As Maine’s food economy continues to grow, a group of supporters is working to set up a financial institution to provide farmers, artisan cheese-makers and craft brewers with stronger financing roots.

The Maine Harvest Credit Project’s goal is to establish a credit union that the backers believe would fill a gap in available financing, offering farm mortgages in the $100,000 to $500,000 range and equipment loans of $25,000 to $100,000.

Scott Budde, the project director who will be the chief executive officer of the credit union when it opens – likely in early 2017 – said farmers, food producers and the like are an underserved sector because few banks are likely to have loan officers who really understand the food economy and unique nature of a farm’s business operations. Larger banks, in particular, don’t see a farmer as being the kind of customer who will grow and provide big profits for the bank down the road.

“The big, ugly banks don’t care – which is a wonderful thing,” Budde said.

Budde used to work at TIAA-CREF, the huge pension and investment firm that started out managing retirement funds for teachers. While there, he created the firm’s first division focusing on strategies to make investments that could have a social impact.

Budde identified food producers as an underserved community and got a grant for a yearlong study of the needs of farmers and small food-producers, especially in New England. He initially thought a New England-wide credit union could help.


“The whole region used to be agricultural, and now it’s resurrecting,” he said, largely because of the increasing popularity of locally sourced food, both for consumers and restaurants.

But Budde said a regional credit union would be difficult to establish, given the maze of state and federal rules. Maine represents an opportunity to start small, he said – and in a state where credit unions are popular.

John Murphy, president of the Maine Credit Union League, said 651,000 Mainers – roughly half the state’s population – have credit union accounts. Most credit unions, which are nonprofits, take part in a system that allows members of one credit union to use another credit union’s branches or ATMs to do most of their banking.

A credit union can essentially select its retail customers and those it plans to lend to. Many are organized around a geographic region, but it’s not unusual for a credit union to serve a narrower slice of the population – people who work in a particular industry, for example.

Murphy said he’s been working with Budde and the advisory board of the credit project for more than a year, and praises them for their tenacity.

“It’s not a walk in the park to organize a financial institution these days,” a fact that Budde wearily agrees with.


He holds his fingers about 3 inches apart, saying that’s the thickness of the initial stack of paperwork to establish the credit union with the National Credit Union Administration. “And this is how thick the response is,” he said, holding his hands about a foot apart.

Murphy praised Maine Harvest for focusing on farming, agreeing that it’s a unique industry that needs a financial institution attuned to its needs.

“You have to understand how the farming business works and the financing needs and the seasonal nature of it,” Murphy said. “The industry is somewhat unique.” The credit project is also being backed by the Maine Farmland Trust and the Maine Organic Farmers and Gardeners Association.

“It does fill a gap that exists,” said Ted Quaday, executive director of MOFGA, which operates a small loan fund for its members.

“Farmers have a hard time finding lenders,” Quaday said. “It’s a huge opportunity for Maine farmers to get access to credit that they might not be able to otherwise find.”

Budde said Maine Harvest is also working with Slow Money Maine, which lines up investors with Maine farms and fisheries. It provides a complementary financial role in the food economy, he said.

In addition to working through the application process to establish a credit union, Budde said Maine Harvest is seeking $2.4 million in donations. He said the goal is to raise half of that this year to support the applications process. Eventually, three-quarters of the money would be used to support lending once the credit union is established, and 25 percent would support expenses. He said the credit union might operate only electronically, with no cash transactions, because the setup process would be simpler and regulations are not quite as stringent.

Once the credit union is established, he said, it expects to raise about seven times the donations in deposits, providing the funding for more loans to farms and small food-related businesses.

The credit union would initially be a small operation, he said, with Budde, a loan officer and an operations manager.

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