"USDA's Rural Development: Delivering Vital Programs and Services to Rural America"

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]3461-954 PDF56                                 2025__782025910  USDA'S RURAL DEVELOPMENT: DELIVERING VITAL PROGRAMS AND SERVICES TO11                                 RURAL12                                AMERICA1314=======================================================================1516                                HEARING1718                               BEFORE THE1920     SUBCOMMITTEE ON COMMODITY MARKETS, DIGITAL ASSETS, AND RURAL21                              DEVELOPMENT2223                                 OF THE2425                        COMMITTEE ON AGRICULTURE26                        HOUSE OF REPRESENTATIVES2728                    ONE HUNDRED NINETEENTH CONGRESS2930                             FIRST SESSION3132                               __________3334                           SEPTEMBER 18, 20253536                               __________3738                           Serial No. 119-163940          Printed for the use of the Committee on Agriculture41                         agriculture.house.gov42?4344                        COMMITTEE ON AGRICULTURE4546                 GLENN THOMPSON, Pennsylvania, Chairman4748FRANK D. LUCAS, Oklahoma             ANGIE CRAIG, Minnesota, Ranking49AUSTIN SCOTT, Georgia, Vice          Minority Member50Chairman                             DAVID SCOTT, Georgia51ERIC A. ``RICK'' CRAWFORD, Arkansas  JIM COSTA, California52SCOTT DesJARLAIS, Tennessee          JAMES P. McGOVERN, Massachusetts53DOUG LaMALFA, California             ALMA S. ADAMS, North Carolina54DAVID ROUZER, North Carolina         JAHANA HAYES, Connecticut55TRENT KELLY, Mississippi             SHONTEL M. BROWN, Ohio, Vice56DON BACON, Nebraska                  Ranking Minority Member57MIKE BOST, Illinois                  SHARICE DAVIDS, Kansas58DUSTY JOHNSON, South Dakota          ANDREA SALINAS, Oregon59JAMES R. BAIRD, Indiana              DONALD G. DAVIS, North Carolina60TRACEY MANN, Kansas                  JILL N. TOKUDA, Hawaii61RANDY FEENSTRA, Iowa                 NIKKI BUDZINSKI, Illinois62MARY E. MILLER, Illinois             ERIC SORENSEN, Illinois63BARRY MOORE, Alabama                 GABE VASQUEZ, New Mexico64KAT CAMMACK, Florida                 JONATHAN L. JACKSON, Illinois65BRAD FINSTAD, Minnesota              SHRI THANEDAR, Michigan66JOHN W. ROSE, Tennessee              ADAM GRAY, California67RONNY JACKSON, Texas                 KRISTEN McDONALD RIVET, Michigan68MONICA De La CRUZ, Texas             SHOMARI FIGURES, Alabama69ZACHARY NUNN, Iowa                   EUGENE SIMON VINDMAN, Virginia70DERRICK VAN ORDEN, Wisconsin         JOSH RILEY, New York71DAN NEWHOUSE, Washington             JOHN W. MANNION, New York72TONY WIED, Wisconsin                 APRIL McCLAIN DELANEY, Maryland73ROBERT P. BRESNAHAN, Jr.,            CHELLIE PINGREE, Maine74Pennsylvania                         SALUD O. CARBAJAL, California75MARK B. MESSMER, Indiana76MARK HARRIS, North Carolina77DAVID J. TAYLOR, Ohio7879                                 ______8081                     Parish Braden, Staff Director8283                 Brian Sowyrda, Minority Staff Director8485                                 ______8687     Subcommittee on Commodity Markets, Digital Assets, and Rural88                              Development8990                 DUSTY JOHNSON, South Dakota, Chairman9192JOHN W. ROSE, Tennessee, Vice Chair  DONALD G. DAVIS, North Carolina,93FRANK D. LUCAS, Oklahoma             Ranking Minority Member94AUSTIN SCOTT, Georgia                DAVID SCOTT, Georgia95DAVID ROUZER, North Carolina         NIKKI BUDZINSKI, Illinois96TRACEY MANN, Kansas                  JONATHAN L. JACKSON, Illinois97KAT CAMMACK, Florida                 SHRI THANEDAR, Michigan98BRAD FINSTAD, Minnesota              ADAM GRAY, California99ZACHARY NUNN, Iowa                   KRISTEN McDONALD RIVET, Michigan100ROBERT P. BRESNAHAN, Jr.,            SHOMARI FIGURES, Alabama101Pennsylvania                         EUGENE SIMON VINDMAN, Virginia,102MARK B. MESSMER, Indiana             Vice Ranking Minority Member103DAVID J. TAYLOR, Ohio                JOHN W. MANNION, New York104                                     APRIL McCLAIN DELANEY, Maryland105106                                  (ii)107                             C O N T E N T S108109                              ----------110                                                                   Page111Craig, Hon. Angie, a Representative in Congress from Minnesota,112  opening statement..............................................     4113    Prepared statement...........................................     6114    Submitted letter on behalf of Bill Broydrick, Executive115      Director, National Rural Lenders' Roundtable...............    90116Davis, Hon. Donald G., a Representative in Congress from North117  Carolina, opening statement....................................     3118    Prepared statement...........................................     4119Johnson, Hon. Dusty, a Representative in Congress from South120  Dakota, opening statement......................................     1121    Prepared statement...........................................     2122    Submitted letters on behalf of:123        Lipsetz, David, President and Chief Executive Officer,124          Housing Assistance Council.............................    75125        Waldorf, Jack, Executive Director, Western Governors'126          Association............................................    76127Thompson, Hon. Glenn, a Representative in Congress from128  Pennsylvania, prepared statement...............................     7129    Submitted statement on behalf of Anthony Pipa, Senior Fellow,130      Center for Sustainable Development, Brookings Institution;131      Brent Orrell, Senior Fellow, American Enterprise Institute.    88132133                               Witnesses134135Brand, Bette, former Deputy Under Secretary, Rural Development,136  U.S. Department of Agriculture; President and Chief Executive137  Officer, Strategic Consulting LLC, Roanoke, VA.................     8138    Prepared statement...........................................     9139Heimel, Hon. Paul, Commissioner, Potter County, Pennsylvania,140  Cowdersport, PA; on behalf of National Association of Counties.    31141    Prepared statement...........................................    32142Forbes, J.D., Lynne Keller, President and Chief Executive143  Officer, South Eastern Council of Governments, Sioux Falls, SD;144  on behalf of National Association of Development Organizations.    39145    Prepared statement...........................................    41146Torres Small, J.D., Hon. Xochitl, former Deputy Secretary, U.S.147  Department of Agriculture; Executive Director, Quivira148  Coalition, Las Cruces, NM......................................    46149    Prepared statement...........................................    48150    Submitted question...........................................    92151152  USDA'S RURAL DEVELOPMENT: DELIVERING VITAL PROGRAMS AND SERVICES TO153154                             RURAL AMERICA155156                              ----------157158                      THURSDAY, SEPTEMBER 18, 2025159160                  House of Representatives,161    Subcommittee on Commodity Markets, Digital Assets, and162                                         Rural Development,163                                  Committee on Agriculture,164                                                   Washington, D.C.165    The Subcommittee met, pursuant to call, at 10:00 a.m., in166Room 1300, Longworth House Office Building, Hon. Dusty Johnson167[Chairman of the Subcommittee] presiding.168    Members present: Representatives Johnson, Rose, Lucas,169Mann, Finstad, Nunn, Bresnahan, Messmer, Taylor, Davis, David170Scott of Georgia, Figures, Mannion, McClain Delaney, and Craig171(ex officio).172    Staff present: Laurel Lee Chatham, Austin DeBerry, Sofia173Jones, Josh Stull, John Konya, Suzie Cavalier, Joshua Lobert,174Emma Simon, and Jackson Blodgett.175176 OPENING STATEMENT OF HON. DUSTY JOHNSON, A REPRESENTATIVE IN177                   CONGRESS FROM SOUTH DAKOTA178179    The Chairman. Ladies and gentlemen, the Committee will come180to order.181    Welcome, and thank you for joining today's hearing182entitled, USDA's Rural Development: Delivering Vital Programs183and Services to Rural America. After brief opening remarks,184Members will receive testimony from our witnesses today, a185really excellent panel, and then the hearing will be open to186questions.187    In consultation with the Ranking Member, Mr. Davis, and188pursuant to Rule XI(e), I want to make Members of the189Subcommittee aware that Members of the full Committee will be190joining us today.191    Today, we are going to hear from great rural leaders and192former USDA Rural Development officials about why the programs193and services that Rural Development provides to rural America194are so incredibly important. This builds on a series of rural195development hearings that this Subcommittee has had in recent196years. Last Congress, we examined programs that support197broadband, energy, water systems, rural businesses and198industry, rural cooperatives, and biomanufacturing. USDA Rural199Development is uniquely positioned to serve our rural200communities. Today, we will learn about the various programs201that provide needed investment in our rural communities,202essential infrastructure, small businesses, and economic203development. So, let's just highlight a few so we are all on204the same page.205    We have the Community Facilities Loan & Grant Programs.206Those are crucial tools to provide essential community207infrastructure in rural America. Projects include fire and208rescue stations, village and town halls, healthcare clinics,209hospitals, adult and childcare centers, assisted living210facilities, rehabilitation centers, public buildings, schools,211libraries, and many other community-based initiatives. Just, it212is hard to imagine what our rural communities would look like213without them. The Value-Added Producer Grant program is really214an unsung hero of the RD programs. Farmers and ranchers are215eligible for this program that helps them enter value-added216activities to generate new products, create and expand217marketing opportunities, and, essentially, increase income. The218Rural Economic Development Loan and Grant programs provide219funding for rural projects through local utility organizations.220USDA RD provides zero-interest loans to local utilities, which221they, in turn, pass through to local businesses for projects222that will create and retain employment in rural areas.223    The Rural Business Investment Program promotes economic224development and creates jobs and wealth opportunities by225supporting the equity capital investment needs in rural226America. The Rural Microentrepreneur Assistance Program227provides loans and grants to micro-enterprise development228organizations--MDOs--to help micro-enterprises start up and229grow through a Rural Microloan Revolving Fund and provide230training and technical assistance to microloan borrowers and231micro-entrepreneurs. That is lots of acronyms but also a lot of232good for rural America. Most of these programs were233reauthorized in the Farm Food and National Security Act of 2024234(H.R. 8467), and so they have an expiration date. As we move235forward with reauthorizing expiring USDA RD programs, the236feedback and the conversations that we are having here today237will help us improve these vital programs so that we can even238better serve rural America and the rural communities that all239of us here represent.240    I want to thank each of our witnesses for your service to241rural America and for the perspectives you bring today. I have242a couple of personal friends on the panel, and so I am excited243about that as well. We will talk about that in a minute. I do244want to recognize the distinguished Ranking Member for any245remarks he would like to make. Just as a note, he and I have246generally run this Subcommittee in a bipartisan manner, both of247us kind of managing/serving as Chairman of the Subcommittee.248And so, I don't want anybody to get nervous assuming the249Minority party has seized control of the dais.250    [Laughter.]251    The Chairman. If Mr. Davis recognizes you, that is just as252valid as a recognition from Mr. Johnson.253    [The prepared statement of Mr. Johnson follows:]254255Prepared Statement of Hon. Dusty Johnson, a Representative in Congress256                           from South Dakota257    Today, we will hear from rural leaders and former USDA Rural258Development officials about why the programs and services they provide259are vital to rural America.260    This builds on the series of rural development hearings this261Subcommittee has held in recent years. Last Congress, we examined262programs that support broadband, energy, water systems, rural business263and industry, rural cooperatives, and biomanufacturing.264    USDA Rural Development is uniquely positioned to serve our rural265communities. Today we will learn about various programs that provide266needed investment in our rural communities' essential infrastructure,267small business, and economic development.268    To highlight a few: the Community Facilities Loan and Grant269Programs at Rural Development are crucial tools to provide essential270community infrastructure in rural America. Projects include fire and271rescue stations, village and town halls, health care clinics,272hospitals, adult and child-care centers, assisted living facilities,273rehabilitation centers, public buildings, schools, libraries, and many274other community-based initiatives.275    The Value-Added Producer Grant Program is the unsung hero of RD276programs. Farmers and ranchers are eligible for this program that helps277them enter value-added activities to generate new products, create and278expand marketing opportunities, and increase income.279    The Rural Economic Development Loan and Grant programs provide280funding for rural projects through local utility organizations. USDA RD281provides zero-interest loans to local utilities which they, in turn,282pass through to local businesses for projects that will create and283retain employment in rural areas.284    The Rural Business Investment Program promotes economic development285and creates job and wealth opportunities by supporting the equity286capital investment needs in rural America.287    The Rural Microentrepreneur Assistance Program provides loans and288grants to Microenterprise Development Organizations (MDOs) to help289microenterprises start up and grow through a Rural Microloan Revolving290Fund and provide training and technical assistance to microloan291borrowers and micro entrepreneurs.292    Most of these programs were reauthorized in the Farm, Food, and293National Security Act of 2024, as they have an expiration date. As we294move forward with reauthorizing expiring USDA RD programs, the feedback295received here today will help us improve these vital programs that296serve rural America and the rural communities we represent.297    I want to thank each of our witnesses for your service to rural298America and for the perspectives you bring today. I am especially299excited that Ms. Lynn Forbes, my constituent, is here to share hers.300301    The Chairman. So, with that, my friend, Mr. Davis.302303OPENING STATEMENT OF HON. DONALD G. DAVIS, A REPRESENTATIVE IN304                  CONGRESS FROM NORTH CAROLINA305306    Mr. Davis. Thank you so much, Mr. Chairman. It is truly an307honor to be on this journey with you. And I must admit, as a308mayor growing up in Snow Hill, North Carolina and eventually309making my way to Congress, one of the things I had in my mind310was rural development, and we realize the importance of Rural311Development. Rural Development is the heartbeat--it is the312heartbeat--of many communities across this nation, and313especially in a district like the 1st Congressional District,31422 counties. One hundred percent of the counties are rural. So,315we are here for a really important reason today, and I think316about the investments that are made, and as these investments317are made in rural America, it makes a huge difference.318    This past Saturday, I showed up at Nashville Fire319Department for the ribbon cutting of Fire Station Number 2. It320could not have happened without rural development. The321Community Facilities Program granted help for this fire322station. The Community Facilities Program provides affordable323funding to build and construct essential rural community324facilities, such as firehouses, police stations, and community325centers. Another successful program and that is really326important to me is the ReConnect Loan and Grant Program. Oh327god, I can't tell you when I think about living in eastern328North Carolina and broadband, and the need to make important329connections.330    So, these are just some of the programs. I could continue331on, RBDG in terms of the Rural Business Development Grants--332these programs are essential. So, when we come together as a333Subcommittee to have meaningful conversations, these334conversations are dire and critical as we talk about rural335America. So, with that in mind, Mr. Chairman, I look forward to336having a wonderful Subcommittee hearing today, and I yield337back.338    [The prepared statement of Mr. Davis follows:]339340    Prepared Statement of Hon. Donald G. Davis, a Representative in341                      Congress from North Carolina342    Thank you so much, Mr. Chairman. It's truly an honor to be on this343journey with you.344    And I must admit, as a mayor, growing up in Snow Hill, North345Carolina, and eventually making my way to Congress, one of the things I346had on mind in my mind was rural development.347    And we realize the importance of rural development.348    Rural development is the heartbeat. It's the heartbeat of many349communities across this nation, and especially in a district like the3501st Congressional District, 22 counties, 100 percent of the counties351are rural.352    So, we're here for a really important reason today. And I think353about the investments that are made.354    And as these investments are made in rural America, it makes a huge355difference.356    This past Saturday, I showed up at Nashville Fire Department for357the ribbon cutting of Fire Station Number 2.358    It could not have happened without rural development.359    The Community Facilities Program grant helped for this fire360station.361    The Community Facilities Program provides affordable funding to362build and construct essential rural community facilities such as363firehouses, police stations and community centers.364    Another successful program, and that's really important to me, is365the ReConnect Loan and Grant Program.366    Oh, God, I can't tell you when I think about living in eastern367North Carolina and broadband and the need to make important368connections.369    So, these are just some of the programs I could continue on, that370are back in terms of Rural Business Development, Development Grants;371these programs are essential.372    So when we come together as a Subcommittee to have meaningful373conversations, these conversations are dire and critical as we talk374about rural America.375    So, with that in mind, Mr. Chairman, I look forward to having a376wonderful Subcommittee hearing today, and I yield back.377378    The Chairman. Let's recognize my neighbor in Minnesota, the379Ranking Member of the full Committee, Ms. Craig, for any380comments she would like to make.381382  OPENING STATEMENT OF HON. ANGIE CRAIG, A REPRESENTATIVE IN383                    CONGRESS FROM MINNESOTA384385    Ms. Craig. Thank you, Mr. Chairman. I am still waiting on386you to offer that gavel to me, too. We will talk to the387Chairman about that when he gets here.388    [Laughter.]389    Ms. Craig. Thank you so much, Chairman Johnson and Ranking390Member Davis, for holding today's hearing, and thank you to our391witnesses for being here today to discuss one of the most392pressing issues facing this Committee: uplifting and supporting393rural America. A special welcome to my former colleague,394Xochitl Torres Small, a former Under Secretary of USDA. It is395so good to see you here and back in the building again.396    Rural America is frequently portrayed as a monolith,397especially by those in D.C. We too often fail to recognize its398diversity, not just of people, but of industry, opportunity,399and challenges. Farmers, their families, and their businesses400are the engines of small towns across Minnesota, but those same401places are also the home to teachers and nurses, manufacturers,402and small businesses, and right now, too many of them are403hurting. If you are a farmer, you are dealing with high cost,404low prices, and not enough markets. If you are opening a405business for the first time, you may have no access to high-406speed internet and face severe workforce shortages. And if you407are raising a family there or taking care of an aging parent,408the cost of groceries and healthcare are increasing, and your409ability to access a childcare center, a daycare, a doctor close410to home is getting more difficult by the day.411    You know, my colleagues' so-called One Big Beautiful Bill412(Pub. L. 119-21), in my view, is a direct assault on rural413healthcare. It slashed Medicaid by nearly $1 trillion. The414Rural Health Care Fund that my colleagues are touting as a new415investment does not come close to correcting the damage that416the bill will do in rural America, both to our health417infrastructure and other areas. In my home State of Minnesota,418rural clinics are already closing because of these seismic419Medicaid changes, forcing people to travel many, many miles420further to receive medical care. It doesn't end there. This421week, House Republicans are pushing a government funding bill422through the House that would increase healthcare premiums by as423much as 90 percent in many rural areas by allowing the ACA tax424credits to expire, hitting many rural communities, family425farmers, right in the pocketbook. There is no reason why we426can't fix the problem right now.427    These policies do not grow local economies, lower costs, or428improve access to the critical services that our rural429communities need. Rural America needs meaningful investments,430not cuts to hospitals, which are often the largest employers in431many rural counties. It needs access to reliable high-speed432internet so that farmers and entrepreneurs can access the433information and services that they need to thrive. It needs434adequately-qualified teachers, childcare providers, and435affordable housing so that rural communities can grow. It needs436new economic opportunities so that our kids don't leave for437college in the ``big city'' and never come back. It needs438vibrant main streets so that rural businesses and communities439can grow together. It needs trade policy that doesn't undermine440American agriculture.441    The seeds of those investments start here in this442Subcommittee. They grow at USDA Rural Development. They bear443fruit in small towns around this country. I am glad we are444taking a comprehensive look at what USDA Rural Development445programs can do. While these programs are beneficial, they do446not exist in a vacuum. Economic opportunities in rural America447depend on the basics, like access to healthcare, a good448education, and jobs, and our discussion cannot lose sight of449that because on all of those fronts, Republican policies are450failing. I look forward to hearing from today's panel on how451USDA Rural Development programs can support rural communities452during these difficult times. Thank you again, Mr. Chairman,453for being here, all of our witnesses, and I yield back.454    [The prepared statement of Ms. Craig follows:]455456 Prepared Statement of Hon. Angie Craig, a Representative in Congress457                             from Minnesota458    Thank you, Chairman Johnson and Ranking Member Davis, for holding459today's hearing, and a thank you to our witnesses for being here today460to discuss one of the most pressing issues facing this Committee:461uplifting and supporting rural America.462    Rural America is frequently portrayed as a monolith, especially by463those in D.C. We too often fail to recognize its diversity, not just of464people but of industry, opportunity and challenges.465    Farmers, their families and their businesses are the engines of466small towns across Minnesota--but those same places are also the home467to teachers and nurses, manufacturers and small businesses. And right468now, too many of them are hurting.469    If you're a farmer, you're dealing with high costs, low prices, and470not enough markets.471    If you're opening a business for the first time, you may have no472access to high-speed internet and face severe workforce shortages.473    And if you're raising a family there or taking care of an aging474parent, the cost of groceries and health care are increasing and your475ability to access a doctor close to home is getting more difficult by476the day.477    Republicans' so-called One Big Beautiful Bill is a direct assault478on rural health care. It slashed Medicaid by nearly $1 trillion. The479rural health care fund that Republicans are touting as a new investment480does not come close to correcting the damage their bill will do rural481America's health infrastructure. Just the latest attempt to put482lipstick on this pig.483    In my home state of Minnesota, rural clinics are already closing484because of these ``seismic Medicaid changes''--forcing people to travel485miles further to receive medical care.486    It doesn't end there. This week, House Republicans are pushing a487government funding bill through the House that would increase health488care premiums by as much as 90 percent in many rural areas by allowing489ACA tax credits to expire, hitting many rural Americans and farmers490right in the pocketbook. There is no reason we can't fix that problem491right now.492    These policies do not grow local economies, lower costs or improve493access to the critical services rural communities need.494    Rural America needs meaningful investments, not cuts to hospitals,495which are often the largest employers in many rural counties.496    It needs access to reliable, high-speed internet so that farmers497and rural entrepreneurs can access the information and services they498need to thrive.499    It needs adequately qualified teachers, child care providers and500affordable housing, so that rural families can grow.501    It needs new economic opportunities so that our kids don't leave502for college in the ``big city'' and never come back.503    It needs vibrant main streets so that rural businesses and504communities can grow together.505    It needs trade policy that doesn't undermine American agriculture.506    The seeds of those investments start here, in this Subcommittee.507They grow at USDA Rural Development. They bear fruit in small towns508across the country.509    I am glad we are finally taking a comprehensive look at what USDA510Rural Development programs can do. While these programs are beneficial,511they do not exist in a vacuum. Economic opportunities in rural America512depend on the basics, like access to health care, a good education and513jobs, and our discussion cannot lose sight of that. Because on those514fronts, Republican policies are failing.515    I look forward to hearing from today's panel on how USDA Rural516Development programs can support rural communities during these517difficult times.518    Thank you again for being here today, and I yield back.519520    The Chairman. The chair would request that other Members521submit their opening statements for the record so the witnesses522may begin their testimony to ensure that there is ample time523for questions.524    [The prepared statement of Mr. Thompson follows:]525526Prepared Statement of Hon. Glenn Thompson, a Representative in Congress527                           from Pennsylvania528    Good morning. Thank you to Chairman Johnson and Ranking Member529Davis for convening this hearing to discuss the importance of Rural530Development programs and services at the United States Department of531Agriculture.532    Our rural communities are the heartbeat of rural America, the533backbone of our great nation. Investing in these communities through534USDA Rural Development programs is crucial to keep our rural535communities strong, including for America's farmers, producers, and536ranchers.537    We must not leave rural communities behind, and we can help by538reauthorizing Rural Development programs in Titles VI and IX of the539farm bill that directly support our rural residents through grants,540loans, and technical assistance.541    The beauty of USDA's Rural Development is its structure. There are542three agencies at the national level. Then, there are state-level543offices led by State Directors, who work with local offices across544their respective states to implement RD programs and services. The545State Directors, like Pennsylvania's State Director Mike Cabell, and546their local staff know their communities better than anyone. They are547an integral part of their communities. Not every Federal agency can say548the same. Rural Development programs and services are best housed at549USDA, where they have long provided specialized services to rural550communities that other agencies do not understand.551    With that top of mind, I share the principles underlying552Agriculture Secretary Brooke Rollins' plan for USDA reorganization,553which at its core is to improve customer service and optimize the use554of finite taxpayer resources.555    As USDA implements Sec. Rollins' reorganization plan, I look556forward to working with USDA to ensure these principles for rural557America are upheld.558    I look forward to hearing from our witnesses today on USDA Rural559Development programs and services that were not highlighted or covered560in recent House Agriculture Committee hearings.561    Here are a few examples of vital RD investments in my Congressional562District of programs that will be highlighted today:563564   The Punxsutawney Area Hospital in Jefferson County received565        about $22 million in USDA Community Facilities Direct Loans for566        a renovation and expansion project. I spoke at the567        groundbreaking ceremony in April 2024. The new emergency room568        was just officially opened in June 2025.569570   The Cameron County Chamber in Emporium received a Rural571        Business Development Grant of $99,000 for their small business572        incubator. In conjunction with other funding opportunities,573        this will strengthen the local economy and community. I574        recently visited this hotbed for future small businesses.575576   Painterland Sisters in Tioga County were awarded a $216,000577        Value-Added Producer Grant to help them create and market new578        products in order to increase farm income. By leveraging this579        program with other funding streams, sisters Stephanie and580        Hayley Painter were able to create a new product: an organic,581        lactose-free, Icelandic-style skyr yogurt. Attendees at my 2025582        Agriculture Summit in Centre County were able to sample583        Painterland Sisters' delicious yogurt.584585    These are just a sampling of how USDA's RD programs make a586difference in my backyard and in countless rural communities all across587the country.588    Mr. Chairman, thank you again for convening this important hearing.589I look forward to continuing our work together to strengthen rural590America.591    I yield back.592593    Mr. Davis. Okay. Our first witness today is Ms. Bette594Brand, who is a former Deputy Under Secretary for Rural595Development at USDA, and our next witness is the Honorable Paul596Heimel, who is a County Commissioner for Potter County,597Pennsylvania Board of Commissioners. Commissioner Heimel is598testifying on behalf of the National Association of Counties.599    The Chairman. Our third witness has unimpeachable rural600credentials. She and I served 20 years ago as Board Members on601the South Dakota Rural Development Council, and she has been602working ever since then to make rural communities stronger. It603is my friend, Ms. Lynne Keller Forbes, the Executive Director604of the Southeastern Council of Governments. Ms. Forbes is605testifying on behalf of the National Association of Development606Organizations. And then we also have--oh, they said you get to607introduce Xochitl. That seems unfair. Okay. We are fighting608over----609    Mr. Davis. We are fighting over who will introduce you.610    The Chairman. Well, I am going to say a couple sentences,611and then you can do the real intro.612    [Laughter.]613    The Chairman. When you run for Congress, there are a lot614of--you think about a lot of the things that winning may help615you secure. You just don't think about the fact that you are616going to secure some friends once you get elected to Congress,617and, indeed, Xochitl Torres Small is a wonderful person and is618a personal friend, and with that, Mr. Davis, I guess you get619the honor.620    Mr. Davis. Oh.621    [Laughter.]622    Mr. Davis. Well, let me say to a person that is no stranger623to Congress and definitely not a stranger to this Committee624that served our country in so many ways, and a person that625knows where Wilson, North Carolina is, it is so good to see626you.627    [Laughter.]628    The Chairman. All right. Very good. Thanks to all our629witnesses for joining us today. We are going to proceed to your630testimony. As you all know, you are going to get 5 minutes. The631timer in front of you will count down to zero, at which point632your time has expired. When you hit zero or, we will kind of633tap gently like that. It gets increasingly loud, and Mr. Davis634is particularly heavy handed if you go more than about 15635seconds over. So, with that, Ms. Brand, please begin when you636are ready.637638         STATEMENT OF BETTE BRAND, FORMER DEPUTY UNDER639 SECRETARY, RURAL DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE;640                 PRESIDENT AND CHIEF EXECUTIVE641         OFFICER, STRATEGIC CONSULTING LLC, ROANOKE, VA642643    Ms. Brand. Good morning. Chairman Johnson, Ranking Member644Davis, Vice Chairman Rose, and Members of the Committee, thank645you for the opportunity to testify today about the critical646role that USDA Rural Development plays in strengthening rural647America. My name is Bette Brand, CEO and Founder of Strategic648Consulting LLC in Roanoke, Virginia. Over my career, including649more than 35 years in the Farm Credit System and leadership650roles in USDA Rural Development, my mission has always been the651same: to help agriculture and rural communities thrive.652    USDA Rural Development manages more than $200 billion in653loans, guarantees, and grants, delivering over $40 billion each654year to communities of fewer than 50,000 people. These655investments finance hospitals, schools, renewable energy,656broadband, and businesses of every size. Rural Development657programs don't just provide funding. They transform658communities. They are the difference between a hospital staying659open, a small business hiring instead of closing, and a farmer660finding a new market for their products.661    Earlier this year, the National Rural Lenders Association662released a landmark assessment of the B&I Loan Guarantee663Program. The findings confirm what rural communities already664know, that these programs work. From 2014 to 2022, the B&I665Program created more than 750,000 jobs in rural America and at666a Federal cost of just $438 per job. Counties with B&I667investment saw sustained employment growth, higher wages, a668stronger GDP per capita for years after the initial investment.669A one percent increase in B&I investment translates into a .55670percent increase in state sales tax revenue, a direct return to671local and state economies.672    These are not abstract numbers. They show that Rural673Development programs provide one of the highest returns on674investment of any Federal initiative serving rural America. In675Virginia, the Maryland-Virginia Milk Producers Cooperative used676a B&I Guarantee Loan to purchase and upgrade a processing677facility. Nearly 1,000 dairy farmers benefited, 178 jobs were678retained, and the region kept a vital market for milk, and it679is the Maola brand that many of you in this area may recognize.680In Minnesota, RD financed a $21.6 million public safety681building, ensuring faster emergency response and improved682disaster readiness. In Tennessee, Claybrook Farms used a Value-683Added Producer Grant to launch a branded Angus beef line,684adding jobs and opening new markets. In South Dakota a $27,000685microloan launched Wild Ground Coffee, bringing new life to686main street.687    These are examples of how RD meets communities where they688are, whether they are helping a century-old cooperative stay689competitive or giving a startup coffee shop a chance to690succeed. What makes Rural Development unique is that it691combines fiscal responsibility with community resilience. Most692programs leverage private-sector lending, ensuring that693taxpayers' dollars stretch farther and risks are shared. At the694same time, Rural Development programs address areas where the695private market alone cannot carry the full load, like696healthcare access, renewable energy adoption, and critical697infrastructure.698    Demand continues to outpace funding. In 2023 and 2024, more699than 90 percent of the B&I Program budget authority was700utilized, the highest on record, demonstrating both efficiency701and an unmet need. Rural Development programs may finance a702hospital, a meat processing plant, or even a coffee shop, but703the purpose is the same: expanding opportunity in rural704America. They have revitalized communities, created and sustain705jobs, modernized essential services, and give farmers and706entrepreneurs the chance to compete and succeed. Most707importantly, they ensure that economic opportunity is not708defined by ZIP Code.709    Thank you for your time today and your commitment to rural710America. I look forward to your questions.711    [The prepared statement of Ms. Brand follows:]712713Prepared Statement of Bette Brand, Former Deputy Under Secretary, Rural714   Development, U.S. Department of Agriculture; President and Chief715        Executive Officer, Strategic Consulting LLC, Roanoke, VA716Introduction717    Chairman Johnson, Ranking Member Davis, Vice Chairman Rose, and718Members of the Committee, Thank you for allowing me the opportunity to719provide testimony on rural America and the programs at USDA that help720improve the economy and quality of life in these important communities.721    My name is Bette Brand, CEO and Founder of Strategic Consulting LLC722in Roanoke, Virginia. Strategic Consulting helps entrepreneurs and723business owners access capital for the acquisition or growth of their724business in rural America. Previously, I served as Deputy Under725Secretary for USDA Rural Development, Administrator of the Rural726Business--Cooperative Service, and Acting Administrator of the Rural727Utilities Service. Before USDA, I spent more than 35 years with the728Farm Credit System.729    Throughout my career, my focus has been simple: helping agriculture730and rural communities thrive.731The Role of Rural Development732    USDA Rural Development (RD) manages more than $200 billion in733loans, loan guarantees, and grants, delivering over $40 billion734annually. These investments strengthen communities of fewer than 50,000735people, helping farmers, families, and entrepreneurs build their future736in rural America.737    During COVID, RD proved its flexibility by deploying the B&I-CARES738Act program. This ensured that rural businesses received urgently739needed capital while protecting program integrity. That success led to740new efforts such as the Food Supply Chain Program (included in the741House Agriculture Committee's farm bill with bipartisan support), the742Timber Production Expansion Guaranteed Loan Program, and other743initiatives to support rural America.744Key Programs and Impact745Guaranteed Loan Programs746    RD does not lend directly in these programs; it guarantees a747portion of the loan that private/regulated lenders make, sharing the748risk to unlock credit for viable projects. While this has been advanced749by the USDA for many years, RD Guaranteed programs were streamlined in750October 2020 under USDA's OneRD framework. The new rules provided751lenders with one rulebook, resulting in faster processing, more752consistency, and greater opportunities for private lenders (most are753small community banks) to participate, expanding the pool of lenders754who were willing to extend credit to rural businesses.755    While many of the Guarantee programs below have not had robust756economic assessments performed on the programs' effectiveness recently,757their impact overwhelmingly supports rural communities providing758resources to support critical infrastructure and services that hold a759community together.760    In fact, all programs noted below are like pieces of rural761America's puzzle. Each represents a crucial part of the ``jump-start''762needed to help rural communities thrive. Sometimes one or more pieces763(RD programs) are needed together for a business or community. Often,764other Federal programs like SBA 504 and 7A are also included to make765the project work. In other cases, one piece is needed now, and then the766business or community grows into the next program.767    Business & Industry Loan Guarantees (B&I)--Supports rural768businesses by guaranteeing up to 80% of commercial loans in partnership769with private lenders.770    Earlier this year, the National Rural Lenders Association retained771Summit. LLC to assess the economic benefits of the Rural Development's772Business and Industry (B&I) Guaranteed loan Program. Through case773studies, B&I programmatic data, and macroeconomic summary statistics,774the report demonstrated many notable positive impacts of the B&I775program, including:776777  a.  From 2014 to 2022, B&I created 757,800 jobs in rural communities.778            Each of these jobs only costs the Federal Government $438779            to create.780781  b.  Counties with businesses that utilized the B&I program saw782            employment increases in the short and long term.783784  c.  Counties that received B&I investment saw a higher increase in785            their average earnings per worker for nine (9) consecutive786            years after initial investment than similar counties that787            did not receive investment.788789  d.  On average, in the years following initial investment, counties790            that received B&I investment had higher GDP per capita than791            similar counties that did not receive investment.792793  e.  A 1% increase in B&I investment results in a 0.55% increase in794            state sales tax revenue.795796    Generally, Congress has provided significant increases in program797levels of the B&I program from $1.3 billion in 2016 to the 2024 level798of $2.2 billion. With each increase, rural communities have deployed799the capital and sought additional resources with near complete use of800budget authority in 2023 and 2024 (90.83% and 98.24%, respectively),801the highest on record.802    In Fiscal Year 2025, The B&I program earned its highest proposed803budget appropriation in program history ($3.5 billion) while holding804its second lowest subsidy rate (.02%).805    A direct example of the B&I program at work is in Virginia, where806Maryland-Virginia Milk Producers Cooperative (in business for over 100807years) representing nearly 1,000 dairy farmers was able to purchase and808upgrade a processing facility in November 2023. This allowed them to809expand their product mix and put more money in the farmer/members'810pockets. This project retained 178 jobs, sustained regional dairy811processing, and kept MDVA milk in the market.812    Community Facilities Program (CFP)--Finances essential813infrastructure such as hospitals, schools, and emergency services. USDA814reports that between 2005 and 2023, 146 rural hospitals closed or815stopped providing acute inpatient care. Without hospitals nearby,816communities lose physicians, equipment ages without replacement, and817people must travel too far for care. For emergencies, that distance can818mean the difference between life and death.819    Equally as important as hospitals are emergency services and820facilities. While firehouses and rescue squads are critical, more821advanced search and rescue and specialized equipment are often needed822to properly respond to vehicle and farm accidents.823824   In the town of Virginia, Minnesota, RD funded a $21.6825        million public safety building in June of 2024. This ADA826        compliant regional fire/EMS and police headquarters supports827        regional training, disaster operations, and community828        education, improving response times, training, and efficiency.829830    Rural Energy for America Program (REAP)--Funds renewable energy and831efficiency projects for farms and small businesses, often contributing832to the overall success of a B&I project.833834   In 2021, Webb Farm in Tennessee installed a small solar835        panel system, HVAC, and lighting to cut energy costs and boost836        resilience.837838   In Minnesota, Four Daughters Vineyard used a $167,500 grant839        to build a solar array, saving $53,000 annually in August 2023.840841    In 2020, Rural Development took on a huge task to finally unify and842streamline processes across all guaranteed loan programs. This effort843eliminated duplicative processes and introduced a common loan note844guarantee application for four of the largest guaranteed programs845included in this testimony above. This process also standardized846eligibility, origination and servicing provisions, concurrently847improving efficiency, and enhancing customer service.848    This process also expanded lender participation by allowing849approval for regulated lenders in good standing to participate in all850the guaranteed programs rather than applying to be an approved lender851in each individual program. The OneRD Rule gives more flexible852collateral and equity requirements that are more in line with standard853lending practices, more flexible loan terms, and clearer Secondary854Market sale requirements.855    Additionally, there are now enhanced refinancing options and a856standardized increased guaranty percentage, providing greater857consistency for the lenders. This pushes the lender and the RD credit858committee to have a more critical eye on the project itself rather than859arbitrarily reducing the guarantee amount at the detriment of the860credit.861RD Grant Programs862    In addition to the Guaranteed loan programs, the grant programs863often complement the needs of a farmer, small business, or a community864to make the project possible. In other cases, Rural Development Grant865programs give farmer producers or rural communities the boost to get866started. Once their project expands, they often utilize a Guaranteed867loan program.868    Value-Added Producer Grants (VAPG)--Helps farmers capture more869income by processing or branding their products with greater value.870Some examples include further processing of milk for a local creamery871or producing lavender lotions and soaps from lavender grown on the872farm. This value-added enterprise usually generates a higher return,873extends the production season, and develops Brand loyalty, all of which874brings more income to the producers.875876   In Tennessee, Claybrook Farms used a $250,000 grant to877        launch a branded Angus beef line, adding 8-10 jobs and opening878        new markets.879880   In South Dakota, a $49,750 grant launched the state's only881        on-farm milk bottling line, giving producers direct access to882        consumers.883884    Rural Innovation Stronger Economy (RISE) Grants--Spur high-wage job885creation and regional clusters and builds on the strength of community886collaboration and cooperation.887888   In Michigan, a $2.1 million RISE award created a multi-889        county workforce hub for advanced manufacturing, leading to 125890        new jobs and retention of 425 more.891892    Rural Economic Development Loans and Grants (REDLG)--Provide zero-893interest loans through local utilities who operate in the rural894communities and often see opportunities to improve the quality of life895for residents.896897   In Minnesota, Redhead Creamery used a $1.5 million loan898        through Stearns Electric Association to expand cheese899        production and build MN's first whey-based distillery and900        tasting room, adding six full-time jobs and new agri-tourism901        opportunities in August 2023.902903   In Tennessee, a $2 million loan financed a USDA-inspected904        regional meat processing facility, strengthening livestock905        markets and producer incomes.906907    Cooperative Development Grants--Strengthen farmer co-ops and908marketing alliances. Cooperatives have saved many industries/909communities when private businesses consolidate or move away, leaving910poultry producers, forestry and timber producers, or service providers911without an option to operate.912913   In Virginia, FAIRS (Foundation for Agriculture, Innovation914        and Rural Sustainability) received multi-year support to grow915        cooperative marketing across the state.916RD Business Development Assistance917    Rural Microentrepreneur Assistance Program (RMAP)--Provides918microloans and technical assistance delivered by local entities to give919a boost to small or start-up businesses.920921   In Sisseton, South Dakota, a modest $27,000 microloan in922        August 2024, through GROW South Dakota helped launch Wild923        Grounds Coffee, bringing life back to main street.924925    Rural Business Investment Program (RBIP)--Provides a license to a926newly formed developmental capital organization to help meet the equity927capital needed in rural communities. The equity raised by these928licensed funds then makes venture capital investments to eligible rural929enterprises or start-ups.930931   In Virginia, Soli Organic scaled its indoor agriculture932        operations with RBIP-backed investment. Recently, Soli Organic933        and 80 Acres Farms--both USDA-supported--merged to create one934        of the largest indoor farming networks in the world.935936   In Tennessee, the Innova Ag Innovation Fund II is investing937        $31 million to commercialize ag-tech across the Mid-South,938        supporting up to 2,000 high-wage jobs.939Conclusion940    Rural Development programs may look different--financing a941hospital, building a meat processing facility, or helping a coffee shop942get off the ground--but they all share one purpose: expanding943opportunity in rural America. They revitalize communities, create and944sustain jobs, build critical infrastructure, and provide farmers and945entrepreneurs with the tools needed to succeed. Most importantly, they946ensure that quality of life and economic opportunity are not defined by947ZIP Code.948    Thank you for your time, and I look forward to your questions.949                               Attachment950951USDA B&I Guaranteed Loan Program: Economic Assessment, 2025952Prepared by: Summit, LLC 777 6th St. NW, Suite 520 Washington, DC 20001953D www.summitllc.us954955Table of Contents956Executive Summary957Program Overview958959    Introduction to USDA Rural Development960    USDA's B&I Guaranteed Loan Program961    One Rural Development Guaranteed Loan Initiative962    Private-sector participation in the B&I Loan Guarantee Program963964Case Studies965966    Champagne Energy and Environmental Solutions: Local business growth967    Commongrounds Cooperative: Building community in Traverse City968    Secure Semiconductor Manufacturing: Returning semiconductor969manufacturing jobs to rural America970    The Inn at Bellefield: Integrating community and hospitality971972B&I Programmatic Data973974    B&I program funding overview975    B&I concentration by sector976    Geographic distribution of loan guarantees977    Program financials: Allotments, obligations, and subsidy rates978979Macroeconomic Summary Statistics980981    Employment rises in both the short run and long run982    Counties that receive investment see a positive effect on earnings983    Counties that receive investment see a positive effect on GDP984    State-level analysis: Positive impact of B&I on sales and taxes985986Assessment Methodology: Brief Overview987List of tables988    Table 1: Core B&I NAICS Industry snapshot: Fiscal Years 2019, 2023,989and 2024990    Table 2: 2015-2024 core B&I Program: Top ten states by total991obligation amount992    Table 3: State comparison: Obligation percentage by sector, 2015-9932024994    Table 4: Congressional district comparison: Obligation percentage995by sector, 2015-2024996    Table 5: Allotments, obligations, and use rates, 2015-2025997    Table 6: Estimated number of jobs created998    Table 7: Summary of jobs created999    Table 8: Job created: cost to the government1000    Table 9: Summary of cost to the government1001    Table 10: Overview of assessment methodologies1002List of figures1003    Figure 1: B&I program loan performance overview 2015-20241004    Figure 2: Total project costs of core B&I projects from Fiscal1005Years 2005-20241006    Figure 3: 2015-2024 core B&I investment amount by NAICS industry1007    Figure 4: State B&I loan guarantee obligation amount per capita1008    Figure 5: B&I program loans in zip codes containing Opportunity1009Zones are increasing1010    Figure 6: B&I loan program subsidy recent history1011    Figure 7: Average earnings per worker for counties that received1012investment and matched counties that did not receive investment1013    Figure 8: Average GDP per capita for counties that received1014investment and matched counties that did not receive investment1015    Figure 9: Average GDP for counties that received investment and1016matched counties that did not receive investment1017    Figure 10: Log of state sales income tax collected plotted against1018log of B&I investment1019Executive Summary1020    Summit was retained by the National Rural Lenders Association1021(NRLA) to assess the economic benefits of the U.S. Department of1022Agriculture (USDA) Rural Development's Business and Industry (B&I)1023Guaranteed Loan Program. The B&I program aims to increase business1024capital access through loan guarantees and improve economic prospects1025in rural communities. While the government's subsidy cost is known,1026NRLA aimed to define the program's economic benefits and establish1027return on investment.1028    Summit conducted over 20 interviews with subject-matter experts,1029lenders, packagers, borrowers, and Federal credit managers and1030leadership; conducted a wide literature review; and employed1031qualitative and quantitative (econometrics) research methods to assess1032program outcomes and impacts. At the most granular level (project case1033studies), B&I programmatic level, and macroeconomic level, we find a1034program with positive momentum and impact, as well as versatility to1035meet Administration priorities.1036    Case studies. In the first section, we highlight four projects1037across the country and in different asset classes, which contain tried-1038and-true results before and after loan origination. We find that the1039B&I program incentivizes projects that would not otherwise be built1040with traditional commercial credit. B&I rates, terms, and conditions1041were not only attractive but also necessary to encourage business1042innovation and expansion with outsize impacts on rural America.1043``Tombstone data,'' or credit memo intentions, are proven in economic1044measures such as jobs, wages, and companies' financial growth.1045    Programmatic data. Next, we display USDA Rural Development B&I-1046specific programmatic data over the past decade. We find a program on1047the move, running increasingly more efficient and easily customizable1048to meet manufacturing, agricultural, and other industry business needs1049across rural America. In Fiscal Year 2025, the B&I program earned its1050highest allotment in program history ($3.5 billion) while holding its1051second lowest subsidy rate (0.2%). Other highlights include:10521053   B&I loans in Opportunity Zones have increased 59.29% from1054        2018 to 2025.10551056   From 2005 through 2024, B&I leveraged an additional $12.41057        billion in other capital, such as commercial debt, private1058        equity, and tax credits.10591060   Total core B&I loans increased from 2015 to 2024 by 108%.10611062   Total B&I allotment use in 2023 and 2024 was 90.83% and1063        98.24%, respectively, the highest on record.10641065    Macroeconomic statistics. Finally, we cite the findings of our1066macroeconomic analysis, focusing on jobs, earnings, gross domestic1067product (GDP), and tax benefits. For example, the B&I program created1068more than 750,000 jobs from 2012 to 2022, costing the Federal1069Government $438 per job. We also find a positive correlation between1070B&I investment and other economic outputs:10711072   Counties that receive B&I loans have higher GDP per capita1073        and GDP than those without.10741075   Counties that receive B&I loans earn more per worker than1076        counties that do not.10771078   A 1% increase in B&I loans results in a 0.55% increase in1079        sales tax revenue for the average state in the long run.10801081    Based on historical evidence and predicated on persistent funding1082levels we would expect to see similar positive economic impacts of the1083B&I program moving forward.1084Program Overview10851086     What is the USDA Business and Industry Guaranteed Loan Program?1087------------------------------------------------------------------------10881089------------------------------------------------------------------------1090    8Business and Industry loan guarantees improve the economic health1091 of rural communities by increasing business capital access and enabling1092 affordable financing for rural businesses.01093------------------------------------------------------------------------1094    Rural businesses can use the loans to pay for:10951096     Enlarging, repairing, modernizing, or developing1097     businesses;10981099     Purchasing and developing land, buildings, and associated1100     infrastructure;11011102     Purchasing and installing machinery, equipment, supplies,1103     or inventory;11041105     Refinancing debt when refinancing improves cash-flow and1106     creates jobs; and11071108     Acquiring businesses to maintain business operations and1109     create or save jobs.1110------------------------------------------------------------------------1111    8Eligible lenders:0                  6Eligible borrowers:011121113     8Federal and state-         6For-profit and1114     chartered banks0                    nonprofit businesses01115     8Savings and loan           6Cooperatives01116     institutions01117     8Farm Credit Banks          6Federally recognized1118     with direct lending authority0      Tribes01119                                         6Public bodies01120     8Credit unions0             6Individuals engaged or1121     8Nonregulated lenders       planning to engage in a1122     may be approved under the           business01123     OneRD Guaranteed Loan               6Individual borrowers1124     Initiative regulation0              must be U.S. citizens or1125                                         legally admitted permanent1126                                         residents01127------------------------------------1128 Lenders can be located anywhere in      6Private-entity1129         the United States               borrowers must ensure loan1130                                         funds stay within the U.S. and1131                                         that financed facilities1132                                         primarily create or retain1133                                         rural jobs01134------------------------------------------------------------------------1135    Eligible areas:11361137     Rural areas outside cities or towns with populations of1138     50,000 or less11391140     Borrower headquarters can be in a larger city if funded1141     project is in an eligible rural area.1142------------------------------------------------------------------------1143    6Loan details:01144    4Rates0                              4Negotiated between1145                                         lender and borrower01146                                         4Can be fixed or1147                                         variable01148    6Terms0                              6Cannot exceed 401149                                         years01150                                         6Determined by lender1151                                         and USDA based on loan purpose,1152                                         asset life, and repayment1153                                         ability01154    4Guarantee amount0                   4Guarantee percentages1155                                         are published annually in the1156                                         Federal Register01157                                         4FY 2025: 80%1158                                         guarantee01159    6Fees0                               6Initial guarantee fee:1160                                         3% of guaranteed loan amount01161                                         6Annual renewal fee:1162                                         0.55% of guaranteed portion of1163                                         outstanding balance01164                                         6Reasonable loan1165                                         origination fees negotiated1166                                         between lender and borrower01167                                         6Some qualifying1168                                         projects may receive a reduced1169                                         fee of 1%01170    4Benefits0                           4Offers loan amounts1171                                         exceeding $5 million for large1172                                         rural business needs01173                                         4Provides fully1174                                         amortized terms with no balloon1175                                         payments for stable cash-flow01176                                         4Allows flexible use of1177                                         proceeds, including real1178                                         estate, equipment, working1179                                         capital, and refinancing01180                                         4Government guaranteed1181                                         loan provides creditability and1182                                         project momentum01183------------------------------------------------------------------------11841185Introduction to USDA Rural Development1186    USDA's Rural Development (RD) plays a pivotal role in fostering1187opportunity and economic security in rural America and improves the1188quality of life in rural communities across the United States. Through1189a variety of loan, grant, and guarantee programs, USDA RD facilitates1190access to capital for rural enterprises that may otherwise struggle to1191secure financing from traditional lending institutions. RD is committed1192to strengthening rural economies through business financing and1193technical assistance; expanding access to critical infrastructure such1194as broadband, energy, water, and healthcare; promoting sustainable1195agricultural and nonagricultural business ventures to diversify rural1196economies; and supporting job retention and creation to reduce economic1197disparities in rural communities.1198    The Business and Industry (B&I) Guaranteed Loan Program was1199introduced in 1972 to provide credit enhancements for rural businesses1200through private lenders. In 1994, USDA lending and grant programs were1201consolidated under the new RD mission area, integrating business,1202housing, and utility programs. From 2008 to 2020, RD initiatives1203further expanded to include vertically integrated agriculture,1204renewable energy financing, mixed use development (so long as primary1205purpose is commercial), and targeted efforts to address economic1206distress in under-served rural areas. This reflects a shift from direct1207government lending toward credit enhancement mechanisms, encouraging1208private lender participation.1209    USDA RD administers a variety of loan and grant programs, including1210Rural Energy for America, Rural Business Development Grants, Community1211Facilities Loans and Grants, and Water & Environmental Programs. The1212B&I program is the flagship in the Rural Business--Cooperative Service1213(RBCS), making up roughly 50% of loan/grant obligation amounts in1214dollars.1215USDA's B&I Guaranteed Loan Program1216    The B&I program is designed to stimulate economic growth in rural1217communities by improving access to private capital and mitigating1218lending risks. Established under the farm bill and periodically1219reauthorized, the program supports rural businesses, nonprofits,1220cooperatives, Tribal organizations, and some publicly owned entities.1221Eligible loan purposes include business acquisition, expansion,1222equipment purchases, working capital, and debt refinancing across a1223wide expanse of sectors (and subsectors)--e.g., battery energy storage1224systems (aiding electric power generation fed by both renewable and1225fossil fuels), timber products (e.g., mass timber and other engineered1226wood), and skilled trade schools (e.g., pipe welding). To qualify, the1227project must be in a rural area with a population under 50,000.1228    The program offers advantages including reduced lender risk through1229the loan guarantee, greater investment in undercapitalized rural1230markets, and economic stability during downturns. Borrowers benefit1231from more favorable loan terms than conventional financing, with fully1232amortized loans and no balloon payments. Loan amounts range from1233$200,000 to $25 million, with up to 80% guaranteed. Interest rates are1234fixed or variable (adjustable no more than quarterly), and fees include1235a 3% initial guarantee fee and a 0.5% annual retention fee on the1236outstanding guaranteed balance.1237    Collateral must be sufficient to protect the interests of both the1238lender and USDA, with appropriate valuation and hazard insurance.1239Lenders are responsible for credit evaluations to address any credit1240risks and demonstrate that loan terms support full repayment.1241Compliance requirements include regular financial and performance1242reporting by borrowers, while lenders monitor active borrowers.1243One Rural Development Guaranteed Loan Initiative1244    In 2021, the One Rural Development (OneRD) Guaranteed Loan1245Initiative unified all of RD's guaranteed loan programs. As part of1246this effort, RD implemented fewer and more streamlined application1247forms and standardized processes and credit reviews with the promise of1248faster approval timelines. To expand the impact of loan guarantee1249programs, RD enhanced lender participation incentives and expanded1250outreach efforts to institutions serving under-served communities.1251    The OneRD Guaranteed Loan Initiative introduced the following1252featured benefits and policy changes:12531254   A single standardized regulation for USDA RD programs: B&I,1255        Community Facilities Programs, Rural Energy for America1256        Program, and Water and Environmental Programs.12571258   Single-point lender approval, certification options, and1259        secondary sale/purchase guidance.12601261   Standardized forms and annual notices with program terms at1262        the start of each fiscal year.12631264   Possibility of guarantee issuance prior to construction and1265        ability to use funds for refinancing.12661267   Establishment of consistent population limits across B&I1268        programs.12691270    The OneRD initiative also included several changes to the B&I1271program terms, increasing the guaranteed amount to 80% as the standard1272for all loan sizes, including emerging industries such as rural1273technology businesses, enhancing creditworthiness evaluation criteria,1274and adjusting terms based on recessionary trends or inflationary1275pressures. OneRD has also led to increased analysis of the USDA loan1276guarantee portfolio; the Rural Data Gateway provides insight into B&I1277loan guarantee obligations from 2012 through 2024.1278Private-Sector Participation in the B&I Guaranteed Loan Program1279    The success of the B&I program hinges on participation from1280private-sector lenders, who originate and service the loans. Lenders1281engaging in the program range from small community-based banks to large1282regional banks and nontraditional lenders. Community banks and regional1283banks in rural and small-town markets are among the most active1284participants, as they have local business customers who need credit.1285    Lenders are drawn to the B&I program by its risk mitigation. The1286guarantee significantly reduces credit risk by covering most losses,1287allowing banks to make loans that would otherwise exceed internal1288lending limits or risk tolerance. The program can help lenders serve1289their communities and meet Community Reinvestment Act goals, as loans1290to rural businesses under a Federal guarantee can qualify as supporting1291economic development. The presence of an active secondary market is1292another incentive: lenders often sell the guaranteed portion of the1293loan to investors, which provides immediate income and frees up capital1294to make more loans. The guaranteed portions are fully backed by the1295government and therefore carry a zero-risk weighting for bank capital1296purposes, making them attractive assets to hold or sell.1297    While B&I loan guarantee activity has increased, the number of1298participating lenders has decreased, which may lead to geographic1299risks. USDA should continue to educate financial institutions about1300program benefits for borrowers and institutions, to ensure rural1301businesses have access to financing.1302Case Studies1303Champagne Energy and Environmental Solutions: Local Business Growth1304          i  Founder Robert Champagne describes the B&I loan as ``a1305        hand up, not a handout.''13061307    A hand up for growth. Champagne Energy and Environmental Solutions1308(CEES) is a subsea construction company working in the Gulf of America.1309With the B&I loan program, CEES' revenue has grown from $1.8 million in13102008 to $110 million today. The loan's low amortization enabled CEES to1311offer a competitive day rate and purchase new vessels, which reduced1312long-term maintenance costs.1313    Ensuring future market competitiveness. CEES lays oil and gas1314pipelines, removes decommissioned pipelines, and lays power cables for1315offshore windmills. The company is now considering expanding to support1316companies building subsea data storage facilities. As founder Robert1317Champagne says, ``I don't care who's in [Federal] office. Whatever you1318want to do, I can adapt. We can make it work.''1319    Keeping jobs local. As one of only two American companies that can1320do shallow-water work in the Gulf, CEES is fending off international1321competitors and keeping jobs in the U.S. With B&I support, CEES has1322doubled wages and the number of local jobs between 2016 and 2025. The1323loan also enabled CEES to maintain its long-standing relationship with1324United Community Bank.1325    The company has more than doubled jobs and average wages from 20161326(97 total jobs and $14.50 average hourly wages) to today (300 total1327jobs and $30 average hourly wages).13281329------------------------------------------------------------------------13301331------------------------------------------------------------------------1332Impacts            Jobs: 97 in 2016;  Wages: $14.50/hr  Revenue: $1.81333                    265 in 2025        (avg) in 2016;    million in1334                                       $30/hr (avg) in   2008; $1101335                                       2025              million in 20241336------------------------------------------------------------------------13371338Commongrounds Cooperative: Building community in Traverse City1339    An innovative, community-owned center. Commongrounds Cooperative is1340a community-owned, mixed-use community center in Traverse City,1341Michigan. Supported by over 1,100 community owners, the cooperative1342brings together affordable workforce housing, mission-driven1343organizations, and common areas. The emphasis on local community-1344building is clear in co-executive director Kate Redman's message to1345community owners: ``Don't just invest in Wall Street, invest in 8th1346Street.''1347    The B&I loan guarantee was the solution to a complex funding stack.1348Commongrounds relied on investment crowdfunding to raise project equity1349for construction, which created a complex funding structure. The $81350million loan was too risky for local credit unions, and no investor1351could guarantee the loan. Redman describes navigating the financial1352structure as the most challenging aspect of development. Ultimately,1353the B&I loan guarantee was critical in bringing Commongrounds to life.13541355          i  Co-executive director Kate Redman says the B&I loan1356        guarantee was ``critical to our project being . . . possible.''13571358    A focus on community needs. From the beginning, Commongrounds has1359focused on the community. Early community input emphasized the1360importance of central social infrastructure, leading to the inclusion1361of affordable workforce housing near the city center, a teaching1362kitchen offering health-focused cooking classes, and a popular1363performing arts venue.13641365------------------------------------------------------------------------13661367------------------------------------------------------------------------1368Impacts            100% occupied      7 commercial or   25% of housing1369                                       nonprofit         priced at 60%1370                                       tenants           AMI1371------------------------------------------------------------------------13721373Secure Semiconductor Manufacturing: Returning semiconductor1374        manufacturing jobs to rural America1375          i  ``We're now [going to] produce much, much, much more than1376        we ever dreamed we could . . .''13771378    Financing rapid growth in semiconductor manufacturing. Secure1379Semiconductor Manufacturing, LLC (SSM) is a semiconductor manufacturer1380in rural Coffey County, Kansas. Created to meet U.S.-based secure1381electronics production needs, SSM saw an opportunity with the B&I1382Guaranteed Loan Program to grow larger than planned. The B&I program1383supported the purchase of large manufacturing equipment; new1384capabilities are coming online soon and SSM already has a waiting list1385of customers.1386    Good, local jobs in rural Kansas. As staffing needs grow, SSM1387maintains an emphasis on hiring locally in rural Neodesha, Kansas. As1388CEO Bart Massey says, it's just good business sense: ``I told them I'd1389work them until their fingers bled before I hired anybody else . . .1390We're hiring people for longevity.'' SSM jobs offer paid training and1391immediate benefits, and aims to double staff by the end of 2025.1392    Repatriating semiconductor manufacturing to the U.S. As Massey1393notes, the number of chip manufacturers in the U.S. has fallen to a few1394hundred, from a high of over 4,000 in the 1980s. SSM emphasizes1395American-made, with no components sent to China or other countries for1396production, meeting Federal and private customer needs for a more1397secure, American-only production standard.13981399------------------------------------------------------------------------14001401------------------------------------------------------------------------1402Impacts            Leverages 45% in   Doubling staff    100% American1403                    other capital      by 2026           investment1404------------------------------------------------------------------------14051406The Inn at Bellefield: Integrating community and hospitality1407    Financing a promising hotel venture. The Inn at Bellefield in1408historic Hyde Park, New York, offers a premium hotel experience. The1409Shaner Hotel Group saw great potential in the town's historic charm.1410Development challenges included the building of a wastewater treatment1411facility and the cost of aligning with local historic design1412guidelines. The B&I loan guarantee covered nearly half of the over $501413million project costs, enabling development of a hotel that integrates1414local design, food, beverage, and art.1415    Marriott-branded, locally owned. As a flagship Marriott hotel, the1416Inn at Bellefield enjoys the benefits of the Marriott brand name while1417remaining locally owned and operated. This allows the inn to leverage1418Marriott's reservation system and extensive network of over 200 million1419reward members. While the branded name helps drives customers to the1420hotel, Shaner's Derrick Skillings says, ``When you walk into the lobby,1421you would not know this is a Residence Inn.'' The bar, crafted from a1422200 year old sycamore tree on the property, underscores the local1423connection at the heart of the hotel.14241425          i  ``How many Residence Inns have an executive chef?''14261427    A community multiplier. The hotel design ``[ties] back to the1428regional history and agriculture of Hyde Park.'' The executive chef1429sources food and beverages from local vendors, while local wines and1430products are showcased in the lobby. The full-service restaurant means1431the hotel employs 40 to 50 staff; higher than the typical 30. The hotel1432also has a multiplier effect on the community by hosting events like1433conferences and weddings, bringing in business for caterers, florists,1434and other business owners. This integration of local elements supports1435the community and enhances the guest experience.14361437------------------------------------------------------------------------14381439------------------------------------------------------------------------1440Impacts            12-15 local        40-50 employees   20251441                    vendors                              Forecasting:1442                                                         55,000+ guests;1443                                                         $7M+ revenue1444------------------------------------------------------------------------14451446B&I Programmatic Data1447B&I program Funding Overview1448          i  Total core B&I obligations increased from 2015 to 2024 by1449        108%. $1.81 billion, $1.60 billion, $1.86 billion, and $1.801450        billion in obligations were made in 2021, 2022, 2023 and 2024,1451        respectively, the four highest core B&I obligation amounts in1452        program history.14531454    B&I loan obligations have totaled $13.4 billion from Fiscal Years14552015 through 2024. Figure 1 below includes core 1% and 3% B&I program1456obligations and omits American Recovery and Reinvestment Act,1457coronavirus relief, and other one-off B&I programs. Sixty percent of1458the total B&I obligations in the period have occurred in the past 51459years. The average loan size has also increased significantly during1460the past 5 years, with a $2.75 million loan guarantee amount per loan1461in 2015, growing to a $8.1 million average loan amount in 2024.1462Figure 1: B&I program loan performance overview 2015-202414631464          i  From 2005 through 2024, the B&I program has leveraged an1465        additional $12.4 billion to complement B&I financing such as1466        commercial debt, private equity, and tax credits.14671468    Figure 2 below shows a longer timeline, Fiscal Years 2005 through14692024, of core B&I financing and the total project amounts funded by the1470loan guarantees. During this period, obligation amounts have increased1471significantly. B&I projects have totaled over $33.9 billion, with $21.51472billion funded by B&I loans. Applicants have successfully leveraged1473credit, private equity, and even other Federal programs such as the New1474Market Tax Credits, Rural Energy for America, and Rural Energy Savings1475funding. For example, Aviva Health, a nonprofit Federally Qualified1476Health Center, utilized B&I funding and New Market Tax Credits together1477to expand their Umpqua, Oregon facility to accommodate a new medical1478residency program. Overall, the B&I program is not only critical to1479business growth in rural America, but also a catalyst of investment1480into rural businesses and communities.1481Figure 2: Total project costs of core B&I projects from Fiscal Years1482        2005-202414831484B&I Concentration by Sector1485    The B&I program serves businesses across a broad spectrum of1486industries, reflecting the diverse rural economy. Analyzing the1487portfolio by sector reveals which industries have been the primary1488beneficiaries of the guarantees. Traditionally, accommodations and food1489services and manufacturing received a substantial share of B&I loan1490dollars. Rural B&I-eligible areas are well suited for tourism and1491recreation, so many borrowers have successfully financed hotel1492projects--which enhance access to rural America's recreational assets--1493and restaurant projects with B&I financing. Investments in1494accommodations and food services and manufacturing represent a1495significant share of total financing from 2015 to 2024, totaling nearly1496$4 billion and $2.3 billion, respectively.14971498          i  B&I loans have been obligated across 21 NAICS sectors and1499        90 unique subsectors, highlighting the program's broad industry1500        reach.15011502    A closer look at year-over-year shifts in other sectors illustrates1503the flexibility of the program. B&I obligations for utilities totaled1504$992 million from 2015 to 2024, with $603 million obligated from 20201505to 2024, including peak obligations of $170 million in 2021. Mining,1506quarry, and oil and gas businesses received $294 million in 2023,1507representing 38% of the sector's $772 million in total obligations from15082015 to 2024. Rural manufacturing plants, whether producing auto parts,1509machinery, building materials, or food products, often require1510significant capital for facilities and equipment, which the B&I program1511has been instrumental in financing.1512    Numerous food and agriculture processing projects have used B&I1513guarantees (such as grain milling operations, meat processing1514facilities, and dairy production plants), aligning with USDA's emphasis1515on adding value to agricultural commodities locally. The healthcare1516sector is another significant area: rural hospitals, clinics, and1517eldercare facilities (nursing homes, assisted living) have obtained1518B&I-guaranteed financing, particularly when other USDA Community1519Facilities funds were not available or when the project had a private1520ownership structure. These healthcare projects can be critical for1521rural community viability and often have sizable loan needs such as1522construction of new clinics or hospital expansions.1523Figure 3: 2015-2024 core B&I investment amount by NAICS industry15241525    The B&I Guaranteed Loan Program is well positioned to adapt and1526change based on Administration priorities. Table 1 below shows a1527snapshot of percentage loan levels in years 2019, 2023, and 2024. The1528snapshot shows significant year-over-year variability in the utilities;1529the mining, quarrying, and oil and gas extraction; and agriculture,1530forestry, fishing, and hunting sectors. A notable example of B&I impact1531in a manufacturing subsector, distilleries, is Jackson Purchase1532Distillery LLC in Fulton, Kentucky, which received multiple B&I loans1533in 2023 and 2024 to expand its contract distilling operations through1534new rick houses, a still, fermenter building, and grain handling1535systems, creating an estimated 25 jobs in a designated Persistent1536Poverty area. Obligations outlined below can be further classified into1537distinct subsectors, such as agriculture, forestry, fishing, and1538hunting, which includes the subsectors of animal production and1539aquaculture; crop production; fishing, hunting, and trapping; forestry1540and logging; and support activities for agriculture and forestry,1541showing the program's broad and diverse economic impact.15421543 Table 1: Core B&I NAICS Industry snapshot: Fiscal Years 2019, 2023, and1544                                  20241545------------------------------------------------------------------------1546              Sector                   2019         2023         20241547------------------------------------------------------------------------1548Accommodation and food services         35.48%       36.54%       32.06%1549Manufacturing                           20.37%       15.15%       18.48%1550Utilities                                9.05%        3.44%       10.54%1551Health care and social assistance        5.55%        5.70%        6.73%1552Real estate and rental and               8.25%        5.47%        3.28%1553 leasing1554Mining, quarrying, and oil and           5.00%       15.76%        5.66%1555 gas extraction1556Agriculture, forestry, fishing,          0.65%        4.63%        4.88%1557 and hunting1558Retail trade                             2.98%        3.54%        3.03%1559All other sectors                       12.68%        9.78%       15.35%1560------------------------------------------------------------------------15611562Geographic Distribution of Loan Guarantees1563    The administration of B&I funds across the United States is1564geographically broad, reaching virtually every state and territory with1565eligible rural areas. Regional patterns in program usage have emerged1566given the prevalence of rural industries and the presence of1567participating lenders. Table 2 shows the top ten states by loan1568guarantee obligation amount for core B&I programs from 2015 to 2024.1569Leading B&I states include those with one or more of the following:1570high populations, significant proportion of population in rural areas,1571or substantial levels of business activity including tourism, oil and1572gas, manufacturing, and agriculture.15731574 Table 2: 2015-2024 core B&I Program: Top ten states by total obligation1575                                 amount1576------------------------------------------------------------------------1577                                                      Number of Loan1578          State              Obligation Amount          Guarantees1579------------------------------------------------------------------------1580   North Carolina                    $957 M                     2001581                 Louisiana           $926 M                     1221582            Texas                    $838 M                      971583          Florida                    $762 M                     1431584         Oklahoma                    $665 M                     1301585       California                    $658 M                     1331586          Arizona                    $485 M                      831587         Missouri                    $481 M                     2691588         Kentucky                    $470 M                      741589           Oregon                    $438 M                     1081590------------------------------------------------------------------------15911592    B&I financing has had a higher per capita impact in rural states1593with lower population density and high amounts of business activity,1594including in oil and gas, energy exploration, and manufacturing.1595Alaska, Wyoming, and Louisiana lead states in B&I loan guarantee amount1596per capita. The bottom per capita states include more urban and1597suburban areas, primarily in the northeastern corridor and New England,1598including New Jersey, Connecticut, and Massachusetts. Figure 4 shows1599the per capita B&I obligation amount from 2015-2024. The top and bottom1600five states for per capita investment during this period include labels1601and per capita amounts.1602Figure 4: State B&I loan guarantee obligation amount per capita16031604          Powered by Bing.1605          GeoNames, Microsoft, TomTom.16061607    Businesses have used B&I loan financing across a broad spectrum of1608sectors and industries. By examining B&I loan guarantee percentage by1609sector across states and Congressional districts, we can see the1610program is adaptable to regional economic priorities. USDA uses B&I as1611a flexible intervention for economic development in rural areas. In1612addition, USDA can designate creditworthy and economically stimulating1613projects as high priority through its application scoring system. Each1614Administration can use the program to fund sectors that will most1615benefit rural America. Table 3 and Table 4 below show the differing1616sector utilization of the B&I program across states and Congressional1617districts from Fiscal Years 2015 through 2024. Michigan and1618Pennsylvania's Congressional district 15, a north-central district in1619the state, have used B&I financing in hotels, motels, resorts, bed and1620breakfasts, campgrounds, restaurants, cafes, and bars. Alabama and1621North Carolina's Congressional district 1 (CD1), an inland district in1622the northeast portion of the state, received the most B&I financing in1623manufacturing and utilities sectors, respectively. Both Alabama and1624North Carolina's CD1 also show significant investment in health care.16251626          i  Sector concentration of B&I investments can vary1627        significantly across states and Congressional districts,1628        meeting the customized business needs of specific rural1629        populations across the United States.16301631  Table 3: State comparison: Obligation percentage by sector, 2015-20241632------------------------------------------------------------------------16331634------------------------------------------------------------------------1635              Michigan                Alabama1636------------------------------------------------------------------------1637Accommodation and food       58.57%   Manufacturing               26.93%1638 services1639Real estate and rental       15.68%   Health care and             18.82%1640 and leasing                           social assistance1641Arts, entertainment,          6.09%   Agriculture,                18.42%1642 and recreation                        forestry, fishing1643                                       and hunting1644Manufacturing                 5.83%   Information                  9.91%1645Retail trade                  3.61%   Real estate and              9.56%1646                                       rental and leasing1647Other sectors                10.22%   Other sectors               16.35%1648------------------------------------------------------------------------16491650  Table 4: Congressional district comparison: Obligation percentage by1651                            sector, 2015-20241652------------------------------------------------------------------------16531654------------------------------------------------------------------------1655Pennsylvania--CongressionalNorth Carolina--Congressional1656                 15                  District 11657------------------------------------------------------------------------1658Accommodation and food       40.47%   Utilities                   52.10%1659 services1660Agriculture, forestry,       26.43%   Health care and             24.02%1661 fishing, and hunting                  social assistance1662Manufacturing                21.59%   Manufacturing               12.40%1663Other sectors                11.51%   Other sectors               11.48%1664------------------------------------------------------------------------16651666          i  Overall B&I investment into [ZIP Codes] containing1667        Qualified Opportunity Zone census tracts have increased 59.29%1668        from 2018 to 2025.16691670    Opportunity Zones were created under the Tax Cuts and Jobs Act of16712017, an economic development tool that allows for increased1672investments in distressed areas by providing tax benefits to investors.1673The [A]ct designated 8,764 low-income communities and certain1674contiguous communities, tracked at the Census tract level, as Qualified1675Opportunity Zones. From 2018 onward, the B&I program has shown1676increased investment in Opportunity Zones. As of 2018, approximately167731.3 million people in the 50 states, not including U.S. territories,1678lived in areas designated as Opportunity Zones. Figure 5 shows the1679percentage of total B&I obligations, including COVID-related B&I1680programs, that have been made in [ZIP Codes] containing census tracts1681designated as Qualified Opportunity Zones. A significant proportion of1682investments have been made in areas that may benefit low-income1683populations directly via increased employment, or indirectly through1684increased economic activity.1685Figure 5: B&I program loans in [ZIP Codes] containing Opportunity Zones1686        are increasing16871688Program Financials: Allotments, Obligations, and Subsidy Rates1689          i  Usage of total B&I allotments in 2023 and 2024 were 90.83%1690        and 98.24%, the highest on record. Usage of Total B&I1691        allotments increased from 53.99% in 2020 to 98.24% in 2024.16921693    On an annual basis, Congress provides budget authority for USDA RD,1694which determines how many loans can be made for the budget year. This1695is often set in appropriation acts or via the authorized amount in the1696farm bill, subject to annual budget decisions. Given that B&I is a1697guaranteed program, the budget authority primarily covers the credit1698subsidy amount of the loan guarantees and program administration. The1699B&I program historically has the largest appropriations and highest1700utilization rate amongst RD guaranteed programs.1701    The percentage usage of total B&I allotments increased steadily1702from 2020 through 2024. In fact, the B&I program would have used 100%1703of allocations in 2024, if not for the recapture of de-obligated funds1704at fiscal year-end. The B&I program allotments were $1.77 billion,1705$2.05 billion, and $1.83 billion for Fiscal Years 2022, 2023, and 2024,1706respectively. The program was appropriated $3.5 billion in Fiscal Year17072025, the highest ever when adjusted for inflation.17081709                           Table 5: Allotments, obligations, and use rates, 2015-20251710----------------------------------------------------------------------------------------------------------------1711      Fiscal Year         2015     2016     2017     2018     2019     2020     2021     2022     2023     20241712----------------------------------------------------------------------------------------------------------------1713Allotments (in           $1,232   $1,778   $1,502   $1,224   $1,374   $2,530   $2,737   $1,778   $2,050   $1,8311714 millions)1715Total B&I obligations      $864   $1,060   $1,177   $1,054   $1,116   $1,366   $2,307   $1,598   $1,862   $1,7991716 (in millions)1717Core B&I obligations       $864   $1,052   $1,177   $1,053   $1,116   $1,058   $1,807   $1,598   $1,862   $1,7991718 (in millions)1719Total usage              70.16%   59.60%   78.39%   86.15%   81.26%   53.99%   84.28%   89.89%   90.83%   98.24%1720Core B&I usage           70.12%   59.15%   78.33%   86.07%   81.26%   41.82%   66.01%   89.89%   90.83%   98.24%1721----------------------------------------------------------------------------------------------------------------17221723          i  The overall subsidy rate for the B&I loan guarantee1724        program has decreased significantly during the past decade,1725        with the 2025 subsidy rate being the second lowest on record at1726        0.2%. In other words, It costs the government 20 for every1727        $100 of lending.17281729    The subsidy rate is a critical financial aspect of any Federal loan1730guarantee program, as it measures the estimated cost to the government1731of extending the guarantees. For the B&I program, USDA and the Office1732of Management and Budget calculate this rate based on the projected1733long-term losses (defaults net of recoveries) and expenses, minus any1734fees collected. In formulaic terms, the subsidy cost considers the1735probability of default on guaranteed loans, the portion of each loan1736that will be lost given default (after collateral liquidation), the1737timing of these defaults, the discount rate (interest rate) used to1738calculate estimate present value costs, and the fee income (initial and1739annual fees) that the government receives. Recent revision of program1740fees under OneRD, diligent underwriting processes, and strong portfolio1741risk management practices have contributed to the reduction of total1742B&I subsidy rate over time. Figure 6 shows the default subsidy cost,1743fee subsidy offset, and total subsidy of the B&I program from 20151744through 2025.1745Figure 6: B&I loan program subsidy recent history17461747    Between Fiscal Years 2015 and 2024, the USDA paid approximately1748$501.6 million in loan losses under the core B&I program. The bulk of1749losses are concentrated in loans likely obligated between pre-2012,17502013 and 2015, underscoring the long tail of loss exposure from those1751cohorts. While obligation year attribution for some older losses is1752incomplete, the claim data still highlight a general pattern: losses1753from newer cohorts have steadily declined in recent years, with average1754annual losses from 2021 to 2024 totaling just under $30 million,1755compared to peak years like 2016 and 2018, which each saw over $701756million in losses. The large share of losses linked to suspected pre-17572012 obligations underscores the program's momentum and attention to1758sound underwriting practices.17591760          i  The B&I program was appropriated $3.5 billion in FY 2025,1761        the highest in program history. Combined with its second lowest1762        subsidy rate, the program is well positioned to benefit rural1763        American businesses.17641765    Overall, the B&I program has seen a significant reduction in1766program total subsidy rate, driven primarily by reduced default1767assumptions in the program's annual modeling. The B&I program is well1768positioned to make a significant impact in rural America with a lower1769cost of financing to the taxpayer.1770Macroeconomic Summary Statistics1771          i  Counties that received USDA B&I investment experienced1772        employment growth over several years. It cost the Federal1773        Government an estimated $438 per job created by the B&I program1774        from 2012 to 2022.17751776    To quantify the economic impact of the B&I program on a macro1777level, we assessed the impact of B&I investment on employment,1778earnings, gross domestic product (GDP), and taxes. We find that the1779USDA B&I Guaranteed Loan Program has had a positive impact on all four1780key macroeconomic variables and that the impact extends past the year1781of investment. There are also differential impacts across states and1782counties; based on certain conditions, the impact grows progressively1783over time. Based on regression analysis, counties that receive B&I1784investment saw employment gains of approximately 200,000 in the short1785run (same year as investment), and approximately 750,000 in the long1786run (first 3 years after investment) in our sample. Conditioning on GDP1787per capita, we find that counties that receive B&I investment also1788observe a rise in both earnings and GDP. At the state level, we find1789that a 1% increase in B&I investment increases taxes collected by 0.55%1790in the long run.1791    We use a variety of econometric and statistical techniques to1792quantify the economic impact of the USDA B&I Guaranteed Loan Program.1793For employment, we want to highlight the short-run and long-run1794implications over a 3 year period of the program, and we use regression1795techniques to quantify these effects. For earnings and GDP, mapping1796counties that receive B&I investment with counties with similar GDP per1797capita that did not receive B&I investment allows us to determine how1798earnings and GDP for counties that receive B&I investment have risen1799over time. Finally, to quantify the impact on tax revenue, we perform1800econometric analysis at the state level (as opposed to county level),1801as this is the lowest level of aggregation for which comparable sales1802tax data is available for the United States.1803Employment Rises in Both the Short-Run and Long-Run1804    We obtained county-level annual employment data for 2001 through18052022 from the U.S. Bureau of Economic Analysis \1\ (BEA) and loan-level1806B&I investment data for 2012 through 2022 from the USDA Rural Data1807Gateway portal.\2\ Loan amounts are aggregated to obtain the total1808amount invested into each county for each year. This is merged with1809employment data at the county level, and employment growth rates are1810annualized. The data are filtered to include only counties that1811received investment at least once between 2012 and 2022.1812---------------------------------------------------------------------------1813    \1\ https://www.bea.gov/itable.1814    \2\ https://www.rd.usda.gov/rural-data-gateway.1815---------------------------------------------------------------------------1816    We then estimate an ordinary least squares regression with annual1817employment growth as the dependent variable and the investment amount1818in the current year, the previous year, and 2 years prior as the key1819independent variables. We include time-fixed effects to account for1820year-specific factors that could affect employment growth independent1821of investment; events in 2019 related to the Taper Tantrum, for1822example, would be captured by the 2019-specific time-fixed effect, and1823the time-fixed effects as a group would capture business cycle dynamics1824throughout the estimation horizon. The results of this regression allow1825us to see both the short-run and long-run impacts of investment on1826annual employment growth at the county level. While the short run1827measures the contemporaneous (same-year) impact of B&I investment, the1828long-run impact looks at employment growth over a 3 year period after1829investment. In what follows, we focus on the long-run implications for1830employment as the macroeconomic effects of investment tend to have1831persistent effects on the macroeconomy.18321833          i  An estimated 750,000 jobs were created from the B&I1834        investment made between 2012 and 2022.18351836    Table 6 illustrates the long-run impact of B&I investment on county1837employment growth. The long-run impact is estimated to be a 0.09171838percentage point increase in annual employment growth for every million1839dollars invested. This aggregates the estimated impact of investment on1840employment growth over a 3 year period.\3\ The dependent variable is1841employment growth: to convert this number into an estimate for jobs1842created, one needs a base level on which to apply this growth. The base1843level is the average numbers of jobs per county. Given the average1844number of jobs per county, we can then compute the jobs that would be1845created from 1% of jobs growth, e.g., 1% growth of the 73,560 jobs in18462014 would be 735.6 jobs. Multiplying the long-run impact (0.09171847percentage points of growth per million invested) by the number of1848millions of investment dollars for each year then yields the expected1849number of percentage points increase in annual jobs growth. Multiplying1850this by the number of jobs produced for a 1% increase in annual jobs1851growth will then give us the estimated number of jobs created1852specifically by the B&I investment that year. Summing across the years1853included in our dataset, we find that the B&I program produced 757,8001854jobs from 2014 to 2022.1855---------------------------------------------------------------------------1856    \3\ Please see the appendix for the justification of this1857calculation.18581859                                    Table 6: Estimated number of jobs created1860----------------------------------------------------------------------------------------------------------------1861                                                                                  Change in1862                                                                                 employment      Estimated jobs1863       Year           Total investment   Average number of     Jobs for 1%      growth for $1      created by1864                     (in  millions) \4\   jobs per  county       growth          Million of        investment1865                                                                                 investment1866----------------------------------------------------------------------------------------------------------------1867          2014                 $874              73,560                736             .0917            58,9141868\4\ For regression1869 analysis,1870 investment into1871 U.S. territories1872 is not1873 considered.1874          2015                 $846              75,226                752             .0917            58,3481875          2016               $1,032              76,476                765             .0917            72,3271876          2017               $1,152              77,849                778             .0917            82,1661877          2018               $1,044              79,547                795             .0917            76,0901878          2019               $1,097              80,237                802             .0917            80,6921879          2020               $1,046              78,102                781             .0917            74,8651880          2021               $1,765              81,306                813             .0917           131,5531881          2022               $1,573              85,209                852             .0917           122,8451882                   ---------------------                                                       -----------------1883  Total...........          $10,429                                                                    757,8001884----------------------------------------------------------------------------------------------------------------18851886                    Table 7: Summary of jobs created1887------------------------------------------------------------------------1888                Topic                                Value1889------------------------------------------------------------------------1890Total amount invested (in millions)                   $10,4291891Estimated number of jobs created                      757,8001892------------------------------------------------------------------------18931894    From the information above, we can estimate how much investment is1895needed in the average county to create one additional job. The total1896amount invested is not what it costs the government to create these1897jobs; rather it is actual losses which depend on delinquencies and1898defaults. If the loans are paid back in full, there is no cost to the1899government; the government only incurs a cost when loans are not1900repaid, and this is reflected in the credit subsidy or delinquency1901rate. Therefore, the cost to the government is the product of the1902subsidy rate with the total investment amount. Given that the subsidy1903rate has changed over time, we can multiply the subsidy rate with the1904total investment amount by year to get the annual cost to the1905government. We then sum across years to get the total cost to the1906government of $331,552,052 for the period from 2014 to 2022. Given that1907757,800 jobs were created during this period, this translates to the1908cost per job in the long run of $438.19091910              Table 8: Job created: cost to the government1911------------------------------------------------------------------------1912                                                             Cost to the1913                     Total      Jobs created                 government1914     Year       investment (in       by       Subsidy rate       (in1915                 millions) \5\   investment                   millions)1916------------------------------------------------------------------------1917        2014             $874         58,914         6.99%           $611918\5\ For1919 regression1920 analysis,1921 investment1922 into U.S.1923 territories1924 is not1925 considered.1926        2015             $846         58,348         5.11%           $431927        2016           $1,032         72,327         3.88%           $401928        2017           $1,152         82,166         4.01%           $461929        2018           $1,044         76,090         4.06%           $421930        2019           $1,097         80,692         2.32%           $251931        2020           $1,046         74,865         2.05%           $211932        2021           $1,765        131,553         1.14%           $201933        2022           $1,573        122,845         2.01%           $321934               ------------------------------              -------------1935  Total.......        $10,429        757,800                        $3321936------------------------------------------------------------------------19371938               Table 9: Summary of cost to the government1939------------------------------------------------------------------------1940            Cost category                            Value1941------------------------------------------------------------------------1942  Total Amount Invested                       $10,428,680,2461943Total Estimated Jobs Created                          757,8001944Total Cost to Government                         $331,552,0521945Cost to Government per Job Created                       $4381946------------------------------------------------------------------------19471948Counties that Receive Investment See a Positive Effect on Earnings1949    To evaluate the impact that investment had on earnings, we looked1950at county pairs; counties that received investment were paired with the1951most similar county that did not receive investment in terms of1952earnings per worker in the year of investment. This was done for all1953counties that first received investment between 2013 and 2021. The1954earnings data were obtained from BEA, which, combined with the1955employment data mentioned above, produces earnings per worker variable1956that we examine. By averaging the earnings per worker each year for1957these two sets of counties (those with investment and their1958counterparts without investment), we can see the positive impact1959investment has on earnings over time.19601961          i  Counties that received B&I investment saw a higher1962        increase in their average earnings per worker for 9 consecutive1963        years after initial investment than similar counties that did1964        not receive investment.19651966    Figure 7 shows average earnings per worker for counties that1967received investment (blue line) and the matched counties that did not1968(black line). The x-axis shows years relative to the first investment1969(time = 0), with up to 9 years before investment (time = ^9 for1970counties with first investment in 2021) and up to 9 years after (time =19719 for counties with first investment in 2013). The blue bars illustrate1972the difference between the average earnings per worker of the counties1973that received investment versus the matched counties that did not (blue1974minus black).1975Figure 7: Average earnings per worker for counties that received1976        investment and matched counties that did not receive investment19771978    Before initial investment (i.e., to the left of zero on the graph),1979counties that received investment had lower earnings for worker on1980average when compared with counties that did not receive investment. A1981few years post-investment, however, there is an inflection point where1982earnings per worker for counties that receive investment start to1983outpace earnings per worker for counties that did not receive1984investment. This suggests that counties that receive B&I investment1985earn more per worker than counties that do not, and that this1986difference grows over time: B&I investment is thus directly correlated1987with a persistently positive impact on earnings per worker at the1988county level.1989Counties that Receive Investment See a Positive Effect on GDP1990    Similarly, to evaluate GDP, counties with investment were again1991matched to the most similar counties without investment by GDP per1992capita (Figure 8) and GDP (Figure 9). The GDP and population data are1993obtained from BEA. By aggregating over these two sets of counties1994(those with investment and their counterparts without investment), we1995can see the positive impact investment had on GDP per capita and GDP1996over time.19971998          i  On average, in the years following initial investment,1999        counties that received B&I investment had higher GDP per capita2000        and GDP than similar counties that did not receive investment.20012002    Figure 8 below shows the average GDP per capita for counties that2003received investment (blue) and the matched counties that did not2004(black). Data from 2012 through 2022 are used. The x-axis shows years2005relative to the first investment (time = 0), with up to 9 years before2006investment (time = ^9 for counties with first investment in 2021) and2007up to 9 years after (time = 9 for counties with first investment in20082013). The blue bars illustrate the difference between the average GDP2009per capita of the counties that received investment versus the matched2010counties that did not (blue minus black).2011Figure 8: Average GDP per capita for counties that received investment2012        and matched counties that did not receive investment20132014    The same graph is produced for GDP, and we see similar trends and2015results in Figure 9.2016Figure 9: Average GDP for counties that received investment and matched2017        counties that did not receive investment20182019    Both graphs show a similar trend with counties that received2020investment having higher GDP per capita and GDP than those without2021investment. Furthermore, the difference between the two series tends to2022increase over time. B&I investment is thus directly correlated with a2023persistently positive impact on GDP and GDP per capita at the county2024level.2025State-Level Analysis: Positive Impact of B&I on Sales and Taxes2026    Finally, we investigated the impact B&I investment had on the2027amount of sales tax each state collected. State tax data are obtained2028from the U.S. Census Bureau, which conducts an Annual Survey of State2029Government Tax Collections. To evaluate the impact of the B&I program2030on taxes at the state level, we start by aggregating B&I investments2031between 2012 and 2022. When performing regression analysis, tax revenue2032should be modeled differently than the employment data. Unlike2033employment data, tax revenue from 2014 should not be treated the same2034as tax revenue from 2022. This is due to inflation over time (as taxes2035are a nominal quality) and because taxes are inherently more volatile2036then employment data. For these reasons, we focus on the impact of B&I2037investment on the percentage of state taxes as opposed to the level,2038given that percentages are unit-less (and hence time-invariant). To2039determine the expected percent change of sales tax collected based on a20401% increase in B&I investment made to that state, we estimate a log-log2041ordinary least squares model; the logarithms on both sides of the2042regression ensure that the units are in percentages when interpreting2043the results from the model. Figure 10 shows a scatterplot of log of B&I2044investment against the log of sales tax collected for all 50 states2045from 2012 to 2022 (when investment was not equal to zero). There is a2046strong positive correlation between these two transformed variables.2047Figure 10: Log of state sales income tax collected plotted against log2048        of B&I investment2049Scatter Plot of Investment vs. Sales Tax Per Capita20502051          i  A 1% increase in B&I investment results in a 0.55%2052        increase in sales tax revenue for the average state in the long2053        run.20542055    To determine the long-run impact of investment, we then estimate a2056regression model where the logarithm of state sales tax is the2057dependent variable, and the independent variable is the logarithm of2058the aggregated investment amount of the current year and the 2 previous2059years. This model also controls for the year the investment was made.2060The dataset thus includes observations from all 50 states with nonzero2061investment for 3 consecutive years in which the last of the 3 years was2062between 2014 and 2022. The results indicate that for every 1% increase2063in B&I investment into a state, we expect to see a 0.55% increase in2064state sales tax collected over a 3 year period.2065Assessment Methodology: Brief Overview2066    For more information on this study, contact us at2067contracts@summitllc.us.20682069             Table 10: Overview of assessment methodologies2070------------------------------------------------------------------------2071                         Methodology description2072-------------------------------------------------------------------------2073                              Case studies2074------------------------------------------------------------------------2075 Loan selection: Identified B&I programmatic loans for potential2076 inclusion, based on the following characteristics of interest:20772078     Project started around the time of OneRD (2021)20792080     Geographic diversity20812082     Industry diversity20832084     Funded project at or near completion, to capture loan impacts20852086 Interviews: Conducted 45-60 minute interviews with lenders and2087 borrowers to gather data on loan details, how the loan helped their2088 business grow, and challenges faced before obtaining the loan.20892090 Data analysis and summarization: Identified key themes in each2091 case study and developed a one-page infographic for each.2092------------------------------------------------------------------------2093                          B&I programmatic data2094------------------------------------------------------------------------2095 Submitted a comprehensive FOIA data request to the USDA Rural2096 Development Innovation Center covering the B&I Guaranteed Loan Program2097 from FY 2000 through FY 2024.20982099 Data included annual program allotments, obligated amounts, and2100 full loan-level details such as borrower type, industry codes, lender2101 names, and project-specific funding indicators.21022103 Included identifiers geographic (e.g., county, ZIP [C]ode,2104 Congressional district), loan performance metrics (e.g., delinquencies,2105 losses), and program structure indicators (e.g., OneRD vs. Pre-OneRD,2106 ARRA vs. Non-ARRA).21072108 Loan-level data received was validated against publicly2109 available records from USDA's Rural Data Gateway to ensure consistency2110 and completeness.2111------------------------------------------------------------------------2112                    Macroeconomics summary statistics2113------------------------------------------------------------------------2114 Econometric analysis of employment, earnings, GDP and tax data.21152116 Employment, earnings, and GDP analysis are at county level, tax2117 analysis at state level.21182119 Regression techniques allow for estimation of short-term and2120 long-term impacts.21212122 Matching allows for identification of macroeconomic effects of2123 the RD program by grouping observations with similar characteristics2124 and probability of receiving an investment.2125------------------------------------------------------------------------2126    Summit is a specialized analytics firm that drives decision-making2127 through data analytics. We bring expertise in economics, statistics,2128 predictive modeling, and analytics to implement solutions for a wide2129 range of clients. Our mission is centered on delivering data-driven2130 solutions to help make government efficient and cost-effective.21312132      Contact Us: Anthony Curcio, Senior Partner, 202-407-8309 Tel, 509-2133   984-8943 Fax, contracts@summitllc.us2134------------------------------------------------------------------------21352136    The Chairman. Thank you, ma'am. Commissioner, you are2137recognized.21382139  STATEMENT OF HON. PAUL HEIMEL, COMMISSIONER, POTTER COUNTY,2140     PENNSYLVANIA, COWDERSPORT, PA; ON BEHALF OF NATIONAL2141                    ASSOCIATION OF COUNTIES21422143    Mr. Heimel. Well, Chairman Johnson, Ranking Member Davis,2144and distinguished Members of the Subcommittee, I want to thank2145you for holding today's hearing. I would like to share some2146ideas to strengthen the partnership between counties and our2147Federal partners to try to better serve rural America. My name2148is Paul Heimel, and I am a Commissioner in Potter County,2149Pennsylvania. I am here on behalf of the National Association2150of Counties, but I want to point out that our county has a2151grand total of less than 16,000 residents countywide, so we are2152truly rural. County governments, though, are on the front-lines2153in rural America, providing essential services that make it2154possible for our residents to stay, work, and thrive in our2155communities. Given our limited staff, our tight budgets, we2156rely on strong Federal partnerships to get the job done.2157    Now, USDA Rural Development is our most important Federal2158partner in this work. This year alone, the RD has invested $262159billion in 60,000 projects across rural America. In Potter2160County, dating back to 2015, USDA RD has helped fund 952161projects supporting our energy systems, our community2162facilities, our small businesses, and affordable housing for2163working families. Without this backing, these projects would2164have been out of reach for our local communities, but too2165often, the communities that need USDA RD the most are the ones2166that are least able to access it. That is why I am here today2167to urge Congress to modernize, streamline, and expand USDA RD2168programs so that all rural counties have the tools we need to2169build stronger, more resilient communities. I am going to put2170forward four practical reforms for Congress to modernize the RD2171programs and empower rural counties like ours.2172    First is a fast-track pathway for small-dollar projects.2173Congress should direct USDA RD to develop a simplified2174application and approval process, allowing those of us with2175limited local resources to quickly secure funding for time-2176sensitive local needs. Second, make pre-development costs2177eligible across RD programs. Counties often pay up front for2178site selection, feasibility studies, environmental review, and2179more before we can use the funding awards, and that creates2180steep barriers to entry. Congress should consider allowing2181these pre-development costs as eligible expenses under RD grant2182and loan awards to support this early-stage development. Third,2183build a single online portal. Applicants could check2184eligibility, they could track applications and get real-time2185support. That one-stop system would cut the red tape, improve2186transparency, and better serve communities like ours with such2187limited staff. And finally, invest in rural capacity building2188in the next farm bill. Local governments can't leverage Federal2189resources without staff, planning capacity, and partnerships.2190We face in our rural county an individual who might be tasked2191with three or four major responsibilities. In larger counties,2192they could have four or five people doing those three or four2193responsibilities. It is simply impossible to navigate the2194bureaucratic process sometimes when you are not properly2195staffed, and we can only afford so much staffing.2196    We also ask the Committee to conduct oversight over USDA's2197internal reorganization efforts. Counties support the2198Department's goals of improving efficiency, but any2199reorganization must preserve the USDA RD's field-based network2200and staff capacity. This is very important. Field staff are2201trusted partners. They have been that way for decades. Their2202knowledge, their relationships cannot be replaced by2203consolidation. We must preserve what makes USDA effective: its2204field offices, its local partnerships, and its deep2205understanding of rural America.2206    Now, Chairman Johnson and Ranking Member Davis, counties2207stand ready to do our part. With a strong USDA RD backed by a2208new, modernized farm bill, we can ensure that every county, no2209matter its size or capacity, has a fair shot at success. Thank2210you, and I look forward to your questions.2211    [The prepared statement of Mr. Heimel follows:]22122213 Prepared Statement of Hon. Paul Heimel, Commissioner, Potter County,2214  Pennsylvania, Cowdersport, PA; on Behalf of National Association of2215                                Counties2216    Chairman Johnson, Ranking Member Davis, and Members of the2217Subcommittee, thank you for the opportunity to testify on behalf of the2218National Association of Counties (NACo) and the nation's 3,0692219counties, parishes and boroughs. NACo represents nearly 40,000 county2220elected officials and 3.6 million county employees working every day to2221deliver essential services that support our residents. We appreciate2222the chance to work toward our shared goal of fostering stronger, more2223resilient rural communities2224    My name is Paul Heimel, and I am honored to serve as a County2225Commissioner in Potter County, Pennsylvania, home to roughly 16,0002226residents across one of the most rural and beautiful regions of the2227Commonwealth. Before my time in county government, I served as third-2228generation editor of the local weekly newspaper for 2 decades; took a2229detour to work in corporate communications and public relations for2230several years, and was then elected to a seat on the Potter County2231Board of Commissioners, where I have served for nearly 18 years.2232    As a commissioner, I've been a strong advocate for rural counties,2233leading efforts to expand services for military veterans, implement2234criminal justice reforms and support a wide range of local initiatives.2235I also serve in leadership roles with the County Commissioners2236Association of Pennsylvania, and I remain actively involved with the2237National Association of Counties.2238    The U.S. Department of Agriculture's Rural Development mission area2239(USDA RD) is an indispensable Federal partner for counties like mine.2240Through community facilities financing, entrepreneurial capital and2241technical support, USDA RD programs help local governments, our2242partners and residents build and sustain thriving rural communities.2243    Today, I will highlight the following items:22442245   The role counties play in rural development.22462247   The critical need for USDA RD programs to address local2248        needs and support county-led growth.22492250   Practical improvements to modernize and scale USDA RD tools2251        so rural Americans can access them.22522253   Impacts of USDA's departmental reorganization as it relates2254        to preserving the vital role USDA RD plays in our communities.22552256    By shaping policy to match rural governance, we can ensure that2257every community, regardless of size, location or capacity, has a fair2258shot at success.2259County Governments Play a Critical Role in Rural America, but Face2260        Persistent Structural Challenges2261    Rural America is home to 20 percent of the nation's population and2262spans more than 70 percent of its land mass. In these communities,2263county governments are the connective tissue that holds rural life2264together. Counties provide the public safety, emergency response and2265law enforcement residents count on in moments of crisis. We build and2266maintain the roads, bridges and water systems that keep people and2267goods moving. We plan and permit development, support local businesses,2268run elections and invest in education. In partnership with state and2269Federal agencies, we deliver the everyday human services that make it2270possible for people to live and work in rural areas even when budgets2271are tight and staff are stretched thin.2272    Despite the vital role counties play, the challenges we face are2273deep and persistent. Rural residents are among the most under-served in2274the country. The poverty rate in rural America (14.4 percent) is 2.52275percentage points higher than the national average (11.9 percent). Of2276the 353 counties experiencing persistent poverty, 85 percent are rural.2277One in five rural census tracts is considered a disadvantaged2278community, a key indicator of vulnerability to shocks like economic2279downturns and natural disasters.2280    Potter County is extremely rural, with a population that has fallen2281below 16,000 for the first time since 1920. Meanwhile, the median age2282has been steadily rising to nearly 50 years; nationally it's 38.7. Each2283year, we have more deaths than births and we continue to see a serious2284out-migration of teens and young adults.2285    Rural counties face unique challenges in meeting local needs. With2286limited staff and funding, many lack the capacity, defined as the2287personnel, expertise and capital, to deliver services and pursue2288external funding. These gaps can make it difficult to apply for or2289manage state and Federal programs, especially those with complex2290requirements, reporting burdens or match obligations. As a result, the2291communities most in need of investment are often least able to access2292it.2293In Light of These Challenges, USDA RD Is Our Most Important Federal2294        Partner2295    USDA RD is often the only source of support that can move a project2296from an idea to a reality. Each year, USDA RD finances tens of billions2297of dollars in rural infrastructure, housing and business investments2298across tens of thousands of projects. USDA RD programs have invested2299over $26 billion across nearly 60,000 projects in FY 2025 alone. The2300value of USDA RD is not only capital it can provide, but also its2301delivery model. USDA deploys a field-based workforce that places2302experienced staff in or near the communities they serve. In many rural2303areas, the USDA field office is the front door to the Federal2304Government. That local presence helps projects take root and succeed.2305    I've seen firsthand what USDA RD means for rural counties like2306mine. In Potter County, we have been proud and frequent partners with2307USDA RD going back to the 1980s. We have seen $8.23 million in 952308different USDA RD investments since FY 2015, including $3.86 million in2309loans and $4.37 million in grants. These investments have touched2310nearly every corner of community life: housing, public works, emergency2311services and more. We have leveraged USDA RD loans and grants to2312acquire and improve water systems in places like Roulette Township,2313helped our local ambulance association purchase lifesaving equipment2314and built housing that our seniors and working families can actually2315afford. USDA RD programs have enabled low-income residents to buy their2316first homes and stay in them through critical home repair financing.2317    These kinds of projects are often out of reach for counties like2318ours without Federal help. With one of the lowest median incomes in2319Pennsylvania and a real estate tax base undercut by the 44 percent of2320land in our county that is state-owned and tax exempt, we simply cannot2321do it alone. Environmental compliance, prevailing wage and other2322important standards often come with price tags we can't meet without2323outside support. USDA RD has been that support, and when called upon,2324we have always stepped up and met the local match.2325    These needs are not going away. If anything, they are growing more2326urgent. Rural health care in our region is approaching a full-blown2327crisis. Just 3 months ago, the maternity ward at our local UPMC2328hospital closed, leaving behind a seven-county maternity desert across2329the northern tier of Pennsylvania. More recently, the same hospital2330closed its skilled care unit, a service it had provided for more than233150 years. Our communities are losing essential care, and with each2332closure, our families are left with fewer and fewer options. We are2333trying to respond the way rural communities always do: with creativity,2334collaboration and a commitment to taking care of our own. However, we2335know we cannot reach our full potential without strong Federal2336partnerships.2337    That is why USDA RD matters to counties like mine. Not just because2338of what it has helped us build in the past, but because of the role it2339must continue to play as we face the challenges ahead. Our track record2340shows that counties like Potter are ready to do our part, but we need2341USDA RD to have the resources and flexibility to meet us there.2342USDA RD Programs Are Vital Tools for County-Led Growth2343    For county leaders, USDA RD programs are some of the most powerful2344tools we have at our disposal to grow local economies, support small2345businesses and provide essential services in rural communities. I want2346to speak today from both experience and observation: what's worked, and2347where small changes would go a long way. The following is a breakdown2348of major programs in USDA RD's portfolio under consideration by the2349Subcommittee at today's hearing, along with recommendations our2350Congressional partners can consider to improve outcomes from these2351resources.2352Programs with Direct County Eligibility2353    The Community Facilities Program (CFP) is the backbone of rural2354infrastructure finance. Counties use it to build, equip and renovate2355EMS facilities, 911 dispatch centers, rural health clinics,2356courthouses, jails, community centers and more. These are the assets2357that keep our towns functioning. They are often owned and operated by2358the county for decades. In Potter County, an additional CFP-financed2359ambulance can mean the difference between life and death on a snowy2360night when there's only one crew on duty.2361    Counties also see the catalytic potential of CFP dollars to advance2362rural food systems and entrepreneurship. In neighboring Cameron County,2363a former restaurant has been transformed into a certified production2364facility for locally sourced food products. This Innovation Center is2365the only commercial kitchen available across our region of northern2366Pennsylvania. Thanks to a $345,000 USDA Community Facilities grant, the2367space now serves as a shared-use kitchen where food entrepreneurs can2368produce sauces, soups and baked goods that meet USDA food safety2369standards. These producers can then sell to local retailers, online2370customers, farm markets and community events, thereby creating new2371revenue streams rooted in our community.2372    But the project is about more than equipment. It has become a hub2373for rural workforce development and community revitalization. Penn2374State Extension now uses the space to host ServSafe certification2375courses and small business classes. Northern Pennsylvania Regional2376College offers culinary training for local students. CareerLink has2377plans to use the site for job readiness programming. The Chamber of2378Commerce and Artisan Center relocated to the facility, strengthening2379local tourism and creating a visible front door for the county's2380creative economy. The project even spurred a $65,000 follow-on grant2381from the local electric utility to purchase energy-efficient kitchen2382equipment. This is the kind of rural innovation that USDA programs make2383possible, and it shows how even modest Federal dollars, when paired2384with strong local vision, can spark durable, multifaceted benefits for2385rural communities.2386    CFP's strength lies in its ability to finance right-sized projects2387tailored to rural service areas, but matching requirements, a lack of2388planning support and a rigid cost structure limit participation.2389Congress should expand access to predevelopment funds, waive match2390requirements for fiscally constrained counties and prioritize small-2391scale, low-overhead projects that stretch taxpayer dollars further.2392Structuring CFP with these rural realities in mind would unlock2393hundreds of essential projects across the country.2394    The Rural Business Development Grants (RBDG) Program is one of the2395most flexible tools available to rural counties for small business2396development. Counties have used it to create shared-use kitchens,2397support rural tourism corridors, provide microloans through local2398revolving funds and help workers form cooperatives in the absence of2399local employers. RBDG is a program we turn to when we want to breathe2400life into our town centers--not through big-ticket incentives but by2401seeding practical investments block-by-block. The grant is accessible2402to counties but constrained by modest funding levels and a 1 year award2403structure that makes incorporating RBDG program funding into long-term2404planning difficult. Administrative requirements can also be burdensome2405for counties with only limited access to economic development staff.2406Congress can improve RBDG by increasing award caps, enabling multi-year2407grants and expanding eligible uses to include site development,2408community branding and marketing. A small increase in flexibility and2409funding would yield outsized returns.2410    Rural Innovation Stronger Economy (RISE) grants support a critical2411but often out-of-reach goal for counties: building regional innovation2412infrastructure. The program funds hubs that combine entrepreneurship,2413workforce development and industry support tailored to local strengths.2414In rural Pennsylvania and nearby New York, counties are using RISE to2415grow sectors like forest products, sustainable building materials and2416outdoor recreation manufacturing. These efforts create durable, locally2417rooted jobs and expand economic opportunity for our residents.2418    RISE makes these projects possible by financing the facilities and2419training needed to launch them. However, the program's complexity makes2420it hard for smaller counties--especially those without planning staff2421or anchor institutions--to apply. Without dedicated technical2422assistance, it's difficult to form the required consortium or develop a2423competitive business plan. USDA should create a smaller-scale tier for2424early-stage applicants, fund regional TA providers to help form2425partnerships and expand eligible activities to include convening and2426planning. The program's design is strong. It just needs to reach the2427communities it was built to serve.2428    The Meat and Poultry Intermediary Lending Program (MPILP) helps2429counties address a key gap in rural agricultural economies: local2430processing capacity. The program provides flexible capital to2431intermediaries, who then relend to small- and mid-size processors.2432Counties can serve as intermediaries or partner with them to finance2433equipment like cut-and-wrap rooms, cold storage, refrigerated trucks,2434wastewater pretreatment and food safety upgrades. In places like Potter2435County, this support can keep a regional plant open or add a mobile2436unit so producers don't have to haul livestock long distances. These2437investments keep more value in the community and strengthen local2438supply chains.2439    Still, MPILP's structure can be burdensome. It requires detailed2440planning, long timelines and documentation that small counties and2441processors often can't manage alone. USDA should issue county-specific2442guidance, allow smaller relending deals and permit bundled projects2443that combine equipment, food safety compliance and distribution needs.2444Eligible uses should include regional cold storage and last-mile2445delivery. USDA should also pair financing with technical assistance for2446business planning and food safety and align loan terms with the2447seasonal nature of cash flow. The program's intent is strong. With2448simpler access and right-sized tools, MPILP can better reach the2449communities it was built to support.2450Programs Where Counties Access Support Through Key Partnerships2451    The Rural Economic Development Loan and Grant (REDLG) Program2452demonstrates how much can be accomplished when Federal capital flows2453through trusted local institutions. In many rural regions, the most2454capable financial intermediary is the electric cooperative or telecom2455provider. These institutions know the community, understand rural2456credit and are willing to provide capital that may otherwise be2457unavailable through private-sector sources. Counties frequently2458collaborate with these co-ops to finance fire stations, broadband2459deployment, health clinic, main street revitalization projects and2460more. But REDLG's structure limits the county role. Only eligible USDA2461borrowers--typically utilities--can apply directly, and county access2462depends entirely on informal partnerships. USDA provides limited2463guidance on how these partnerships should be structured. Congress can2464make REDLG more accessible by allowing counties to serve as co-2465applicants, expanding eligible uses to include housing and2466infrastructure planning and streamlining USDA's review process to2467ensure timely deployment. Rural counties are ready to lead projects.2468However, we need a clearer and more direct pathway to the capital.2469    Although counties cannot apply directly for Value-Added Producer2470Grants (VAPG), we often play an indirect but essential role in helping2471rural producers access support through the VAPG program. These grants2472keep more agricultural wealth in rural communities--for example, by2473helping a dairy farm start an on-site cheese operation or a grain co-op2474launch a branded flour line. That added value builds resilience and2475supports the supply chain that rural counties rely on to sustain our2476local economies. However, the smallest producers often don't have time2477or expertise to prepare a full VAPG application. VAPG is designed for2478independent producers and ag-based business ventures. Grants require a24791:1 match and a detailed business plan. Smaller producers struggle to2480meet those requirements, and counties are currently unable to serve as2481fiscal agents or technical assistance providers under the program.2482Counties could help by coordinating producer groups, offering matching2483funds or providing technical assistance, but the program doesn't2484currently make space for us. USDA should allow counties or regional2485entities to serve as administrative partners, fiscal sponsors or TA2486providers for small producer groups. Template business plans and2487streamlined application pathways would also help. If we want to grow2488rural wealth from the ground up, we need tools that empower the people2489and institutions already doing that work.2490    The Rural Business Investment Program (RBIP) is USDA's effort to2491bring equity capital to rural communities, something many rural2492businesses find elusive. Counties indirectly benefit from RBIP when2493approved investment funds (RBICs) support firms located in their2494communities. But RBICs often overlook smaller or more remote counties,2495and many rural businesses are not investment-ready. Counties can help2496identify promising local firms or sites, but the program offers no2497formal mechanism for engagement or coordination. RBIP can work better2498for rural counties if USDA requires RBICs to engage with local2499governments when evaluating investments, provides technical assistance2500to help firms become investment-ready and expands capital structures2501beyond equity. For example, supporting mezzanine or revenue-based2502financing models that better match rural growth trajectories. If USDA2503wants private capital to align with rural economic development,2504counties need a seat at the table.2505    The Rural Microentrepreneur Assistance Program (RMAP) recognizes2506that the most important businesses in rural counties are sometimes the2507smallest. From mobile mechanics to home health aides, these2508entrepreneurs don't need millions. They need a few thousand dollars and2509guidance on bookkeeping, business planning and compliance. RMAP is one2510of the few programs designed to meet these needs, pairing small loans2511with hands-on coaching from local intermediaries. Where those2512intermediaries exist, counties often partner by making referrals,2513sharing space or helping meet match requirements. But in places without2514intermediaries, counties have no clear way to fill the gap. RMAP2515currently excludes counties from eligibility. Congress should expand2516eligibility to allow counties and county-led economic development2517agencies to serve as intermediaries or partners. USDA should also offer2518multi-year funding for strong-performing Microenterprise Development2519Organizations and streamline re-advances to avoid service disruptions.2520This is one of USDA's most effective programs. It just needs to be2521easier to deliver and grow where it's needed most.2522The Upcoming Farm Bill Presents a Critical Opportunity To Expand Access2523        and Modernize Delivery of USDA RD Programs and Resources2524    USDA RD programs are among the most powerful levers the Federal2525Government has to support infrastructure, small business growth and2526community vitality in rural America. But far too often, these programs2527are out of reach for the counties they are meant to serve, not because2528the needs aren't real, but because the systems around those programs2529are too complex, too slow or too disconnected from rural reality.2530    The House Agriculture Committee has a chance to change that. By2531including commonsense reforms and new investments in the next farm2532bill, the Committee can ensure that USDA RD remains not only well-2533resourced, but also responsive, accessible and effective for rural2534counties. These are the types of improvements that will not make2535headlines, but they will make a difference. They will ensure that USDA2536RD programs reach the counties they were designed to serve, and that2537rural America is not just included in the farm bill but fully empowered2538by it.2539Counties Urge Members of the Committee To Consider the Following2540        Recommendations In Any Future Action on USDA RD Programs2541    Simplify access for small-dollar projects: USDA should establish a2542streamlined application track for modest but essential investments2543under Community Facilities and RBDG. These micro-projects such as2544acquiring new ambulances, HVAC replacements at senior centers or code-2545compliant restrooms in childcare facilities, deliver high value but2546often face disproportionate administrative hurdles. For these2547applications, USDA should reduce narrative requirements, allow a single2548unified budget narrative and waive documentation not required by2549statute.2550    Pre-development activities like feasibility studies, site selection2551and environmental review should be explicitly eligible uses under USDA2552RD programs. These expenses often fall to county general funds and are2553a major barrier to participation for rural jurisdictions.2554    USDA should standardize core application components across CF,2555RBDG, RMAP and REDLG to the extent permitted by statute, and pilot a2556common core form. Pilot regional bundling of small projects with a2557single review. Where NEPA scopes and lead-agency determinations align,2558allow a single environmental record across RD programs. Applicants2559could then reuse project narratives, budget forms and attachments,2560reducing duplication and cutting down on application time for2561applicants and administrative review for USDA RD staff.2562    Improve program sequencing and coordination: Federal resources are2563most effective when local staff can align them with real-world2564timelines. USDA should open rolling concept submission windows and2565adopt quarterly award cycles to allow counties to coordinate with board2566calendars, permitting processes and legislative sessions.2567    To support early-stage applicants, USDA should publish a plain-2568language eligibility matrix listing allowable uses, matching2569requirements and unique criteria for each RD program. This should be2570paired with a living repository of sample projects--for example, ``fire2571hall expansion'' under Community Facilities Program or ``shared-use2572commercial kitchen'' under the Rural Business Development Grant and2573Loan Program--informed by regular field office feedback and updated to2574align with programmatic and statutory changes.2575    Where National Environmental Policy Act (NEPA) scopes are similar,2576USDA should allow a single environmental record to satisfy requirements2577across programs. This would save consultant costs and staff time while2578maintaining environmental protections.2579    Strengthen field-based delivery: In many rural counties, the USDA2580field office is not just the point of access for RD programs--it is the2581only Federal office in the region and a front door to the Federal2582Government for rural residents. The success of USDA's local delivery2583model depends on having enough staff with enough time and expertise to2584provide real support to rural customers. USDA should prioritize2585backfilling vacancies and limiting individual caseloads, particularly2586in high-demand states and persistent poverty counties.2587    USDA should also establish standing virtual and in-person office2588hours at the state level, where county staff and regional development2589partners can schedule brief consultations to review project concepts2590and get questions answered. These consultations should be available at2591least biweekly and staffed by specialists trained in multiple program2592areas.2593    In addition, USDA should provide resources for circuit-rider TA2594teams or technical assistance (TA) vouchers that counties can use with2595trusted nonprofit partners, regional councils or local economic2596development organizations to build capital stacks and navigate post-2597award compliance. USDA's Community Facilities Technical Assistance and2598Training and Rural Community Development Initiative programs provide a2599potential model for this approach, but funding should be scaled up and2600targeted specifically at pre-application support.2601    Make rural-scale financing work: Rural projects often stall not2602because they lack merit but because funding sources cannot be aligned2603in time. USDA should offer conditional commitments or letters of2604interest across programs to help counties demonstrate intent to fund2605when applying for state appropriations or private match. These tools2606exist in CF loans and Single-Family Housing and should be extended2607across RD programs.2608    USDA should clarify that reasonable interest on interim financing2609is an eligible project cost under CF and RBDG. Counties often rely on2610bridge loans while awaiting obligation. Clear guidance would ease cash2611flow constraints without increasing risk. Counties and regional2612entities should also be allowed to bundle small projects into a single2613coordinated application to reduce transaction costs and achieve scale.2614    Modernize USDA RD technology to improve rural access: Counties urge2615USDA RD to consider building a single web-based ``front door'' for its2616programs. This portal should include:26172618   A program matching tool based on project need and location26192620   Application status tracking for pre- and post-award stages26212622   Email and text alerts for deadlines, missing items and2623        decisions26242625   Save-and-reuse functionality for standard forms26262627   A geospatial eligibility checker that overlays maps with2628        population data and priority designations26292630   Published service standards including average review times,2631        common deficiencies and FAQs26322633    USDA's existing tools, like RDApply and the Rural Data Gateway,2634offer a foundation, but functionality must be expanded. Portals should2635be mobile-friendly and usable in low-bandwidth settings to accommodate2636rural connectivity gaps.2637    Invest in rural capacity building: To ensure USDA RD programs reach2638the communities they're intended to serve, the 2025 Farm Bill must2639include dedicated investments in rural capacity building. Counties face2640persistent barriers to accessing Federal resources not because of lack2641of need or readiness, but because of limited staffing, grant-writing2642expertise and technical support.2643    The 2025 Farm Bill presents a key opportunity to address this2644challenge. Counties support the inclusion of new rural capacity-2645building initiatives that would provide multiyear, flexible grants to2646local stakeholders to plan, implement and coordinate community2647development strategies across rural America. This would help counties2648overcome longstanding barriers to accessing Federal funds by investing2649in the staff, partnerships and tools needed to move local priorities2650forward and level the playing field for rural communities. We also2651support devoting mandatory funding to rural development programs.2652Consistent funding is essential to ensure capacity-building support is2653not subject to year-by-year appropriations, especially in communities2654that need the most help in reaching Federal resources.2655    These recommendations are not radical departures from current law.2656They are practical, bipartisan adjustments that build on USDA's own2657successful models, expand access for the smallest and most under-served2658counties and ensure that Federal dollars are deployed more efficiently.2659By making these changes in the next farm bill, the House Agriculture2660Committee can bring USDA RD into closer alignment with the realities of2661rural governance.26622663    As Congress considers the future of USDA programs through the2664upcoming farm bill, it is equally important to ensure that USDA's2665internal reorganization strengthens, rather than weakens, the2666Department's ability to deliver on-the-ground results in rural2667communities.26682669    Counties support USDA's goal of improving operational efficiency2670and ensuring taxpayer dollars are used effectively. At the same time,2671we urge the House Agriculture Committee to exercise strong oversight2672and ensure that USDA's reorganization builds on the Department's2673greatest strength: its field-based presence and local relationships.2674    In many rural counties, USDA field staff are more than program2675administrators. They are neighbors, partners and in many cases the only2676visible Federal officials available to residents. Counties collaborate2677with USDA every day to implement conservation projects, expand2678broadband, deliver nutrition assistance, respond to disasters and build2679affordable housing and infrastructure. These are practical, place-based2680partnerships that depend on trust, continuity and local expertise. As2681the reorganization moves forward, the Committee has a critical2682opportunity to ensure that USDA remains rooted in the communities it2683serves and continues to deliver on the ground.2684    To that end, counties offer the following recommendations for2685strengthening USDA's service delivery model through the reorganization2686process:26872688  1.  Maintain and Strengthen USDA's Field-Based Workforce: USDA field2689            offices are instrumental in helping counties navigate2690            complex programs, tailor projects to local needs and2691            deliver timely support during emergencies. These personnel2692            are not interchangeable with centralized systems. They2693            offer institutional knowledge and community trust that2694            cannot be replicated through regional hubs alone. USDA2695            should prioritize backfilling vacancies, empowering field2696            offices and ensuring staff have the time and flexibility to2697            support small and first-time applicants. In states where2698            counties administer SNAP and other safety net programs,2699            these staff will be especially important as local2700            governments implement changes included in H.R. 1.27012702  2.  Engage Local Governments and Partners Early and Often: Counties2703            are key intergovernmental partners in serving USDA's rural2704            customer base. USDA should establish regular stakeholder2705            consultation mechanisms, including listening sessions,2706            rulemaking comment opportunities and continued cooperating2707            agency status for counties. Structural changes that affect2708            how counties interact with USDA should never be implemented2709            without meaningful local input.27102711  3.  Ensure Continuity of Operations During Reorganization: Counties2712            rely on USDA to support housing, infrastructure, nutrition2713            and economic development projects. Delays caused by2714            staffing gaps or administrative restructuring could2715            threaten local timelines, funding drawdowns, or compliance.2716            USDA should publish clear continuity protocols and2717            designate points of contact for impacted programs to help2718            local governments and grantees stay on track during2719            transitions.27202721  4.  Clarify the Role of Regional Hubs: While there may be cost-2722            efficiencies in relocating some functions, regionalization2723            must not come at the expense of responsiveness. USDA should2724            define the responsibilities and decision-making authority2725            of regional offices, protect local office autonomy for2726            project-specific decisions, and assess how hub structures2727            affect applicant experience in rural communities.27282729  5.  Preserve USDA RD Within USDA's Jurisdiction: USDA should continue2730            to lead the Federal rural development mission. No other2731            agency offers the same blend of local delivery, sector-2732            specific expertise, and cross-program coordination. USDA2733            should continue to build on this capacity, not transfer it2734            elsewhere.27352736  6.  Prioritize Cross-Mission Area Integration and Interagency2737            Coordination Without Losing Local Responsiveness: USDA2738            should seek to better integrate operations across mission2739            areas without sacrificing specialized expertise or local2740            responsiveness. Streamlining is welcome where it reduces2741            redundancy and improves access. But integration must not2742            result in one-size-fits-all programming or diminish the2743            availability of subject-matter experts in state and local2744            offices. USDA should retain flexible, agency-specific TA2745            resources and ensure integration efforts remain responsive2746            to local context.27472748    As the House Agriculture Committee considers USDA's proposed2749reorganization alongside farm bill reauthorization, we encourage2750Members to protect the principles that have made USDA such a vital2751partner to rural counties: proximity, partnership and place-based2752problem-solving. USDA's footprint in rural America is not a relic. It2753is a modern and necessary foundation for effective service delivery.2754With the right safeguards and stakeholder engagement, this2755reorganization can strengthen USDA's ability to deliver on its mission2756and help ensure that no county is left behind.2757Conclusion2758    Chairman Johnson and Ranking Member Davis, on behalf of NACo and2759rural counties across the country, thank you for your attention to2760these tools and to the people who rely on them. We stand ready to work2761with this Subcommittee to preserve these programs and to modernize and2762streamline them so that every county, regardless of size or staff2763capacity, can put them to work to build stronger more resilient2764communities across rural America.27652766    Mr. Davis. Thank you, Commissioner Heimel. At this time, we2767are going to recognize Executive Director Lynne Keller Forbes2768for 5 minutes.27692770  STATEMENT OF LYNNE KELLER FORBES, J.D., PRESIDENT AND CHIEF2771EXECUTIVE OFFICER, SOUTH EASTERN COUNCIL OF GOVERNMENTS, SIOUX2772                    FALLS, SD; ON BEHALF OF2773              NATIONAL ASSOCIATION OF DEVELOPMENT2774                         ORGANIZATIONS27752776    Ms. Forbes. Chairman Johnson, Ranking Member Davis, and2777distinguished Members of the Subcommittee, I want to thank you2778for the opportunity to appear before you this morning on this2779important topic. I am Lynne Keller Forbes. I am the President2780and the CEO of the South Eastern Council of Governments and the2781South Eastern Development Foundation in Sioux Falls, South2782Dakota, and I am honored to testify on behalf of the National2783Association of Development Organizations, known as NADO.2784    I grew up on the Cheyenne River Indian Reservation in South2785Dakota, where my parents operated a farm and ranch. When I was2786young, we hauled our water until rural water was finally2787expanded. Rural water was a game changer, not only for our2788family, but for our livestock. We didn't have a telephone until2789I was in the second grade and the lines were finally expanded2790to reach us. Both of these events were only possible because of2791the Federal Government's investment in rural America, so my2792love for rural America and the advocacy for a strong farm bill2793runs deep.2794    For the past 25 years, I have worked with rural communities2795and businesses across southeastern South Dakota, helping them2796plan, finance, and implement development projects that improve2797infrastructure, expand access to capital, and support long-term2798economic growth. Our mission is simple: we want to ensure that2799even the smallest communities and businesses have a trusted2800partner in building economic resilience and prosperity to help2801sustain rural America. One of our most vital partners in this2802work is USDA's Rural Development mission area, known as RD.2803Today, I want to highlight the critical role regional2804development organizations, or RDOs, play in supporting rural2805communities and offer some practical recommendations to2806strengthen RD's programs and services.2807    RDOs, also known a councils of governments, planning2808districts, and regional planning councils, are multi-2809jurisdictional entities that serve as trusted intermediaries2810for rural counties, cities, towns, and businesses. We help2811communities and businesses access Federal resources, deliver2812essential services, and plan for long-term success. In many2813cases, RDOs are the lead applicants or technical assistance2814provider for RD's programs. We conduct feasibility studies, we2815write grant applications, manage complex projects from start to2816finish, help develop housing, and provide financing for2817businesses that would not otherwise be considered bankable.2818    Rural America faces unique challenges. Nearly one in seven2819Americans live in rural areas, which span \3/4\ of the nation's2820landmass. These communities often struggle with limited2821infrastructure, higher poverty rates, fewer job opportunities,2822and reduced access to broadband, healthcare, and housing.2823Despite these challenges, RDOs help rural communities and2824businesses navigate Federal systems and unlock funding for2825transformative projects. We work closely with RD to deliver2826programs, like the Water & Waste Disposal Program, the2827Community Facilities Program, the Rural Business Development2828Grant Program, and the Intermediary Relending Program. These2829programs are not just financial tools, they are lifelines. Let2830me share a few examples.2831    In Dolton, South Dakota, a community of less than 1002832people, we helped TM Rural Water secure a grant through the2833Water & Waste Disposal Program to rehabilitate lime-drying beds2834that were damaged by a derecho storm. Across the country, RDOs2835are making similar impacts. In New York, a NADO member used RD2836funds to launch a small business technical assistance program.2837In Louisiana, another member received funding to develop a2838strategic growth model along the I-49 corridor, and in Montana,2839an RDO led a coalition securing $10 million through the MPILP2840Program to strengthen local processing capacity and expand2841economic development opportunities. These examples show how2842RD's flexible, place-based approach empowers communities to2843structure investments around local needs, often filling gaps2844the private-sector cannot or will not address.2845    As Congress considers reauthorization of the farm bill, I2846urge you to prioritize the core programs that create jobs,2847improve infrastructure, and support small businesses.2848Specifically, we recommend you protect key programs that rural2849communities have come to rely on; improve access and2850flexibility to empower rural communities to fully participate2851in the programs by removing unnecessary barriers; strengthen2852the capacity of field offices and regional partners, like RDOs,2853to ensure that support services are responsive and tailored to2854rural needs; preserve USDA's local footprint. As USDA2855reorganizes, maintaining field staff and communities is2856essential. RDOs can extend RD's reach, but we urge Congress to2857invest in these partnerships. De-federalizing IRP: our B&IGs2858and EDA funds have been de-federalized with reduced USDA staff2859and limited resources. Now is the time to discuss de-2860federalizing IRP funding as well. RD's programs are more than2861infrastructure investments. They level the playing field for2862communities and businesses that often lack access to capital,2863capacity, and partnerships.2864    As you renegotiate the farm bill, I encourage you to2865prioritize the tools that enable rural America to grow and2866succeed. Rural communities have never lacked vision or2867determination. What they need is a sustained Federal2868partnership to build strong, resilient economies that support2869families, attract investment, and ensure future generations can2870thrive. Thank you again for the opportunity to testify. I look2871forward to your questions.2872    [The prepared statement of Ms. Forbes follows:]28732874 Prepared Statement of Lynne Keller Forbes, J.D., President and Chief2875 Executive Officer, South Eastern Council of Governments, Sioux Falls,2876   SD; on Behalf of National Association of Development Organizations2877Introduction2878    Chairman Johnson, Ranking Member Davis, and distinguished Members2879of the Subcommittee, thank you for the opportunity to testify today on2880behalf of the National Association of Development Organizations (NADO)2881and the national network of Regional Development Organizations (RDOs).2882NADO empowers RDOs through advocacy, education, and training to advance2883collaborative, place-based strategies that strengthen rural quality of2884life and economic competitiveness. We are grateful for the opportunity2885to join you today to share our perspective.2886    My name is Lynne Keller Forbes, and for the past 25 years, I have2887served as President and CEO of the South Eastern Council of Governments2888(SECOG), a Regional Development Organization serving over 315,0002889residents across six counties and 40 municipalities in southeastern2890South Dakota. In addition to leading SECOG, I also serve as President2891and CEO of the South Eastern Development Foundation and Dakota BUSINESS2892Finance, two affiliated entities we established to expand access to2893capital and support economic development throughout the region.2894    Through these roles, I have the privilege of working closely with2895rural communities across my region to provide coordinated support in2896planning, financing, and development. By aligning resources and2897expertise, we help local governments and small businesses secure2898funding, implement infrastructure projects, and pursue sustainable2899growth. Our collaborative approach ensures that even the smallest2900communities have a trusted partner in building long-term resilience and2901prosperity.2902    One of our most essential partnerships in delivering impactful2903programs and services to rural South Dakotans in our region is with the2904U.S. Department of Agriculture's Rural Development mission area (USDA2905RD). In my testimony today, I will outline the critical role RDOs play2906in supporting rural communities, including programmatic level examples,2907and offer practical recommendations to modernize and expand these tools2908so they are more accessible to those who need them most. I will also2909address USDA's recent departmental reorganization and its implications2910for maintaining the central role USDA RD plays in our regions.2911About the South Eastern Council of Governments2912    The South Eastern Council of Governments is a regional planning and2913development district serving six counties in southeastern South2914Dakota--Clay, Lincoln, McCook, Minnehaha, Turner, and Union--and the2915municipalities within them. Established in 1970 by executive order,2916SECOG was created to provide staff support to local governments and2917promote regional cooperation. Its mission centers on helping rural2918communities plan for growth, improve infrastructure, and enhance2919overall quality of life through strategic development initiatives.2920    With four of the six counties we serve having populations under292120,000, SECOG offers a wide range of services tailored to the needs of2922rural communities. These services include land use planning, geographic2923information systems (GIS), and pre-disaster mitigation planning. A key2924component of SECOG's work involves assisting its members in accessing2925Federal resources--particularly through the USDA RD programs. SECOG2926helps local governments apply for USDA grants and loans such as the2927Community Facilities Direct Loan and Grant Program and the Water and2928Waste Disposal Loan and Grant Program, which support essential2929infrastructure like water systems, public buildings, and waste2930management. Through these efforts, SECOG plays a vital role in2931strengthening rural South Dakota's capacity to grow and thrive.2932How Regional Development Organizations Assist Rural America2933    RDOs are the backbone of Rural America. This simple truth2934underscores the critical role that RDOs--also known as Councils of2935Government (COGs), Planning and Development Districts (PDDs), Area2936Development Districts (ADDs), Local Development Districts (LDDs), and2937Regional Planning Councils (RPCs)--play in supporting rural2938communities. These multi-jurisdictional, quasi-governmental entities2939serve as trusted regional intermediaries, working on behalf of rural2940counties, cities, and towns to deliver essential services, secure2941resources, and plan for long-term prosperity.2942    To understand the value of RDOs, it's important to first understand2943the current rural landscape. Rural America is home to nearly one in2944seven Americans--just over 46 million people--yet it spans nearly \3/4\2945of the nation's landmass. This vast geographic footprint, paired with a2946relatively small and dispersed population, makes it inherently2947challenging to maintain infrastructure, deliver services, and build2948resilient economies. While some rural counties are beginning to grow2949again, the challenges remain deep-rooted. Poverty rates are2950consistently higher in rural areas than in urban ones, particularly in2951regions that have experienced persistent poverty for generations.2952Incomes remain lower, job opportunities more limited, and essential2953services--like broadband, health care, and affordable housing--are2954harder to access. Many rural economies are also heavily dependent on2955industries like agriculture, manufacturing, and natural resource2956extraction, which remain highly susceptible to market swings and policy2957shifts.2958    Despite the challenges facing rural communities, RDOs play an2959essential role in advancing the mission of USDA RD by helping them2960plan, access, and implement thoughtful Federal investments tailored to2961their unique local needs. RDOs work closely with USDA RD to deliver2962essential infrastructure, housing, broadband, and community facilities2963programs, especially in places with limited local capacity. In many2964communities, RDOs serve as the lead applicant or technical assistance2965provider for USDA RD programs, conducting feasibility studies, writing2966grant and loan applications, and managing complex multi-agency projects2967from start to finish.2968    This partnership is especially vital in rural areas that lack in-2969house planning or grant-writing staff. RDOs help bridge that gap by2970guiding communities through the process of identifying resources and2971applying for USDA RD programs such as: the Water and Waste Disposal2972Loan and Grant Program; the Community Facilities Direct Loan & Grant2973Program; the Rural Economic Development Loan & Grant Program; the2974Intermediary Relending Program; the ReConnect Loan and Grant Program;2975and the Rural Business Development Grant Program, among many others.2976The expertise of RDOs helps ensure that these resources are effectively2977targeted and deployed in the places that need them most.2978    In addition to their work with USDA, RDOs are often designated as2979Economic Development Districts by the U.S. Economic Development2980Administration (EDA), where they lead the development of Comprehensive2981Economic Development Strategies (CEDS)--planning documents that align2982with USDA RD investments and are key to leveraging additional Federal2983and state funding. Many also serve as Rural Planning Organizations2984(RPOs) for state transportation departments, ensuring rural priorities2985like road repairs and transit access are included in long-term2986infrastructure plans.2987    RDOs further support rural resilience by partnering on disaster2988recovery and hazard mitigation efforts with FEMA and state emergency2989agencies. Some also assist in regional workforce development, often2990serving as conveners or operators of local workforce development boards2991and sector-based training initiatives.2992    Beyond direct project delivery, RDOs are strategic conveners. They2993bring together local governments, nonprofits, businesses, and state and2994Federal partners to align efforts, share resources, and speak with one2995voice. By supporting USDA RD's mission at the regional level, RDOs help2996ensure rural communities don't just access Federal programs--they2997succeed with them.2998    Despite the support RDOs provide to rural communities, the2999structural challenges they face remain profound and persistent. Limited3000fiscal capacity, aging populations, geographic isolation, and decades3001of disinvestment have left many communities without the basic3002infrastructure and services their urban counterparts take for granted.3003RDOs are a vital part of the solution helping rural areas overcome3004barriers that no single town or county can address alone, though we are3005not a silver bullet. Targeted, sustained Federal investment isn't just3006helpful, it's essential to provide economic prosperity and security in3007rural communities.3008USDA RD Is a Vital Resource for Rural America3009    USDA RD is often the most important Federal partner for rural3010America--not only because of the scale of its investments, but because3011of its deeply place-based approach, its on-the-ground presence, and its3012unmatched ability to deliver tailored, community-driven solutions where3013they're needed most. Through a national network of state and field3014offices, USDA RD staff work directly with local governments,3015nonprofits, and community leaders to identify priorities, navigate3016complex Federal systems, and unlock funding for projects that are3017critical to community well-being.3018    What sets USDA RD apart is its ability to meet rural communities3019where they are. With a flexible toolkit of grants, direct loans, and3020loan guarantees, USDA RD empowers communities to structure investments3021around local needs and capacity. Whether it's helping a small town3022build a health clinic, financing a rural business incubator, or3023partnering with one of the nearly 500 RDOs to launch a revolving loan3024fund, USDA RD is often the first--and sometimes the only--Federal3025partner equipped to respond to the unique realities of rural life.3026    Since FY 2012, USDA RD has invested over $400 billion in nearly two3027million projects across the country. These are not one-size-fits-all3028programs--they're strategic, high-impact investments that often fill3029gaps the private sector cannot or will not address due to low3030population density, limited tax bases, or lack of short-term return. In3031many cases, RD is the linchpin that makes transformative rural3032development possible.3033    A powerful example is USDA RD's partnership with SECOG to support3034the town of Centerville, where local leaders needed help funding a new3035water treatment facility. With RD's support, they were able to complete3036a vital infrastructure upgrade that not only improved public health and3037environmental safety, but that also positioned the town to attract new3038business and housing development. This is what USDA RD does best--3039helping rural communities solve urgent challenges today while laying3040the foundation for long-term economic growth and resilience.3041Recommendations for the Rural Development Title for a Farm Bill3042        Reauthorization3043    For years, USDA RD programs have had more demand than funding,3044showing just how much rural America needs steady Federal support. Even3045though 85 percent of the country's persistently poor counties are3046rural, these communities are often forced to carry an unfair share of3047the costs just to keep basic services running. Without reliable Federal3048help, they're stuck making tough choices--cutting back on things like3049infrastructure, healthcare, schools, or public safety just to balance3050the budget. These services aren't luxuries--they're essential for the3051farmers, ranchers, foresters, and families who keep rural areas going.3052USDA RD is one of the few Federal programs that can really meet these3053needs, and its support is more important now than ever.3054    A reauthorized farm bill is more than a routine policy update--it3055represents a strategic investment in the future of rural America. It3056provides for an opportunity for Congress to emphasize rural development3057programs and strategies that will create opportunities for all rural3058Americans. As Congress begins negotiations on the farm bill, we support3059several key priorities in the farm bill that will boost rural3060economies, create jobs, and improve the quality of life in rural3061America:3062Protect Key Rural Development Programs3063    Community Facilities Programs (CFP): This flexible funding program3064provides grants and low-interest loans to communities with populations3065under 20,000 for the purchase, construction, or improvement of3066essential community infrastructure. Since its inception, small3067communities have depended on its funding to build and sustain critical3068infrastructure--such as health clinics, fire stations, schools, and3069libraries--that not only improve quality of life for residents, but3070also foster economic resilience and long-term development.3071    RDOs support local governments in understanding eligibility3072requirements and apply for funding through the CFP program. For3073example, in my region, SECOG helped secure over $2 million for the TM3074Rural Water District to rehabilitate its Lime Drying Beds near Dolton,3075SD. These beds, part of a Lime Softening Water Treatment Plant3076constructed in 2008, were originally lined with a 6" clay barrier to3077prevent groundwater infiltration and enable proper drying of lime3078slurry for environmentally responsible land application. Over time, the3079liner deteriorated, leading to significant infiltration issues. The3080derecho event of May 12, 2022, further exacerbated the damage, causing3081erosion from high winds, flooding, and wave action. This grant helped3082restore the integrity of the beds and protect water quality for the3083surrounding communities.3084    Rural Business Development Grants Program (RDBG): RDBG is another3085critical program that helps RDOs support rural economic vitality by3086supporting technical assistance, entrepreneurial training, market3087research, feasibility studies, revolving micro-funds, among other3088activities aimed at providing hands-on assistance to local small3089businesses.3090    In New York, the Lake Champlain-Lake George Regional Planning3091Board, with help from the RBDG program, launched the ``Small Business3092Technical Assistance Program'' in 2023. Through this program, they have3093been providing free technical assistance to existing and start-up3094business within the region.3095    In Louisiana, the Acadiana Planning Commission received a $30,0003096RBDG for their I-49 Midway Corridor Strategic Growth Initiative, which3097will help produce a performance-based land use model to help create3098opportunities and spur sustainable economic growth along the corridor.3099This corridor, which is halfway between New Orleans and Shreveport,3100will help unlock significant economic growth for the region by making3101the communities along it more competitive for commercial investments3102and business expansion projects.3103    Intermediary Relending Program (IRP): USDA's IRP is another3104critical resource for RDOs, providing low-interest loans to local3105intermediaries who use the funds to create or expand Revolving Loan3106Funds (RLFs). These RLFs then support small rural businesses with3107fixed-rate, term financing for working capital, equipment, and lines of3108credit--often one of the few sources available. The IRP helps build3109long-term economic resilience by creating a sustainable cycle of3110lending: over a 30 year loan term, intermediaries typically revolve IRP3111funds three times, meaning every Federal dollar results in3112approximately $3 lent to rural businesses. This model reduces Federal3113financial burden while driving local growth.3114    The South Central Tennessee Development District, which represents311535 municipal and 13 county governments in south middle Tennessee,3116received an initial capitalization of nearly $1.9 million in 1991 for3117their RLF. Since then, more than $8 million has been loaned to over 1253118small businesses. Additionally, these funds leveraged more than $303119million in private investments, leading to the creation of nearly 5003120new jobs and the retention of hundreds more.3121    Rural Innovation Stronger Economy (RISE): RISE addresses a critical3122need for Federal support of job accelerator partnerships that drive3123private investment in regional economies. Its flexibility allows3124recipients to support new and existing industries, establish innovation3125centers, and provide workforce development and training. These grants3126help rural communities compete by creating high-wage jobs, while3127building more diversified regional economies.3128    Meat and Poultry Intermediary Lending Program (MPILP): Designed to3129counter industry consolidation by empowering smaller, independent meat3130and poultry processors, MPILP provides grant funding to intermediary3131lenders, who then offer affordable loans to businesses for starting,3132expanding, or modernizing processing facilities, equipment, and3133infrastructure. By increasing local processing capacity, MPILP3134strengthens the resilience and diversity of the U.S. food supply chain,3135ensuring more competition and consumer choice. This program is vital3136for rural economies, helping producers thrive in a global marketplace3137while lowering food costs and reinforcing national food security.3138    The Bear Paw Development Corporation led a coalition of five3139Montana Economic Development Districts to secure a $10 million MPILP3140grant, aimed at strengthening local meat processing operations. The3141coalition established a revolving loan fund to support Montana-owned3142facilities with capital improvements, equipment upgrades, and USDA3143certification efforts. By leveraging existing relationships, staff3144expertise, and interregional collaboration, the program has already3145deployed millions in funding and is expanding economic opportunities3146across 26 rural counties. This initiative demonstrates how regional3147partnerships can translate national priorities into impactful, locally3148driven economic development activities.3149    Rural Economic Development Loan and Grant Program (RED-LG): Though3150RDOs are not directly eligible, RED-LG has a proven track record of3151strengthening rural businesses and economies by providing more than3152$330 million to communities through both loans and grants.3153    Value-Added Producer Grants (VAPG): Although RDOs are not eligible3154for VAPG funding, we recognize that it is a vital program that supports3155agricultural producers transform raw commodities into higher-value3156products. Strengthening this program will continue to allow small- and3157mid-sized farms diversify income streams, access new markets and stay3158competitive amid industry shifts.3159    Rural Business Investment Program (RBIP): RBIP is an important3160initiative that helps bridge the capital gap in rural America by3161licensing Rural Business Investment Companies (RBICs) to channel3162private equity into under-served communities. Rural areas often lack3163access to traditional venture capital and face declining numbers of3164community banks, making it difficult for entrepreneurs to secure3165funding. RBIP addresses this by leveraging public support to attract3166private investment, enabling scalable startups and small businesses to3167grow, innovate, and create jobs locally. By treating rural regions as3168emerging markets, the program fosters economic diversification and3169resilience--making it essential to preserve and strengthen during3170reauthorization efforts.3171    Rural Microentrepreneur Assistance Program (RMAP): RMAP empowers3172rural small businesses by providing critical access to capital and3173technical support through local nonprofit lenders. It offers microloans3174up to $50,000 and grants for training, helping entrepreneurs who often3175lack traditional financing due to limited credit or business3176experience. By supporting startups and expansions, RMAP strengthens3177local economies, creates jobs, and fosters innovation in areas3178typically under-served by mainstream financial institutions. For rural3179small businesses, this program is a lifeline that turns ideas into3180sustainable enterprises and revitalizes communities from the ground up.3181    In New York, the Mohawk Valley Economic Development District3182(MVEDD) received a RMAP grant to support rural small businesses. This3183funding will enable MVEDD to offer hybrid workshops and one-on-one3184consulting focused on financial planning, grant access, and business3185growth strategies. The initiative aims to strengthen rural3186entrepreneurship across the Mohawk Valley by providing practical tools3187and guidance.3188    Water and Wastewater Disposal Loan and Grant Program: This program3189is essential to communities within the SECOG service area, and across3190the nation, because it helps rural communities access safe drinking3191water and effective waste management systems--which are critical for3192public health, environmental protection, and economic development.3193    These types of infrastructure projects are often cost-prohibitive3194for small communities, which typically lack the tax base or financial3195resources to fund them independently. Without Federal support, many of3196these areas would be unable to build or upgrade the systems needed to3197ensure long-term sustainability and attract new investment. By offering3198affordable financing and grants, the program reduces the financial3199burden on the local government while improving quality of life and3200resilience in under-served regions.3201Improve Access and Flexibility for Grantees3202    Congress should prioritize enhancing access to Federal support for3203rural communities by addressing structural barriers in current grant3204programs. Many existing Federal grant structures inadvertently exclude3205or disadvantage rural areas due to rigid requirements that fail to3206account for the unique financial and administrative challenges these3207communities face.3208    For example, local match requirements--which often mandate that3209communities contribute a set percentage of project costs--can be3210prohibitive for communities with limited tax bases. Some grants require3211up-front spending by the applicant, with reimbursement coming only3212after the fact. This model assumes a level of fiscal flexibility that3213many rural communities simply do not have. In contrast, allowing in-3214kind contributions, to count toward match requirements would provide3215more equitable opportunities for participation. This is particularly3216important for projects like community childcare centers, where3217community engagement and non-cash resources are often more readily3218available than liquid funds.3219    Similarly, short grant timelines tend to favor projects that are3220easier and faster to implement, even if they offer less long-term3221benefit. Rural communities may lack the staff or consultants to quickly3222produce shovel-ready proposals, pushing them toward low-impact projects3223they can execute quickly rather than transformative initiatives like3224broadband expansion, which require extended planning, permitting, and3225coordination. Extending grant implementation periods would allow rural3226areas the time needed to pursue these complex, high-impact investments3227that are critical to long-term economic development.3228    Another pressing issue is the complexity of the grant application3229process itself. Many small local governments have only one or two staff3230members--or rely entirely on volunteers--and lack dedicated grant3231writers. Highly technical application forms, excessive documentation3232requirements, and poorly designed online portals can discourage or3233prevent these communities from applying altogether. Simplifying the3234application process, it would lower the barrier to entry and help3235ensure that communities with the greatest need are not left behind.3236Invest in Capacity Building and Technical Assistance3237    There is a strong need for increased investments in technical3238assistance and capacity building at the USDA to better support the full3239spectrum of rural businesses and economic development initiatives.3240Technical assistance can help bridge this gap by providing the guidance3241and expertise needed to navigate USDA programs, secure funding, and3242build sustainable operations. At the same time, strengthening the3243internal capacity of USDA field offices, local and regional development3244organizations, and partner institutions ensures that support services3245are more accessible, responsive, and tailored to the unique challenges3246of rural economies. With targeted investments in training, outreach,3247and organizational development, USDA can play a more effective role in3248fostering innovation, job creation, and long-term economic vitality3249across rural America.3250USDA Reorganization Efforts Must Compliment Congress' Efforts To3251        Strengthen, Not Weaken, Program Delivery and Quality of3252        Services for Rural Communities3253    As the Administration pursues its goal of restructuring and3254reorganizing USDA, with the stated goals of improving operational3255efficiency and protecting taxpayer dollars, I urge Congress to provide3256oversight and guidance to ensure that USDA remains a catalyst for rural3257prosperity. In particular, it is essential to maintain a robust3258footprint of local and regional USDA staff that are embedded in local3259communities across the country. Local and regional USDA field staff are3260the mechanism that ensures service--delivery and connectivity to our3261communities. USDA field staff serve as a ``front door'' to the Federal3262Government--these individuals are a tangible human connection point3263that helps our communities access and navigate the complexities of3264Federal funding. These staffers help us determine whether funding3265sources fit our local needs, provide guidance on proper administration3266of Federal funds, and help us problem-solve. Without a working3267relationship with these individuals, most communities' only connection3268to the Federal Government is through overwhelmingly extensive and3269technical documents such as Notices of Funding Opportunity (NOFOs)3270which are far from being user-friendly. Indeed, the process of applying3271for Federal funds can be so daunting for rural and capacity-constrained3272communities that many smaller towns and villages and rural places would3273simply be left out or locked out of the process entirely, if not for3274the presence of field staff who help make these processes approachable.3275    Similarly, as the Administration has indicated its intent to reduce3276the overall volume of Federal USDA staff, I encourage USDA leadership3277to work in an increasingly close and coordinated manner with locally-3278based Regional Development Organizations which can, and often already3279do, essentially serve as extensions of USDA staff at the local level.3280RDOs have existed for decades and, similarly to agency field staff, RDO3281staff members typically have extensive knowledge of Federal programs,3282are expert grant writers, and help other local stakeholders apply for3283Federal funding opportunities and administer Federal awards. I would3284encourage Congress and agency officials to prioritize and invest in3285regional entities like RDOs that work with local stakeholders to3286identify and elevate local priorities and projects; conduct regional3287planning processes; bring local stakeholders together; and weave3288together competitive applications for Federal funding. As the volume of3289Federal agency staff continues to be reduced nationally, partnerships3290with local partners like RDOs that have deep expertise accessing3291Federal programs will be increasingly vital.3292Conclusion3293    Chairman Johnson, Ranking Member Davis, and distinguished Members3294of the Subcommittee, thank you again for the opportunity to testify3295today. USDA RD's programs are not just investments in infrastructure or3296financing tools--they are lifelines for rural communities working to3297build a more secure, prosperous future. These programs help level the3298playing field for small towns and rural regions that too often lack3299access to the capital, capacity, and partnerships needed to thrive.3300    As you continue negotiations on the farm bill, I encourage you to3301prioritize the tools that enable rural communities to grow and succeed.3302Rural America has never lacked vision or determination--what it needs3303is sustained Federal partnership to continue building strong, resilient3304economies that support families, attract investment, and ensure future3305generations can thrive in the communities they call home.33063307    The Chairman. Thank you, and to the 15th USDA Deputy3308Secretary Torres Small, 5 minutes.33093310  STATEMENT OF HON. XOCHITL TORRES SMALL, J.D., FORMER DEPUTY3311SECRETARY, U.S. DEPARTMENT OF AGRICULTURE; EXECUTIVE DIRECTOR,3312               QUIVIRA COALITION, LAS CRUCES, NM33133314    Ms. Torres Small. Chairman Johnson, Ranking Member Davis,3315Ranking Member Craig, and Members of the Subcommittee, it is an3316absolute joy to be back here with you. Whether it is supporting3317local meat processors through the ups and downs of cattle3318cycles in South Dakota, or working with chicken farmers on3319innovative energy solutions to power towns in North Carolina, I3320have witnessed how you put Rural Development into practice with3321the people you serve. You know that local know-how needs to be3322in the driver's seat, and the government's job is to support3323that vision. You have also seen how vital USDA staff are to3324that work.3325    Rural Development is the only agency in D.C. with a focus3326on rural America. That experience matters. I have worked with3327staff whose early experience providing housing or water loans3328in rural places has made them more able to stretch3329flexibilities in the midst of a disaster or save thousands of3330dollars on applications and reporting for rural people. But3331DOGE cuts and oversights and recent staff departure incentives3332hobble an already struggling mission. While I know this3333Subcommittee isn't responsible for staff funding, your3334oversight is invaluable. Many state and field offices are3335currently operating at half capacity. In some places, it is3336worse, like Mississippi, where 90 percent of Rural Development3337staff were cut last year. Nationally, only 16 engineers remain3338the RD state system. Vital projects are sitting on desks3339waiting for approval. Phone calls are going unanswered for3340months. That is not serving rural people. Let me be clear: the3341problem I am raising here today isn't simply that Federal3342staffing was cut. The problem is that those cuts happened3343without consulting the very people they affect. Rural Americans3344are more than willing to tell us what is working and what isn't3345if only we take the time to listen, and that brings me to my3346second point.3347    When I talk with people working to make a difference for3348the places they live, they ask for straightforward applications3349to programs that fit their vision. People often ask what I have3350seen in other places that might inform how they can solve the3351challenges they face. In the long-term, we need to pivot from a3352``there is a program for that'' or all of the acronyms, as3353Chairman Johnson mentioned, to ``we will invest in your3354strategy, here are some people who found success with similar3355efforts, and we will be with you every step of the way.''3356    When it comes to straightforward investments, we need to3357resist the temptation o