Farm and Food
Lending
Small rural businesses create jobs and economic activity...
Small rural businesses are the lifeblood for many rural communities. Such locally-owned businesses generate greater economic returns for their communities than their larger counterparts. They also employ more people per unit of sales, an incredibly valuable service in rural areas where jobs are often scarce.
...but also face challenges in accessing capital.
Small rural business owners face major challenges. These include difficulty in accessing credit and training in business planning and financial management. They also face difficulty in accessing lenders as the number of rural banks has declined.
The USDA Rural Microentrepreneur Assistance Program, described below, provides a pathway to prosperity for rural small businesses. RMAP is authorized and funded by the farm bill, but its continuation is in jeopardy.
How does RMAP work?
- Through RMAP, USDA makes grants to organizations that provide training, technical assistance or make small loans to new and existing rural small businesses.
- Grantee organizations then work with rural small businesses to supply them with the tools, training, and/or loan capital they need to be successful.
- Loan funds are used to provide fixed interest rate microloans of less than $50,000. Examples of types of businesses that have benefited from these loan funds include a brewery, a restaurant, a dog-grooming and training business, and a shrimp hatchery.
- To qualify for this assistance, a business must not be able to access loan capital or financial assistance from other sources. They also must be either a sole proprietorship in a rural area, or have 10 or fewer employees and be located in a rural area.
National Impact
- The 2014 Farm Bill provided $3 million annually in mandatory funding for RMAP. USDA can leverage RMAP funds for broader impact: in 2017, RMAP supported loans totaling $6 million.
- In 2017, 72 organizations earned grant funds to provide technical assistance to qualifying businesses, and 18 organizations worked with USDA to allocate loan funds.
- Since 2010, RMAP grants have gone to nearly every state, and to Puerto Rico.
- Research shows that money spent at locally-owned businesses has a positive impact on local economies. For example, in Utah they found that local retailers return a total of 52 percent of their revenue to the local economy, compared to 14 percent for national chain retailers.
Farm bill authority
RMAP was created in the 2008 farm bill. The authorization for RMAP is at 7 USC 2008s. USDA has established regulations for RMAP at 7 CFR Part 4280 subpart D.
Impact by State
Illinois
- Between 2010 and 2016, two organizations in Illinois received RMAP grants, with $1,550,000 committed to loan funds and $261,873 committed for grants.
- Southern Illinois Coal Belt Champion Community, Inc. received $500,000 in 2014 to make microloans to very small businesses in 11 counties, designated as Delta Regional Authority communities characterized by high unemployment and poverty.
- Another RMAP grantee is Southern Five Development Corporation, which covers Illinois, Alexander, Johnson, Massac, Pulaski, and Union counties. The RMAP program has allowed us to make seven loans totaling $270,700. These seven loans have created 18 jobs and allowed 10 jobs to be retained. With RMAP technical assistance funds, Southern Five provided 72 clients with one on one assistance in filling out applications, making business plans, and marketing strategies.
Iowa
- In 2014, the Iowa Foundation for Microenterprise and Community Vitality received an an RMAP grant, with $200,000 committed to loan funds and $50,000 committed for grants. The funds were committed both to make microloans and to provide technical assistance and training to very small businesses.
Kansas
- Between 2010 and 2016, one organization in Kansas received RMAP grants, with $70,606 committed to loan funds and $6,037 committed for grants.
Kentucky
- Between 2010 and 2016, three organizations in Kentucky received RMAP grants, with $2,670,000 committed to loan funds and $280,722 committed for grants.
- For example, the Kentucky Highlands Investment Corporation received RMAP loans of $500,000 in both 2014 and 2016, to capitalize a revolving loan fund to provide microloans to very small businesses in 19 counties, designated by the Appalachian Regional Commission as distressed communities.
- MEDI, Inc. received $400,000 for loans and $100,000 in grants in 2014 to serve as a statewide microlender and technical assistance provider for very small businesses in Kentucky.
Minnesota
- Since RMAP was created, five different organizations in Minnesota have participated in the program. $946,875 has been allocated to Minnesota organizations for loan funds. $628,016 has been allocated to Minnesota organizations for grants for technical assistance.
Missouri
- Between 2010 and 2016, five organizations in Missouri received RMAP grants, with $1,731,250 committed to loan funds and $314,835 committed for grants.
- East Missouri Action Agency, Inc. received $200,000 for loans and $50,000 in grants in 2014 to capitalize a rural microloan revolving loan fund to make microloans to very small businesses in eight counties in southeastern Missouri.
- Missouri Innovation Corporation received $400,000 for loans and $100,000 in grants in 2014. These funds are used to capitalize a rural microloan revolving loan fund to make microloans to very small businesses in 18 counties in southeastern Missouri.
North Dakota
- Between 2010 and 2016, two organizations in North Dakota received RMAP grants, with $500,000 committed to loan funds and $273,168 committed for grants.
- The Oyate Community Development Corporation received $500,000 for loans and $105,000 in grants in 2014 to capitalize a rural microloan revolving loan fund and to make microloans to very small businesses.
- Lake Agassiz Development Group, located in Fargo, received one RMAP revolving loan fund in the amount of $500,000 in April 2012. Since that time, Lake Agassiz Development Group received $212,743 in grant support to provide technical assistance to serve the state of North Dakota. Lake Agassiz Development Group has funded 26 loans from this program, putting $816,280.10 to work in North Dakota businesses.
“We at Lake Agassiz Development Group have done our best to build an extensive toolkit to allow us to assist businesses throughout the state with large and small business ventures that struggle to cross the finish line with traditional financing and RMAP has proven to be a valuable tool as we continue that work. We are able to be a ‘high touch’ lender offering trusted advising and helping more businesses succeed because of technical assistance dollars like those awarded to us through RMAP.”
Oklahoma
- Between 2010 and 2016, two organizations in Oklahoma received RMAP grants, with $1,000,000 committed to loan funds and $205,000 committed for grants.
- One Oklahoma grantee, the Southwest Intermediary Finance Team, Inc., in 2016 received $500,000 for loan funds and $100,000 for grants, to capitalize a microloan revolving fund and to provide technical assistance for eight counties in rural Oklahoma.
Oregon
- Between 2010 and 2016, six organizations in Oregon received RMAP grants, with $1,865,000 committed to loan funds and $359,837 committed for grants.
- Micro Enterprise Services of Oregon received an RMAP grant, with $150,000 committed to loan funds and $37,500 committed for grants. The funds were to capitalize a microloan revolving fund to provide access to capital for rural microentrepreneurs and microenterprises, and provide technical assistance to microbusinesses.
Texas
- Between 2010 and 2016, two organizations in Texas received RMAP grants, with $700,000 committed to loan funds and $105,000 committed for grants.
