VEDA-doing (small) business in Vermont for 50 years


Jericho Settlers Farm. Photo: VEDA

Jericho Settlers Farm. Photo: VEDA

Successes, challenges and the future of entrepreneurship and ag businesses

by Joy Choquette, Vermont Business Magazine

“It was the best of times, it was the worst of times…” In many ways, the current business climate in Vermont mirrors the opening sentiment from Dickens’ “A Tale of Two Cities.”

Entrepreneurship and the technology tools to support it have never been closer at hand or easier to access. Yet many small businesses have been forced to close their doors in the past few years.

Some closures were due to the pandemic, others to high-interest rates or lack of staffing. Still others fell prey to the Great Flood of 2023.

New businesses continue to open, however, keeping the staff at the Vermont Economic Development Authority busy processing new applications. VEDA, with offices in Burlington, Montpelier and Middlebury, recently celebrated its 50th anniversary.

What Is VEDA? What Has It Done In The Past 50 Years?

VEDA’s role is to provide financial assistance to eligible agricultural and commercial businesses. It also works to help these businesses grow and create more Vermont jobs. Since its inception in 1974, the organization has provided $2.6 billion in financing to eligible businesses.

CEO Cassie Polhemus counts among the authority’s greatest successes its role in helping individual businesses and farmers grow “from an unknown into an iconic Vermont brand.” A few of the most notable? Ben & Jerry’s, Gardener’s Supply, Darn Tough Socks and Black River Produce.

Photo: Cassie Polhemus, CEO of VEDA. Courtesy photo.

Cassie Polhemus, CEO of VEDA. Courtesy photo.

“The list keeps going, and we know many of the borrowers we are helping today will make it on that list down the road,” Polhemus said.

“We know the cost of living is high and increasing all the time,“ she added. “Our goal at VEDA is to make it possible for business owners — existing and those just starting out — to accomplish their goals. We’ve seen this happen time and time again during the last 50 years, and it is always inspiring. We’re here to support Vermonters, plain and simple.”

The organization also partners with other agencies to help entrepreneurs and farmers. “In the agricultural sector, we work closely with our partners in Vermont’s Farm Service Agency to make loans to beginning farmers,” Polhemus said. “The program provides very favorable terms and is a great source of financing for someone with 10 years or less in farming.”

How HAS VEDA Helped Small Businesses Thrive?

While VEDA started as a lender focused on commercial and industrial lending, its scope and mission have evolved over time. Today, loans are made in three distinct sectors: agriculture & forestry, commercial business and energy.

“Loans to agricultural businesses represent about one-third of our loan portfolio,” Polhemus said.

At the end of 2023, VEDA’s loan portfolio stood at approximately $269 million, comparable in size to a small community bank. That figure comprised ag loans of $87 million, energy loans of $36 million and $146 million in commercial loans.

Polhemus explained how rates are set: “Unlike traditional financial institutions such as banks and credit unions, VEDA does not have deposits to lend out. Instead, VEDA borrows from larger banks and relends that money to Vermont businesses. To stay financially viable, VEDA needs to charge an interest rate to its borrowers that will cover VEDA’s interest costs and its overhead expenses. The rate to VEDA’s borrowers is generally lower than typical bank rates for comparable loan types and credit risks. This is just one of the advantages of doing business with VEDA.”   

VEDA’s website explains that loans through the Vermont Agricultural Credit Corporation (VACC) program feature variable interest rates subsidized for two years or fixed interest rates subsidized for five, seven or 10 years. The site notes that these rates may change and encourages visitors to contact the organization for its current rates. 

From Coffee to Sweet Potatoes

Uncommon Coffee Co., in Essex, is one example of an entrepreneurial success that ties into VEDA’s overall mission. The coffee roaster and café is owned by Maya Crowley, former manager of Uncommon Grounds in Burlington. Crowley describes her experience working with VEDA as exceptional.

“They went above and beyond to help me, and I always felt like they cared about me and my story more than a lot of other institutions would,” Crowley said. “Since our business was in the unique position of being both a successor business to another retailer as well as a new business, our FLP (Farm Loans Program) loan required special care and attention.

Eun-Young Denny, senior commercial loan officer at VEDA, helped Crowley navigate the loan process.

Coffee roasting at Uncommon Coffee.   Photo credit:  Jacquelyn Potter

Coffee roasting at Uncommon Coffee. Photo credit: Jacquelyn Potter

“She identified that we weren’t going to fit neatly into a category, so she helped add context to our loan application, which was essential in its success,” Crowley said.

Timothy and Brooke Hughes-Muse, owners of Laughing Child Farm in Pawlet, which supplies grocery stores and specialty markets throughout New England, said VEDA played a pivotal role in the farm’s startup and success.

“While we initially relied on the generosity of neighbors for land and equipment, VEDA stepped in to fill the crucial gap by funding the purchase of essential equipment necessary for organic sweet potato cultivation,” Brooke Hughes-Muse said.

Later, when the couple were ready to purchase a permanent farm, VEDA helped them obtain a mortgage.

“Their assistance was integral to our early success and stability,” Hughes-Muse said.

Ian and Caitlin Ackermann, owners of Ackermann Maple Farm in Cabot, are another VEDA success story. The 17,000 maple trees on the couple’s 148-acre farm produces more than 5,000 gallons of maple syrup and other maple products annually.

Caitlin Ackermann said VEDA offered her and her husband a chance to get started when more traditional lenders were nowhere to be found.

While other banks “won’t even look at you if you don’t have a substantial income already,” Ackermann said, “VEDA sees the potential of your business plan and knows that even if you start with nothing, you’ll be able to make it happen with the opportunities they give you.”

She said the authority opened doors that would otherwise have been locked.  Once a year, a VEDA representative visits the farm to review the couple’s numbers with them. While this might seem tedious to some, Ackermann finds it “hugely helpful.”

“They are always there with advice for how to proceed with our business. It’s good to know we have that extra personal support,” Ackermann said. “Banks are big business, and VEDA takes it to a personal level.”

This sentiment is shared by Feyzi and Holly Menguc, who run Tup’s Crossing, a goat dairy farm in Orwell.

“VEDA offers lines of credit for farm businesses with three years of experience,” Holly Menguc said.

The couple opened a line of credit as soon as they met VEDA’s requirements, she said.

Menguc said she appreciates the ease of working with VEDA and the manner in which the organization collaborates with the Vermont Farm Service Agency.

“We work with VEDA because they work with farmers and, most importantly, because of their close connections with the FSA,” Menguc said. “Our loan officers work closely together, which makes communication simple for us.”

Matt Durkee, president of commercial banking at Community Bank, said he is not surprised by the glowing testimonials of VEDA clients.

“VEDA is often an integral partner for the state’s financial industry to assist with the financing of new and/or expansion projects to bring needed jobs to our state,“ he said. “Their collaborative approach to economic development is one of the key differentiators we have.”

Tom Gallagher, president and CEO of Peoples Trust Co. and a VEDA board member. He noted, “Increasing or decreasing rates can present a set of unique challenges to any lending organization. VEDA has managed through different interest rate cycles successfully during its 50 years of existence.”

Photo: VEDA at the 2023 Addison County Fair & Field Days. Peter Fitzgerald (L) and Ellen Howrigan (R) with a VEDA borrower. Photo credit VEDA

VEDA at the 2023 Addison County Fair & Field Days. Peter Fitzgerald (L) and Ellen Howrigan (R) with a VEDA borrower. Photo credit VEDA

What Entrepreneurship Is Really Like

Crowley at Uncommon Coffee Co. said a lot of what she does would surprise people who don’t run a business. Many people assume owning a café means working behind a counter. They don’t often think about the other tasks that Crowley performs during a typical workweek: supporting clients who buy wholesale coffee, traveling to teach about coffee, planning, administrative tasks — even doing maintenance and repair work.

Ackermann said the public has several misconceptions about the process of producing maple syrup. These include the expense of and the time involved in running a sugaring operation. It’s not unusual to sleep in small spurts during the busiest parts of the season, she said.

“Building a business from scratch is very time-consuming and takes a lot of grit,” Ackermann said. “But as we always say, ’We work 80 hours a week so we don’t have to work 40.’”

Similarly, Hughes-Muse said misconceptions about farming life abound. For example, many people are surprised to learn how busy she and her husband are off-season.

“Contrary to popular belief, winters are far from dormant for us,” she said. “Instead of taking a break, we find ourselves immersed in a flurry of activity, from meticulously washing and packing sweet potatoes to orchestrating their shipment. It’s during these colder months that our workload often peaks, showcasing the year-round dedication required in agriculture.”

Gallagher said Hughes-Muse’s story is typical of what he hears from other farmers.

“Vermonters historically adapt and overcome business challenges and emerge stronger than before,” he said. “There are so many success stories throughout the state and within VEDA’s customer base of perseverance and overcoming obstacles.”

Looking Forward

Tup’s Crossing has plans for continued improvement and expansion, albeit slowly.

“We are focused on running a tight ship and keeping the smallest number of animals possible and still being financially solvent,” Menguc stated.

Ackermann Maple Farm is also looking to expand.

“We do a lot of online business, and it’s been steadily growing every year,” Ackermann said. “In 2023 we diversified into the firewood business, and VEDA helped us with that too.”

The farm currently produces 1,000 cords of firewood through this venture. “The goal has always been to spend money wisely, pay our bills to VEDA, and when it’s all said and done, have a business to hand down to our kids,” said Ackermann.

At Laughing Child Farm, Hughes-Muse said she is not currently focused on expansion. “Rather than simply scaling up, we’re committed to honing our craft and elevating the quality of our product,” she said.

She and her husband are looking to refine their operations and produce even better sweet potatoes.

“This includes strategic investments in advanced field equipment to minimize harvest damage and the development of state-of-the-art, climate-controlled storage facilities,” Hughes-Muse said. “By prioritizing innovation and efficiency, we aim to not only meet but exceed consumer expectations, ensuring the long-term sustainability and success of our farm.”

VEDA board member Gallagher said he is moved by the success of VEDA’s many clients.

“It’s difficult to review these borrower stories and not feel energized and excited for the future of Vermont,” he said.

 

Joy Choquette writes from the Franklin County area.

www.vermontbiz.com



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