80-Year-Old Iowa Grain Elevator Company Saved From Closure by CU
Iowa company Troy Elevator is familiar with starting a business during uncertain times, having gotten its start on the eve of the Great Depression in 1928 as a produce company buying and selling chicken, eggs, cream and wool.
With the growth of fertilizer sales in the 1960s, Troy Produce, its original name, expanded its offerings to include bagged fertilizer and grain. The Bloomfield-based company bought a grain elevator and built storage bins. Over the years, Troy continued to grow to a total storage capacity of 2.5 million bushels with the goal to fill to capacity every fall, according to the company's website.
However, in 2008, Troy suffered severe tornado damage at its Pulaski, Iowa, site. Robert Newton, president of Troy, began working with his lender at that time to restructure the company's long- and short-term debt in an effort to recover from the damages. In January 2009, the lender informed Newton it would no longer do business with the company.
"We had never missed a payment or been late in our 18-month relationship with the bank," Newton said. "We were completely shocked and frustrated that they wouldn't help us."
That's where Community 1st Credit Union came in.
"We knew Troy Elevator was having issues with their lender and we didn't want to see them close their doors," President/CEO Terry Maloy said.
The Ottumwa, Iowa-based credit union recently provided a guaranteed loan to Troy through the U.S.D.A. Rural Development Loan Program. The $310 million CU began working with the business in December 2009. After receiving the loan in August, Troy was able to reorganize its operations and keep all 40 jobs in Iowa.
"We are so thankful to Community 1st Credit Union for stepping up to help us during our desperate time of need, especially when banks turned us away," Newton said. "We were able to save our business and the jobs of our employees thanks to this credit union."
While Community 1st was able to make the loan to Troy Elevator, it may not be able to do the same for the next struggling business owner. The CU said it is currently at its 12.25% of assets member business lending cap. Prior to 1998, there was no statutory limit on credit unions' member business lending, said Patrick Jury, president/CEO of the Iowa Credit Union League.
"Iowa credit unions have always practiced safe lending practices and now more than ever, Iowans are turning to credit unions for their business lending needs," Jury said. "Iowa credit unions are in a position to do even more if given the opportunity, allowing for greater capital expenditures, greater economic activity and-ultimately-more job creation."
When the U.S. Senate returns from the August district work period, it will consider H.R. 5297, the Small Business Jobs and Creation Act. An amendment to the legislation offered by Sen. Mark Udall (D-Colo.) would increase the MBL cap. If enacted into law, it is estimated that the cap increase would create more than 100,000 new jobs and add $10 billion in new capital to the economy for business owners to borrow, according to the league. In Iowa, this would amount to approximately $137 million in new lending and more than 1,400 jobs, the league said.
"Congress should adopt the Udall amendment as a common-sense solution that will help businesses, create jobs and allow credit unions to continue doing what they do everyday-serving the financial needs of our members," Jury said.