USDA Expands Access to Capital for Very Small Rural Businesses

Erin McDuff
Release Date
May 27, 2021

The U.S. Department of Agriculture (USDA) Rural Development implemented a series of actions to make it easier for very small rural businesses to get access to capital.

Rural Development published a final rule outlining changes to the Rural Microentrepreneur Assistance Program. The program provides loans and grants to microenterprise development organizations to help them establish revolving loan funds to support rural businesses with 10 or fewer full-time employees. It also provides funding to support training and technical assistance to microenterprises.

These improvements are required by the 2018 Farm Bill and will make the program more effective, user-friendly, and consistent with other USDA business programs. Among other things, these improvements:

  • Increase program eligibility by reducing the minimum application priority score required to be eligible for program funding.
  • Give microlenders the discretion to request loan funds more often than quarterly to meet the microlender's loan demand.
  • Allow microlenders to receive their initial technical assistance grant in an amount up to 25 percent of their new loan. The maximum loan amount remains $500,000. (The previous grant limit was 25 percent of the first $400,000 of the loan, plus 5 percent of a loan amount in excess of $400,000.)
  • Allow a microlender's technical assistance funds to be replenished annually to a minimum of 20 percent of its outstanding loans to small businesses, not to exceed 25 percent of its loan balance, subject to the availability of appropriated funds. The maximum percentage has not changed. (Previously, there was no minimum percentage of grant funds to a microlender.)
  • Change the definitions of "close relative," "Indian tribe," and "rural or rural area" to match the definitions for other USDA Rural Development business programs.
  • Clarify that the total outstanding loan balance from a lender to any one microborrower may not exceed $50,000.

These changes took effect on May 14, 2021. For additional information, see page 26348 of the May 14, 2021, Federal Register.

Applications from lenders for the Rural Microentrepreneur Assistance Program are accepted on a continuous basis. To discuss a potential application in Oregon, contact Mandie Cole, Business and Cooperative Programs Director, (541) 378-3538.