Rural Microentrepreneur Assistance Program
What Is It?The Rural Microentrepreneur Assistance Program is a new program created by the 2008 Farm Bill. USDA will administer the program, which will make grants to organizations that provide training, technical assistance or make small loans to new and existing rural small businesses. The Rural Microentrepreneur Assistance Program will have $4 million available for fiscal years 2009-2011, and $3 million for 2012.
Who Can Apply for GrantsThis program will provide grants and loan funds to organizations that provide training and technical assistance to rural small business owners, facilitate access to capital and access to services for rural microenterprises.
Organizations eligible to apply for funding include nonprofit organizations, public institutions of higher education, and tribal governments that are not served by a nonprofit development organization. Applicants should have a demonstrated record of delivering services to rural microentrepreneurs or an effective plan to develop such a program. Applicant organizations do not need to be located in a rural area, but they must serve rural entrepreneurs. Microenterprises can be food or agriculture-related but are not required to be.
The farm bill defines organizations meeting the above qualifications as Microenterprise Development Organizations.
What the Program SupportsThe Rural Microentrepreneur Assistance Program provides funding for three areas of work.
- Loans to microentrepreneurs through applicant organizations: Funds to provide fixed interest rate microloans of less than $50,000 to rural entrepreneurs for the development or startup of successful microenterprises in rural areas. Loans can be made to rural sole proprietorships or businesses with less than ten employees which could not obtain funding from other lending sources due to lack of credit or limited business development experience. Loans cannot exceed a twenty-year timeframe and must have an annual interest rate of at least 1 percent.
- Grants to organizations to assist microentrepreneurs (connected to loan funds): Funding to organizations to provide marketing, management, and other technical assistance to microentrepreneurs who received or are seeking a loan from the microenterprise development organization. The maximum annual grant award is limited to no more than 25 percent of the organization’s outstanding microloan balance.
- Grants to support microenterprise development (not connected to loan funds): Funding to organizations to provide training, operational support, business planning, market development assistance, and other services to rural entrepreneurs. To the greatest extent possible grants will be targeted to organizations which serve microenterprises in rural areas that have suffered significant outward migration. USDA is directed to ensure that recipients will be organizations of varying sizes and those which serve racially and ethnically diverse populations.
What You Need to Know to ApplyThe Rural Microentrepreneur Assistance Program program will most likely be administered as a national program through USDA Rural Development’s Business Programs Office. We expect USDA to issue a request for proposals in the first quarter of 2009.
Applications must meet the following standards:
- Federal share of the cost of a project funded by this program shall not exceed 75%
- MDOs must match at least 15% of any grant amount
- Not more than 10% of any grant received by an MDO may be used for administrative expenses
For more information contact Steph Larsen, Rural Policy Organizer, Center for Rural Affairs at email@example.com or (402) 687-2103 ext 1014.
Examples of Current Microenterprise Development OrganizationsCenter for Rural Affairs
Established in 1990, the Rural Enterprise Assistance Project (REAP) at the Center for Rural Affairs, delivers small business training, networking, one-on-one technical assistance, and microloans to rural entrepreneurs. To read about success stories of various microenterprises visit this link.
NC Rural Economic Development Center
North Carolina Rural Economic Development Center, Inc.’s Business Loan Program provides loans to rural small businesses. Their loan program works in partnership with small business centers at local community colleges and technology development centers to provide technical assistance and business planning to microenterprises.
USDA InformationA website specifically for the Rural Microentrepreneur Assistance Program has not yet been launched, but will likely be located with other USDA Rural Development Business Programs at this site.
DefinitionsThe farm bill provides several definitions related to the program.
- Microenterprise development organization (MDO): an organization that is a nonprofit entity, Indian tribe (that is not served by an MDO), or public institution of higher education that provides training and technical assistance to rural microentrepreneurs, facilitates access to capital and services to rural microenterprises and has a demonstrated record of delivering services to rural microentrepreneurs or an effective plan to develop such a program
- Microentrepreneur: an owner and operator or prospective owner or operator of a rural microenterprise unable to obtain sufficient training, technical assistance or credit
- Microloan: a business loan of not more than $50,000
- Rural: any area other than 1) a city or town with 50,000 or greater population, or 2) an urbanized area contiguous or adjacent to a city or town with 50,000 or greater population
- Rural Microenterprise: sole proprietorship or business with no more than 10 full-time equivalent employees