Comment Now on RMAP Proposed Rule
Comments Invited on the Rural Micro-entrepreneur Assistance Program (RMAP)
Comment by November 23rd
USDA has issued a proposed rule for the new Rural Micro-entrepreneur Assistance Program (RMAP). RMAP was created in the 2008 Farm Bill to provide loans and grants to Micro-enterprise Development Organizations (MDOs) that support micro-enterprise development in rural areas. While the law directs USDA to provide grants to allow development organizations to offer training and technical assistance to micro-entrepreneurs the proposed rule fails to do so. Training and technical assistance are essential to the success of these new businesses. Comments on the rule are due on November 23rd and can be submitted here.
The following are some issues to consider when writing Rural Microentrepreneur Assistance Program (RMAP) comments:
The RMAP program was created to address the acute shortage of financing for very small businesses in rural communities and to build the capacity of rural organizations to provide the training necessary to make these loans successful. The Center for Rural Affairs has provided their analysis of the proposed rule for RMAP, which they find undermines the statute’s ability to achieve intended goals in several ways.
1. The proposed rule directs most of the RMAP funds to loan capital and gives short shrift to support for training, financial planning, and critical support services that Microenterprise Development Organizations (MDO) offer. The proposed rule does this by limiting the purposes of Grants to Support Microenterprise Development as outlined by Congress and by capping the maximum technical assistance grant an MDO can receive at $100,000, rather than 25% of the MDO’s total balance of microloans as the Farm Bill states.
2. Congressional intent was to build the capacity of rural organizations to provide microlending services and to increase the number or organizations offering microloans in rural areas. The proposed rule awards higher points to organizations with past experience and to organizations currently operating in rural areas. While the work of these organizations is valuable, with resources so scarce in rural America the program should not discourage the development of new providers or the expansion of existing programs to rural communities.
3. Successful microenterprise lending requires providing significant time, training, marketing and other support services to potential borrowers. This investment pays off in the long run through lower than average default rates. The proposed rule is inflexible and will unnecessarily increase expenses for MDOs.
You can learn more about RMAP by checking out this summary in the Grassroots Guide to the Farm Bill.