NSAC's Blog

Over 50 Organizations Express Discontent over RMAP Interim Final Rule

September 23, 2010

On Thursday, September 23, NSAC and 56 other organizations delivered a letter to Agriculture Secretary Tom Vilsack expressing concern over USDA’s Interim Final Rule for the Rural Microenterprise Assistance Program (RMAP).  The letter was organized by the Center for Rural Affairs.

Interim rules for RMAP were published to the Federal Register on May 28, 2010.  While USDA closed the public comment period on July 27, 2010, it has not yet released a final rule for the Program.

The letter demonstrates that concern with the the interim final rule is widely shared amongst rural development, sustainable agriculture, and food systems organizations.  The organizations are particularly unhappy with the borrowing terms laid out in the rule and the narrow scope of the technical assistance provision.  These and other barriers and disincentives have discouraged many microenterprise development organizations from applying for RMAP funding.

In the letter, the signatory organizations make the following recommendations in order to more fully realize the potential of this program:

  • Allow microlenders to use interest earnings for any purpose consistent with the purposes of RMAP
  • Remove the “first lien” requirement, as it greatly hinders the ability to partner with local banks as lenders
  • Conform to the law as written in the Food, Conservation, and Energy Act of 2008 by providing a technical assistance grant equal to 25 percent of the entire loan
  • Eliminate the 75 percent cap on loan funds provided through this program
  • Impose an interest rate more in line with what the law intended, at or close to one percent

“The failure of the rule to provide support for business training reflects a misunderstanding of the needs of microentrepreneurs and grossly undervalues human capital development,” the letter states.  “Without business skills and technical assistance, borrowers who receive RMAP loans would have great difficulty repaying.”

NSAC will continue to encourage USDA to comply with the intent of Congress by improving RMAP loan terms and increasing support for training and technical assistance.

Categories: Commodity, Crop Insurance & Credit Programs, Local & Regional Food Systems, Rural Development

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