Community Developments Investments (November 2013)

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Barry Wides, Deputy Comptroller, Community Affairs, OCC

Aerial view of farmland

To stimulate growth in rural economies, some federal agencies offer guaranteed loan programs and tax incentives that help mitigate risks. (USDA)

This issue of Community Developments Investments focuses on successful initiatives and programs that have allowed banks to expand their financing for small business development in rural areas across America. We highlight these enterprising examples because rural communities offer opportunities and resources that you will not want to overlook.

Rural areas comprise nearly 75 percent of the land area of the United States, according to a report by the Carsey Institute, but are home to only 51 million people, or about 17 percent of the U.S. population in 2010. Most rural towns have fewer than 2,500 residents. These communities face particular challenges that became even tougher during the recent recession. These challenges include rising unemployment, which has forced a growing number of young people to head to urban areas in search of jobs, as well as tightening credit in the wake of the financial crisis, which has made it more difficult for some small businesses to get financing.

These challenges, however, also present opportunities. Where banks are unable to meet customer needs working alone, community development financial institutions (CDFI), certified by the U.S. Department of the Treasury, can form partnerships with banks or provide technical assistance to small businesses. To stimulate the financing needed to meet community needs and goals, some federal agencies offer guaranteed loan programs and tax incentives that help mitigate risks to lenders. In addition, new trends have emerged in the types of rural businesses that are encouraged by government incentives, including renewable energy production, expanding manufacturing, and growing food for nearby cities.

Working with a combination of these financial tools, rural communities can form alliances that help them to grow their own assets, create businesses and jobs, and take advantage of homegrown talent to retain residents and attract new ones. In this newsletter, we include articles that give examples of how these alliances work.

For example, Peoples National Bank uses the U.S. Small Business Administration's (SBA) new Small/Rural Lender Advantage initiative to make start-up loans to local small businesses. Northern Initiatives is a CDFI that uses the SBA's Community Advantage 7(a) and the U.S. Department of Agriculture's Intermediary Relending Program to make small loans and to partner on large loans with local banks. Associated Bank helps increase local manufacturing with the Agriculture Department's Rural Development Business and Industry Guaranteed Loans. Wells Fargo, which has expressed a goal of bringing financing to small communities with big needs, has found that the Treasury Department's New Markets Tax Credit Program can be an essential tool for investing in operating businesses and real estate projects in rural communities. And the Appalachian Regional Commission (ARC), a federal-state partnership, funds a wide range of initiatives to promote economic development in high-poverty areas of the Appalachian region.

This newsletter also reviews the expansion in 2005 of the "community development" definition in the Community Reinvestment Act (CRA), as well as the newly proposed changes to the "Interagency Questions and Answers Regarding Community Reinvestment" that clarify how banks can earn CRA consideration for serving rural communities even if those communities are beyond the banks' branch-based footprint.

Finally, we bring you "This Just In," describing new and diverse opportunities in the OCC's four districts.

This publication is part of:

Collection: Community Developments Investments

Deputy Comptroller
Barry Wides

Staff Writers
Ted Wartell
Bill Reeves
Letty Ann Shapiro
Dianne Davenport

For questions or comments, call (202) 649-6420 or email This and previous editions are available on the OCC's website at

Articles by non-OCC authors represent the authors' own views and not necessarily the views of the OCC.