Last Updated November 10, 2009
Rural Microentrepeneur Assistance Program (RMAP)
Providing rural entrepreneurs with skills for establishing new or continuing existing micro-enterprises
The Rural Microentrepreneur Assistance Program (RMAP) is a new USDA Rural Development program created in 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.
Application and Financial Information
The RMAP program 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. The 2008 Farm Bill authorizes $15 million in mandatory funding over four years for the RMAP program. The program is also authorized to receive up to an additional $40 million a year in discretionary funding. For FY2010, RMAP was funded at $9 million.
Eligibility, Uses, and Restrictions
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.
Examples of Current Microenterprise Development Organizations
Center for Rural Affairs
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
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 Microloan Beneficiaries
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
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.
A website specifically for RMAP has not yet been launched, but will likely be located with other USDA Rural Development Business Programs at this site: www.rurdev.usda.gov/rbs/busp/bpdir.htm.
Jody Raskind, Director
Specialty Lenders Division (SLD)
USDA Rural Development - Business Programs