Small business entrepreneurship is a key source of job creation for rural counties across America. These businesses generate economic activity that can multiply throughout the community. But, they also face many challenges, including difficulty in accessing capital, identifying lenders, and acquiring training for business planning and financial management.
The U.S. Department of Agriculture (USDA) Rural Microentrepreneur Assistance Program (RMAP) addresses the unique challenges faced by rural small businesses, and helps them overcome adversity.
What is it?
Created in the 2008 farm bill, Rural Microentrepreneur Assistance Program has enabled numerous small rural businesses to access much-needed loan capital and technical assistance. Rural Microentrepreneur Assistance Program makes grants to organizations that provide training and technical assistance and make small loans to new and existing rural small businesses.
- Since 2010, Rural Microentrepreneur Assistance Program grants have gone to nearly every state, Washington, D.C., and Puerto Rico.
- Rural Microentrepreneur Assistance Program has facilitated more than 2,100 small businesses in expanding operations, creating jobs, and tapping into new markets.
- In 2019, 95 organizations in 32 states received grant funds to provide technical assistance to qualifying businesses; several of these also received revolving loan funds.
Rural Microentrepreneur Assistance Program provides funding for three areas of work:
- Loans to microentrepreneurs through organizations: Funds to provide fixed interest rate microloans of less than $50,000 to entrepreneurs for the development or startup of successful microenterprises in rural areas. Loans cannot exceed a 10-year timeframe and must have an annual interest rate of at least 1 percent.
- Grants to organizations to assist microentrepreneurs: Funding to organizations to provide marketing, management, and other technical assistance to microentrepreneurs who received or are seeking a loan from the organization. The maximum annual grant award to organizations is equal to not less than 20 percent and not more than 25 percent of the organization’s total outstanding microloan balance.
- Grants to support microenterprise development: Funding to organizations to provide training, operational support, business planning, market development assistance, and other services to rural entrepreneurs. Grants are targeted to organizations which serve microenterprises in rural areas that have suffered significant outward migration.
Who can apply for grants?
This program provides grants and loan funds to organizations that provide training and technical assistance to rural microentrepreneurs, facilitate access to capital and access to services for rural microenterprises, and have a history of delivering services to rural small businesses.
Nonprofits, federally-recognized tribes, and institutions of higher education are eligible to participate. Applicant organizations do not need to be located in a rural area.
Additionally, organizations must establish a loan loss reserve fund, and maintain a reserve fund in an amount equal to at least 5 percent of the outstanding balance of such loans owed by the organization.
Eligibility for microentrepreneurs
To qualify for assistance from an organization, a business must not be able to access loan capital or financial assistance from other sources. They must be either a sole proprietorship, or have 10 or fewer employees, and be located in a rural area.
Example of a Rural Microentrepreneur Assistance Program grantee
The Center for Rural Affairs has received a Rural Microentrepreneur Assistance Program grant for its small business program.
The organization delivers small business training, networking, one-on-one technical assistance, and microloans to rural entrepreneurs.
The Center for Rural Affairs has received both revolving loan funds and funds for technical assistance every year it has been eligible for such awards since Rural Microentrepreneur Assistance Program was created.
Examples of types of Nebraska businesses that have benefitted from these loan funds and/or training and technical assistance include: a brewpub, a veterinary clinic, a dog-grooming business, and a photography business.
Rural Microentrepreneur Assistance Program funding for fiscal year 2020
The Agriculture Improvement Act of 2018 reauthorized Rural Microentrepreneur Assistance Program at $20 million in discretionary funding for each of the fiscal years 2019 through 2023, but did not provide mandatory funding.
The fiscal year 2020 appropriations bill provided $6 million in discretionary funding for Rural Microentrepreneur Assistance Program.
Legislative references
Section 6422 of the Agriculture Improvement Act of 2018 amends Section 379E(d) of the Consolidated Farm and Rural Development Act of 1961, codified at 7 U.S.C. Section 2008s.
