Rural Microentrepreneur Assistance Program
Program Basics
The Rural Microentrepreneur Assistance Program (RMAP) is a new USDA Rural Development program created by the 2008 Farm Bill that will provide entrepreneurs in rural areas with the skills necessary to establish new businesses and continue operation of existing rural microenterprises.
RMAP provides loans and grants to Microenterprise Development Organizations (MDOs), which in turn provide technical services and distribute microloans to rural microentrepreneurs. The MDOs are not required to be located in a rural area to be eligible to participate but microentrepreneurs must be. Microenterprises may be, but do not have to be, food or agriculture-related.
A few MDOs have already been successful at assisting microentrepreneurs start businesses in rural areas. Lenders and entrepreneurs have received funds through other USDA programs such as the Intermediary Relending Program or Rural Business Enterprise Grants, through the Small Business Administration’s Microenterprise Assistance Program, or through private, philanthropic, or venture capital funds. The SBA program is generally fully subscribed and provides rural microenterprise assistance in only one state. RMAP now gives USDA the funds to fill that void.
MDOs can include nonprofit entities, Indian tribes, or public institutions of higher education; they must facilitate access to capital and have a demonstrated record or future plan of delivering vital services to rural microentrepreneurs.
RMAP provides three categories of funding through MDOs in either loans or grants:
- Loans to microentrepreneurs through MDOs: provide fixed interest rate microloans of less than $50,000 to rural entrepreneurs for the development of startup or successful microenterprises in rural areas. Loans through MDOs cannot exceed a twenty-year timeframe and need to bear an annual interest rate of at least 1 percent. Each MDO must establish a loan loss reserve fund and keep at least 5 percent of the outstanding loan balance in reserves. Through MDOs, RMAP will particularly assist 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.
- Grants to support microenterprise development: provide funding to MDOs to provide training, operational support, business planning, market development assistance, and other services to rural microentrepreneurs. Grants will be targeted to organizations which serve microenterprises in rural areas that have suffered significant outward migration; to the greatest extent possible, USDA is directed to ensure that recipients will be organizations of varying sizes and those which serve racially and ethnically diverse populations.
- Grants to assist microentrepreneurs: provide funding to MDOs to provide marketing, management, and other technical assistance to microentrepreneurs who have already received or applied for a loan through section (1) above. The maximum annual grant award can be no more than 25 percent of the organization’s outstanding microloan balance. This assistance could include but is not be limited to networking, online collaboration and marketing, grant-writing, entrepreneurship workshops or conferences.
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RMAP Funding – FY 11 |
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Estimated Total Program Funding |
$13.0m in grants and loans for fiscal year 2011 |
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Average Microloan |
$12,300* |
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Cost Sharing Requirements |
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* Indicates information for Small Business Administration Microloans as of 2005—no information is available specifically for RMAP because it is a new farm bill program.
2008 Farm Bill Changes
This is a new farm bill program.
Section 6022 of the Food, Conservation, and Energy Act (FCEA) of 2008 amends Subtitle D of the Consolidated Farm and Rural Development Act to establish a new Rural Microentrepreneur Assistance Program, to be codified at 7 U.SC. Section2008s.
Funding
The 2008 Farm Bill authorizes $15 million in mandatory funding over four years for RMAP. RMAP is also authorized to receive up to an additional $40 million a year in discretionary funding.
RMAP was funded at $9 million in the FY 2010 agricultural appropriations bill, $17 million short of President Obama’s budget request but $5 million more than its mandatory level. With the $4 million in mandatory funding carried forward from FY 2009, RMAP had $13 million available for FY 2010. No new funding is available for FY 2012, due to appropriation cuts.
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Rural Microentrepreneur Assistance Program (RMAP) Mandatory Funding |
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2008 |
2009 |
2010 |
2011 |
2012 |
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– |
$4m |
$4m |
$4m |
$3m |
Please note: The funding levels in the chart above show the amount of mandatory funding reserved by the 2008 Farm Bill for RMAP to be provided through USDA’s Commodity Credit Corporation. However, Congress does at times pass subsequent appropriations legislation that caps the funding level for a particular year for a particular program at less than provided by the farm bill in order to use the resulting savings to fund a different program. Therefore, despite its “mandatory” status, the funding level for a given year could be less than the farm bill dictates should the Appropriations Committee decide to raid the farm bill to fund other programs under its jurisdiction.
Implementation Basics
RMAP will be administered as a national program through the Business Programs Office of USDA’s Rural Business-Cooperative Service. A program rule was supposed to be finalized in 2010, but has yet to be.
For up-to-date application deadlines and links to the current RFA, please go to NSAC’s farm bill programs and grants page.
Examples of Current Microenterprise Development Organizations
Center for Rural Affairs (http://www2.cfra.org/reap/loan_programs.htm)
The Center for Rural Affairs in Lyons, NE, has been operating its Rural Enterprise Assistance Project (REAP) since 1990. REAP is a microenterprise program “that delivers small business training, networking, one-on-one technical assistance, and micro lending to businesses that are members of a REAP ‘association’ or members of the REAP Individual Program.”
NC Rural Economic Development Center (http://www.ncruralcenter.org/loans/micro.htm)
North Carolina Rural Economic Development Center, Inc.’s Business Loan Program has been providing loans to rural small businesses since 1989. Their Microenterprise 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.
Examples of a Current Microloan Program Recipients
Lil’ Ladybug (www.littleladybuggardens.com)
With the help of the Association for Enterprise Opportunity’s cash equity microloan of $2000 and the Center for Rural Affairs’ REAP training sessions, Karen Runkle of Hay Springs, NE, started a tomato marketing business called Lil’ Ladybug. The microenterprise is marketing tomatoes indirectly to farmers markets and Community Supported Agriculture (CSAs) and directly from her greenhouse to consumers.
The Quilter’s Cottage (www.quilterscottage.net)
Phyllis Hamaker opened The Quilter’s Cottage in January, 2001 after purchasing inventory and remodeling the space with her husband. After purchasing more inventory, however, she found that she needed additional working capital to make improvements to the store. A REAP loan was approved in 2004, and the business continued to grow. Hamaker has now expanded to an even larger building where she teaches quilting classes and continues to sell her artwork.
USDA Contact Information
Website: http://www.rurdev.usda.gov/BCP_RMAP.html
Lori Washington, Loan Specialist, Business Programs, Specialty Programs Division, USDA, Rural Development, Rural Business-Cooperative Service, , 202-720–9815.