When it comes to beer, Oregon is known far and wide as a hub of innovation and artistry or, as we locals call it, “beer-topia.” Since the 1980s, small breweries have been popping up across Oregon thanks to the state’s pristine water, abundant hops and grain fields, forward-thinking craft brewing policies, and talented foodies. In the process, Oregon’s brewers have tapped a powerful economic engine. According to the Oregon Brewers Guild, the state’s beer industry today generates $2.83 billion in economic activity in the state and employs 29,000. And the future shows even more promise. The Brewers Association notes nationwide growth of the craft brewing industry in 2012 at 15 percent by volume and 17 percent by dollars.
Deschutes Brewery, Inc. is one of the pioneering businesses that helped establish the state’s craft brewing industry. Gary Fish founded the company in 1988 with 12 employees and a brew pub in downtown Bend, Oregon. By 1993, the increasing demand for their craft beers led Fish to build a separate brewery across town. With the added capacity, the company enjoyed increasing sales in a burgeoning market for artisanal products.
In the late 1990s Wells Fargo, Deschutes’ lender, helped strategize another major expansion to the company’s brewery facility. As part of that plan, the lender approached USDA Rural Development for the first of three loan guarantees through the Business and Industry (B&I) program. The program is designed to help credit-worthy rural businesses access private capital at favorable rates and terms and, ultimately, save and create jobs in rural communities.
Rural Development’s first loan guarantee in support of the business was made in 1997 when the company employed around 50 employees. The $1.3 million loan allowed for the purchase of new kegs and keg-filling equipment to expand production, increase quality, and open up new markets.
The larger component of the financing package was ultimately developed and submitted to Rural Development in late 1999. This request included two simultaneous B&I loan requests totaling $6.5 million. These loans, with a USDA B&I guarantee, were used to restructure existing debt while expanding Deschutes Brewery’s operation and production capacity even further. At the same time, the loan guarantees helped the bank manage their loan portfolio in a safe and profitable manner while fueling rural economic activity with lower-cost funds.
Since then, Deschutes Brewery has flourished by opening a second successful brew pub in Portland and expanding distribution from only five western states in 1997 to 21 states and Canada today. Out of more than 2,300 craft brewers in the United States, Deschutes ranks 5th for sales volume (12th among overall U.S. brewing companies) and employs more than 415 employees.
This is not just a delicious and mildly intoxicating company success story. It’s also a perfect example of how programs like USDA’s Business and Industry loan guarantee can smartly and efficiently fuel rural job creation in partnership with commercial lenders and private businesses.
From 2009 through 2012 in Oregon, the B&I program guaranteed 82 business loans amounting to $151.4 million and saving or creating an estimated almost 3,000 jobs.
Whether or not you drink beer, you might just consider raising a glass to a good program that’s helping private industry keep rural America working. Cheers!
To find out more about how USDA’s business programs can assist your rural business, click here.
