Are you based in rural America and plan on taking your entrepreneurial goals a step forward? Look into your USDA loan options – consider the Rural Microentrepreneur Assistance Program (RMAP.)
The United States Department of Agriculture is the institutional wing of the federal government that manages the development and execution of laws relating to agriculture, forestry, and food. As an executive department, it holds full power over the promotion of agricultural trade and production, as well as in meeting the needs of farmers and ranchers, while ensuring the protection of natural resources and the meeting of domestic and international food demands.
These general goals are cascaded into programs that help meet needs in the micro level. Among the most common ways that the USDA extends help to America’s farmers and ranchers is through grants and financing options.
The USDA has programs not only for individuals and cooperatives but for businesses as well. If you are in the agricultural business and looking for such programs to fund your entrepreneurial efforts, you might want to consider the USDA’s Rural Microentrepreneur Assistance Program.
What is the Rural Microentrepreneur Assistance Program (RMAP) and what does it do?
The RMAP is a program that provides loans and grants to Microenterprise Development Organizations (MDOs). These are non-profit organizations, community-based financial institutions, and local economic development councils that provide technical and financing services to small businesses in the rural communities
The RMAP helps the MDOs to:
- provide microloan programs that help microenterprises establish themselves as players in the industry via a Rural Microloan Revolving Fund;
- offer training and technical assistance to microloan borrowers and micro-entrepreneurs
Who can apply and qualify for RMAP?
Nonprofits, tribes recognized by the federal government, and higher education institutions can all qualify as MDO and therefore be eligible for the program.
To get a loan from an MDO, the business must be located in an eligible area with ten or fewer full-time employees.
What is this eligible area?
Eligible areas in this sense refer to rural regions outside a town or city with a population size of less than 50,000. The borrower may be headquartered in a larger city as long as the project service area is within an eligible territory.
The lender, however, can be based anywhere.
You can check out the list of eligible addresses here.
What are supplemental requirements?
An MDO must be able to demonstrate that they can handle or manage a Revolving Loan Fund, OR
a) show proof of certification that they or their employees were recipients of education and training from a qualified microenterprise development training entity;
b) show that they are participating actively as an intermediary lender in good standing under the US Small Business Administration (SBA) Microloan Program or other loan programs determined by the Administrator
How much can an MDO procure from the program?
Grants for the provision of technical assistance to rural microentrepreneurs or enterprises can total up to $205,000 per year. You cannot guarantee funding as requested and a minimum of 15 percent matching fund will be required.
For the purpose of establishing a Rural Microloan Revolving Fund, loans can range from $50,000 to $500,000. Recipients of the loan cannot have a debt total of more than $2.5 million.
What are the loan terms for the MDOs?
Loan term maximum is capped at 20 years with a 2-year payment deferral. The MDOs must also be able to establish a loan loss reserve fund.
What terms are required on loans to ultimate recipients?
They can get a loan of up to $50,000 with fixed-rate interest and limited to 75 percent of the total project cost.
Are there limitations on how these funds can be used?
Microlenders are allowed to make microloans for qualified business activities and expenses such as for working capital, debt refinancing, purchase of equipment and supplies, and the improvement of real estate, among others. Lenders will not approve fund use for purposes determined to be not covered by the program.
Where should we start?
The USDA is now receiving applications for the program. You may contact your local state office for more information and to apply for RMAP.
Source: USDA site