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Wyrulec loan program grows local business
Keeping local economies vital is one of the greatest challenges facing small-town and rural utilities in Western's territories, and it is one that Wyrulec Company in Lingle, Wyo., has tackled with creativity and vision. The electric co-op has been stimulating economic development in eastern Wyoming since 1997 with a revolving loan fund started with a $400,000 grant from the USDA Rural Development Electric Program. "We did it initially to provide a zero-interest grant for a 75-bed addition to the Community Hospital in Torrington," said Wyrulec General Manager James Hudelson. The conditions of the grant required Wyrulec to put up 20 percent matching funds and make the first loan to a non-profit entity. "The revolving loan fund was established once the first loan was repaid. As long as that money stays in the fund, it stays in the community." Wyrulec has made 12 subsequent loans to support feasibility studies, business expansions and new businesses. Hudelson estimates that the loan fund has generated or retained between 150 and 200 jobs in the area. The loans have not created direct load growth for the utility, but they have probably helped to keep people in Wyrulec's service territory who might otherwise leave to find work, he added. Jump-starting new technology One of those start-up ventures, Heartland BioComposites, LLC, might still be just Heath Van Eaton's dream without Wyrulec's help. Van Eaton developed a composite building material made of wheat straw and recycled plastic that supports weight. Competing products on the market are not structural. "Heath had a great idea and a strong business plan, but it's very hard for a college student to get funding to launch a company on a new technology," said Brad Sutherland, executive director of the Goshen County Economic Development Corporation. Sutherland sits on the loan committee, which reviews applications. Wyrulec was Van Eaton's first choice for funding, rather than a last resort. "I could have gone to a bank first, but I went directly to Wyrulec because I had a good ongoing relationship with one of the board members," he recalled. Wyrulec awarded Heartland a $20,000 loan initially, and then increased it to the maximum of $150,000. "They saw the potential in the project and the benefits to the different communities," said Van Eaton. The utility charges no interest for the first year and prime rate after that. The borrower does not put up collateral and makes no payments for two years. The funding went into research and product development. "We learned a lot about our composite with the money they loaned us," said Van Eaton. The loan not only aided with product development, "It helped enhanced our credibility in securing debt funding," he noted. "Their loan boosted our company, the credibility of our technology." Benefits throughout the community After Heartland BioComposites received the Wyrulec loan, Van Eaton was able to raise $2.5 million. The company held a groundbreaking ceremony for plant construction in December, and hopes to be in production by summer 2006. The Economic Development Corp. will own the 33,750-square-foot facility Heartland will lease. The plant will employ 15 to 20 people initially, growing by an additional 50 to 60 employees over the next five years. Eastern Wyoming wheat farmers will benefit by selling Heartland the wheat straw needed to manufacture the material. "That additional market increases the farmers' profitability by 50 percent," noted Sutherland. In an agricultural community, supporting a business that adds value to local crops makes good economic sense, said Sutherland. "It's diversifying off what is already there. And even if Heartland has to go elsewhere for the wheat straw, the jobs stay here." Another advantage of locating in Torrington is the nearby supply of the product's other ingredient. "The Rocky Mountain region is one of the only areas that has a surplus of recycled plastic," Sutherland pointed out. "Logistically, it just makes sense for the company to be here." All the elements for success Wyrulec's loan committee and board carefully scrutinize those logistics and the business plan when evaluating loan applications. "Applicants have to have a product and a marketing strategy," stated Sutherland. "We see a lot of plans that have one but not both. Heath had the product, the marketing and the talent, and he was realistic. Too often, people don't want to give up any ownership, so they can't find financing and the idea never gets out of the garage." Companies should be choosing the community for the right reasons, Sutherland added, "Otherwise, it could leave town for the first better offer that comes along." The business should be based on the present economy, he recommended, and have a good potential future. Old industries, especially ones that rely on the Farm Bill, don't fit that description. "It can be hard in rural areas to think in terms of cutting-edge manufacturing, but you have to do it," said Sutherland. Backing a new idea can be risky, but Wyrulec Company is willing to put its faith—and funding—behind its community. When an innovative enterprise like Heartland BioComposites comes along, that faith may reward both the utility and the community. Please visit our home page at http://www.wapa.gov/es/pubs/esb/default.htm
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