Consider the possibilities: Six of Appalachian Kentucky’s most respected business development lenders joining together to leverage additional resources, combine expertise and minimize risk.

The Appalachian Development Alliance (ADA) is making the possibilities real. Every member orgvanization is a nontraditional, multi-county business lender focused on the collective success of eastern Kentucky and its business interests. Each organization operates a revolving loan fund with capital obtained from public and/or private sources and couples that with technical assistance to help regional businesses thrive.

While the potential for competition is great, members understand that collaboration is imperative to truly make a lasting difference for Appalachian Kentuckians. And it’s working largely due to the cooperative nature and leveraging power of the ADA members. In the 10 years prior to forming the ADA, founding members have:
• Served nearly 3,000 businesses
• Created or saved 14,500 jobs
• Leveraged $350 million in private investments
Lent $75 million to regional businesses
• Helped to increase the capacity of other business development lenders
• Demonstrated a lasting commitment to the people of Appalachian Kentucky
• Accomplished outstanding results by working collaboratively

In June 2003, the ADA received its first funds to lend. Within 30 days of receiving $1 million from the state of Kentucky, the Alliance closed eight, $125,000 loans to members. Member organizations immediately put the funds to work. In 18 months time, members closed 23 loans that created or retained 112 jobs and leveraged $3.8 million of other capital. By summer 2005, ADA members lent or leveraged over $14 million of their own or other resources.

Financial Solutions
The ADA has expanded its financial products to best address the major challenges and issues facing eastern Kentucky’s economy. Through these products, the ADA can better target motivated entrepreneurs who are building opportunities and seeking self-reliance in a changing economy.

Large Project Rate Enhancement Loans
Large Project Rate Enhancement Loans are made available to members structuring affordable financing for projects exceeding $250,000.

Structured Financing
It’s important that members with fully deployed loan funds can continue their work. So the ADA makes structured finance loans (up to $200,000) based on a discounted percentage of the member’s appraised portfolio value. This allows the organization to continue to assist the region’s businesses, build capacity and provide a safety net.

Agriculture Diversification Loan and Value- Added Wood Products Guarantee Program
The health of Kentucky’s rural economies requires investment in small farm communities, local artisans, cultural tourism and value-added strategies that capitalize on the region’s natural resources. Eastern Kentucky is home to over 90,000 family farms, over half of Kentucky’s tobacco-growing farms, 1,000 working artists and craftsmen and the state’s most significant and valuable forest resources. All present opportunities for economic growth but require investment capital and implementation strategies to succeed.

Economic Potential for the Region’s People
The following three indicators show the region’s extreme economic hardship in
contrast to the rest of the country.

Economic development opportunities do exist. The region’s economy is diversifying—a growing service industry, cultural and agri-tourism are filling the void in rural areas that lack viable industry. Education systems are improving while the rugged individualism that helped tame the mountains is re-emerging as eastern Kentuckians are creating their own opportunities through entrepreneurial endeavors.

Rural isolation and shifting economies are not the only challenges that Appalachia faces. Bank consolidation and decreased competition further restrict access to capital. Between 2000 and 2004, Kentucky lost 43 banking institutions with an accompanying decrease in assets of $3.8 billion.

The ADA has proven itself to be a vital source of capital to the region’s entrepreneurial ventures. The market potential is still far greater than the funds available. From June 2003 through July 2007, ADA members have invested no less than $55 million in the region’s economy. Members project another $12 million in capital will be needed over the next 24 months to meet borrowers’ requests.

ADA is always looking for additional lending partners to cross-market and leverage its member resources. Contact us at 606-524-6224 or to join us in our effort to expand Kentucky’s economy.

Founding Alliance Members:

Appalbanc/HEAD Corp. (Human/Economic Appalachian Development Corporation)
Appalachian Federal Credit Union, est. 1974 |

Community Ventures Corporation (Lexington, KY) est. 1982 |

Kentucky Highlands Investment Corporation (London, KY), est. 1968 |

Mountain Association for Community Economic Development (Berea, KY), est. 1976 |

Mountain Economic Development Fund (Winchester, KY), est. 1994

Southeast Kentucky Economic Development Corporation (Somerset, KY), est. 1986 |

East Kentucky Corporation (Hazard, KY), est. 1990

Pine Mountain Community Development Corporation (Cumberland, KY), est. 1996 |

Appalachian Development Alliance
Ed Harris, Executive Director
P.O. Box 1738, London, KY 40743-1738

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