Program Status: OPEN
What does this program do?
Provides loans and grants to Microenterprise Development Organizations (MDOs) to:
- Provide microloans for microenterprise startups and growth through a Rural Microloan Revolving Fund
- Provide training and technical assistance to microloan borrowers and micro entrepreneurs
Who may apply for this program?
The following are eligible to be an MDO:
- Federally-recognized Tribes
- Institutions of higher learning
The following are eligible to apply for a loan from the MDO as an ultimate recipient:
- Businesses with 10 or fewer full time employees, and located in an eligible area
What is an eligible area?
- Rural areas outside a city or town with a population of less than 50,000. Urbanized areas near a city of 50,000+ may not be eligible.
- The borrower’s headquarters may be based within a larger city so long as the project service area is located in an eligible rural area
- The lender may be located anywhere
Are there other requirements?
MDOs must demonstrate experience in managing a Revolving Loan Fund.
How much funding is available to MDOs?
- Grants are available to provide technical assistance to rural micro-entrepreneurs or microenterprises, up to $205,000 annually. Funding at the requested level is not guaranteed, and at least 15% matching funds are required.
- Loans up to $50,000 - $500,000 may be used for establishing a Rural Microloan Revolving Fund managed by the MDO. Total aggregate debt is capped at $2.5 million.
What are the loan terms for the MDOs?
- Maximum term is 20 years
- 2-year payment deferral
- Must establish a loan loss reserve fund
What terms are required on loans to ultimate recipients?
- Up to $50,000
- Fixed interest rate
- Limited to 75% of project cost
How may funds be used?
- Working capital
- Debt refinancing
- Purchase equipment, supplies, real estate
How do we get started?
Applications for this program are accepted on an annual basis. A Notice of Solicitation for Applications (NOSA) is posted in the Federal Register. Program Resources are available online (includes forms needed, guidance, certifications, etc.)
Who can answer questions?
Contact your local office
What governs this program?
- Code of Federal Regulations, 7 CFR 4280, subpart D
- This program is authorized by Section 379E of the Consolidated Farm and Rural Development Act (7 USC 2008s)
Why does USDA Rural Development do this?
To support the development and ongoing success of rural microentrepreneurs and microenterprises.
NOTE: Because citations and other information may be subject to change please always consult the program Instructions listed in the section above titled "What Law Governs this Program?" You may also contact your local office for assistance.
(1) An organization that is a non-profit entity; an Indian tribe (the government of which tribe certifies that no MDO serves the tribe and no RMAP exists under the jurisdiction of the Indian tribe); or a public institution of higher education; and that, for the benefit of rural microentrepreneurs and microenterprises: (i) Provides training and technical assistance and/or; (ii) Makes microloans or facilitates access to capital or another related service; and/or (iii) Has a demonstrated record of delivering, or an effective plan to develop a program to deliver, such services.
(2) A revolving loan fund (RLF) is a pool of public- and private-sector funds that recycles money as loans are repaid (revolved funds). Funding by a grant (RBDG) or a long-term/low-cost loan (IRP and RMAP) is used to start, replenish and expand RLFs. Funding recipients are State or local government agencies and non-profit entities structured to make loans. They must demonstrate economic need and have a plan that both meets program requirements and spurs growth.