USDA expands access to capital for very small rural businesses
The US Department of Agriculture (USDA) announced that it has implemented a series of actions to make it easier for very small rural businesses to get access to capital.
The changes will strengthen businesses in Puerto Rico’s rural communities. In prior years, Pathstone Corporation has been the only entity to apply for funding, local agency officials said.
The USDA published a final rule outlining changes to the Rural Microentrepreneur Assistance Program, which provides loans and grants to microenterprise development organizations to help them establish revolving loan programs to assist microenterprises, businesses with 10 or fewer full-time employees, said Luis R. García, acting state director in Puerto Rico.
It also provides annual funding to development organizations to conduct training and provide technical assistance to microloan borrowers.
USDA made the improvements to implement changes required in the 2018 Farm Bill and to make the program more effective, more user-friendly, and more consistent with other USDA business programs, the agency confirmed.
Among other things, these improvements:
- Allow microlenders to receive their initial technical assistance grant in an amount up to 25% of their new loan amount. The maximum loan amount remains at $500,000. The previous grant limit was 25% of the first $400,000 plus 5% of the amount over $400,000.
- Allow a microlender’s technical assistance funds to be replenished annually to a minimum of 20% of its outstanding loans to small businesses, not to exceed 25% of its loan balance, subject to the availability of appropriated funds. The maximum percentage is not changed. Previously, there was no minimum percentage of grant funds to a microlender.
- Give microlenders the discretion to request loan funds more often than quarterly to meet the microlender’s loan demand.
- Increase program eligibility by reducing the minimum application priority score to be eligible for program funding.
- Add clarifying language emphasizing that the total outstanding loan balance from a lender to any one micro borrower may not exceed $50,000.
Program applications are accepted on a continuous basis at the local Rural Development state office.