Capital Shortage in Rural Alaska
THE CAPITAL SHORTAGE IN RURAL ALASKA
Alaska Growth Capital was established to respond to the acute capital shortage in rural Alaska. The state of Alaska recognized this capital shortage when it allocated $3 million through the Alaska Science and Technology Foundation for the establishment of Alaska Growth Capital, Alaska’s first Business and Industrial Development Corporation (BIDCO). This allocation was structured to encourage the first BIDCO to focus on rural development. Arctic Slope Regional Corporation recognized this capital shortage when it committed $3 million in corporate assets to the establishment of Alaska Growth Capital.
Rural Alaska is a remote and underdeveloped area. Two of the census districts targeted in Alaska Growth Capital’s CDFI application — Yukon-Koyukuk and Wade Hampton — together cover a geographic area only slightly smaller than the size of Texas. Within this area, there is not a single bank. Another targeted area — the North Slope Borough — is only slightly smaller and it has only one bank.
The capital shortage in rural Alaska is the result of numerous factors including:
Poor communication resulting from cross cultural issues.
A land and resource base that until recently was in a state of legal limbo.
Lack of access to entrepreneurial expertise.
Growth Capital is in a unique position to help remove these barriers blocking access to capital.
THE MAGNITUDE OF THE RURAL CAPITAL SHORTAGE
Attached to this supplement is a chart entitled “Debt Financing in Targeted Areas is Estimated to be Less Than One Third of the National Average”. Attached to this chart is a two-page description of the methodology behind this quantitative analysis.
This analysis estimates a capital shortage of about $300 million in the targeted census districts. This estimate was generated by analyzing total business revenues in the targeted census districts and then calculating an expected total deb…