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V O L . X X I I N O. X X V O C T O B E R 3 1 , 2 0 1 6 16 T he Maine Harvest Credit Project, which aims to create a specialized, socially responsible credit union focused on the new food economy in Maine, has raised $1.4 million, or about 60% of the money it needs from donors, to start what would be the state's 59 th credit union, the fi rst new credit union in more than 25 years. It plans in January to fi le its applica- tion to become a state-chartered credit union, Maine's 13 th , with Maine's Bureau of Financial Institutions and to get National Credit Union Administration insurance for deposits, says CEO and project director Scott Budde. "We've met with both institutions several times to prepare to submit the application," Budde says, adding that both think the application is ready for submission. e likely location for the credit union is central Maine, where he and advisory board chair Sam May, who co-founded the project with him, already are looking at properties to lease. e credit union will only do business in Maine. After the application there will be a public comment period, and the two men will set about raising the remaining $1 million from donors, a process they anticipate will take about nine months. "We can't start until we have $2.4 million," Budde explains. "We need to be well capitalized to support lending as we'll be doing larger loans than the average credit union." Regulators typi- cally like to see credit unions start with 7% of their expected equity raised, and Maine Harvest will have 15% if all goes according to plan with donors, he says. Once Maine Harvest has its credit union charter, it expects to raise seven times the amount of the donated seed money in deposits to provide funds for farm and small business loans. e donors to date are the Sewall Foundation, the Ram Island Conservation Fund and Sandy River Charitable Foundation, all of which donated over the past year. If the credit union gets the green light, in eight years Budde expects it to have about $12 million in assets, with some 75% of its business focused on loans to buy farm land, which are hard to come by currently. It also plans to have three employees: Budde as CEO, May as board chairman plus they plan to hire a chief loan offi cer. But getting to the point of being able to submit an application was a long stretch involving fi lling in about 3 inches of paperwork and detailed interviews with 36 farmers as well as the Maine Brewers' Guild, the Maine Cheese Guild and the Maine Grain Alliance for proof-of-concept of the new, focused credit union. " ese were two-to-three-hour interviews," says Budde. A lot of the discussion was about how diffi cult it is to get loans for farmland, equipment and expansions. Budde says that's likely because the other fi nancial institutions don't understand the farming business well or don't want to assume the risk of an underperforming farm due to drought or other conditions. "Community banks and credit unions don't have the in-house expertise to assess the risk profi le [of the farm land]," adds May. " ey also don't understand how farm diversifi cation, community supported agriculture, farmers markets and [aspects of farming] work." Loans with a social mission To May, who grew up on a mid-coast dairy farm, there's nothing better than the smells of a barn in winter, the spilled milk, the silage and manure all mixed together. "I have deep relations to farm- land and agriculture," he says. "I'm a homesteader and a vegetable farmer, and I'm on the board of the Maine Organic Farmers and Gardeners Association. He also is on the steering committee of Slow Money Maine. He watched as his neighbor's dairy farm went under and got turned into a golf course in the tough business conditions of the 1960s, an experience that made him want to help with one of the toughest aspects of farming: fi nancing to buy land. Budde's ties to agriculture came at investment fi rm TIAA-CREF, where he created the fi rm's fi rst investment department focused on social and impact investing strategies. Maine Harvest is now under the auspices of Maine Farmland Trust and MOFGA. e project also is under the fi scal sponsorship of MOFGA, which provides it with 501(c)3 status and handles the project's receipts, disburse- ments and fund-tracking. If granted credit union status by regulators, Maine Harvest will be a nonprofi t with members including MOFGA farmer members and those from other food-related businesses. "Ours is a very loan-driven model," says Budde. He says farm land loans will be 2% to 3% higher over 20-to- 30 years than a conventional mortgage, but still be a couple percentage points below current loans. If approved, the credit union will off er three loan products. One is $10,000 to $30,000 for used equipment. e second is a business loan for $65,000 to $135,000 for buildings, expansions and upgrades. And the third is land loans of $200,000 to $400,000. Budde emphasizes that Maine Harvest isn't trying to replace cus- tomer business at other credit unions or banks. e deposits it does pull in and donations will help mitigate risks associated with farmland. It also is Scott Budde, project director of Maine Harvest Credit Project, left, and Sam May, advisory board chairman, at Broadturn Farm in Scarborough. P H O T O / T I M G R E E N WAY Funding farms Maine Harvest Credit Project raises 60% of needed funding, readies filing with regulators Maine Harvest Credit Project Location: Central Maine Advisory board chair: Sam May Project director, CEO: Scott Budde Funding: $1.4M in donations (60% of total needed) Product/service: Aims to become credit union servicing food/ag/ fisheries/forestry businesses Contact: maineharvestcp.org 653-5527 / scott.j.budde@gmail.com

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