Rule2021-21504
Rural Microentrepreneur Assistance Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 4, 2021
Issuing agencies
Agriculture DepartmentRural Business-Cooperative Service
Abstract
The Rural Business-Cooperative Service, a Rural Development agency of USDA, hereinafter referred to as "RBCS" or "the Agency," published in the Federal Register on May 14, 2021, a final rule with request for comments. This document presents the opportunity for the Agency to provide its responses to the public comments received on the final rule and to confirm the final rule as published.
Full Text
<html>
<head>
<title>Federal Register, Volume 86 Issue 189 (Monday, October 4, 2021)</title>
</head>
<body><pre>
[Federal Register Volume 86, Number 189 (Monday, October 4, 2021)]
[Rules and Regulations]
[Pages 54587-54588]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-21504]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 86, No. 189 / Monday, October 4, 2021 / Rules
and Regulations
[[Page 54587]]
DEPARTMENT OF AGRICULTURE
Rural Business-Cooperative Service
7 CFR Part 4280
[Docket Number: RBS-20-BUSINESS-0044]
RIN 0570-AB02
Rural Microentrepreneur Assistance Program
AGENCY: Rural Business-Cooperative Service, Department of Agriculture
(USDA).
ACTION: Final rule; confirmation.
-----------------------------------------------------------------------
SUMMARY: The Rural Business-Cooperative Service, a Rural Development
agency of USDA, hereinafter referred to as ``RBCS'' or ``the Agency,''
published in the Federal Register on May 14, 2021, a final rule with
request for comments. This document presents the opportunity for the
Agency to provide its responses to the public comments received on the
final rule and to confirm the final rule as published.
DATES: October 4, 2021.
FOR FURTHER INFORMATION CONTACT: David Chestnut, Program Management
Division, U.S. Department of Agriculture, 1400 Independence Avenue SW,
Washington, DC 20250-3201; telephone: (202) 692-5233; email:
<a href="/cdn-cgi/l/email-protection#573336213e3379343f322423392223172224333679303821"><span class="__cf_email__" data-cfemail="7d191c0b1419531e15180e091308093d080e191c531a120b">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: RBCS published a final rule with request for
comments in the Federal Register on May 14, 2021, at 86 FR 26348. The
final rule modified the interim rule with comment published in the
Federal Register on May 28, 2010 (75 FR 30114), as amended by the
correcting amendments published in the Federal Register on July 19,
2010 (75 FR 41695), and incorporated amendments to the Consolidated
Farm and Rural Development Act (ConAct) made by the Agriculture
Improvement Act of 2018 (2018 Farm Bill). The Agency implemented other
changes to make the Rural Microentrepreneur Assistance Program (RMAP)
run more efficiently, be more user-friendly and be more consistent with
other RBCS programs.
Within the preamble to the final rule, the Agency addressed each of
the 29 public comments that were received on the interim rule. RBCS
carefully reviewed each of the comments and modified the regulation
based on analysis of the responsive comments received as well as
program delivery experience. The final rule allowed the Agency to: (a)
Implement changes required by the 2018 Farm Bill, (b) address comments
received after publication of the interim rule, and (c) implement the
final regulation.
Due to the length of time that transpired between the publication
of the interim rule and the final rule, the Agency invited comments
from the public on the provisions outlined in the final rule. The
comment period on the final rule closed July 13, 2021. Comments were
received from four respondents. The comments provided and Agency
responses are as follows:
Comment: ``All the mandatory grants should be funded at the
authorized 25 percent of the loan balances. We support this change. It
can be difficult for financial intermediaries to secure adequate
funding for technical assistance programs. This is a concern for any
potential MDO that may consider utilizing the RMAP program for the
first time. The adjustment recorded here will help minimize a clear
disincentive by making it easier for a new entrant to manage necessary
costs.''
Agency Response: The Agency agrees and the regulation at Sec.
4280.313(a) was modified to allow for microlenders to receive up to 25
percent of their new loan amount as a technical assistance grant.
Previously, this was limited to 25 percent of the first $400,000, then
5 percent of any amount above $400,000. The 2018 Farm Bill amended
Section 379E of the Consolidated Farm and Rural Development Act
(Contact) to require that annual grant amounts to Microenterprise
Development Organizations (MDOs) be in an amount equal to not less than
20 percent and not more than 25 percent of the total outstanding
balance of microloans made by MDOs. The Agency clarified the annual
grant process at Sec. 4280.313(a)(1) to enact this change. The
previous regulation did not have a minimum threshold percentage for the
replenishment of an MDO's technical assistance funds.
Comment: ``USDA should relinquish its first lien position on all
funds in the Rural Microentrepreneur revolving fund except those
derived from the Rural Microenterprise loan itself. We recommend that
USDA implement a process by which MDOs can request a drawdown of
accumulated interest earnings within the Rural Microentrepreneur
Revolving Fund (RMRF). The collateral provided to USDA by the cash in
the RMRF, the loans outstanding, and the cash in the Loan Loss Reserve
Fund (LLRF), should be adequate to protect USDA from losses. MDOs
typically use the interest earnings from microloans to help cover costs
of operating programs. Because USDA maintains a first lien position on
all assets in the RMRF and does not provide a process by which MDOs can
request a drawdown of accumulated earnings, MDOs are unable to use
earnings from RMAP loans to help cover operating costs. This may
dissuade some MDOs from utilizing the RMAP program, and we have heard
at least one MDO identify this as the reason they left the program.''
Agency Response: The Agency disagrees with the release of its lien
position in the revolving loan funds. The accounts serve as collateral
for the Agency loan to the MDO, which is a debt obligation of the MDO
and protects the Agency in cases of default by the MDO. The Agency
disagrees with the commenter that MDOs are unable to use earnings from
RMAP loans to help cover costs of operating programs. MDOs may use
interest and fee earnings to make principal and interest payments to
the Agency loan and to help cover operating costs in accordance with
their annual operating budget. In addition, the Agency does permit the
use of up to 10 percent of their technical assistance grant funds for
administrative expenses from which they can operate their RMAP and
other programs.
Comment: ``The current methodology of calculating the annual MDO
grant based on the amount of outstanding loan balances is inadequate.
We recommend an adjustment to the methodology used to calculate the
annual technical assistance grants to MDOs. At current, USDA calculates
the
[[Page 54588]]
technical assistance grant for the following fiscal year on June 30 of
the prior fiscal year. USDA then subtracts the unspent balance from the
prior year award from the new award. USDA is making this calculation 9
months into a 12-month grant contract. An MDO seeking to use their
technical assistance award to support staff to provide continuous
technical assistance to clients over a 12-month period receives a
penalty for having 3 months of funds remaining when there are 3 months
remaining in the contract. We recommend that USDA instead calculate the
grant based on the loans outstanding on June 30 without regard for
funds remaining in the prior year grant. USDA already requires grant
spending to take place within the 12-month contract period, so there is
no need to calculate the remaining balance at the end of 9 months from
the grant for the following year.''
Agency Response: The Agency has a consistent process for the
calculation of an MDO annual grant with its annual June 30 calculation
date. An MDO can use their grant funds in each month of the year, thus
the 9-month comment for use of the funds is not relevant. The annual
grant award calculation must include the amount of any unused/remaining
technical assistance funds from prior years to ensure that the total
amount of awarded and available grant funds to an MDO does not exceed
the 25 percent maximum amount.
Comment: ``Sec. 4280.313(a)(1). We support this change. Technical
assistance needs are ongoing. According to the Aspen Institute, the
business owners who participate in technical assistance and training
have higher rates of business survival, revenue growth, and employment
growth than those who do not. Of the new business owners who receive
technical assistance, 84 percent will still be operating their business
five years later. The median revenue of these businesses will grow by
60 percent. Our ability to make ongoing technical assistance available
can be the difference between business failure and success.''
Agency Response: Thank you for the comment.
Comment: ``Rural Microentrepreneur Assistance Program--Seeking
clarification on eligibility of microbusiness as it relates to
location. Rural areas are growing and microbusinesses are expanding.
Please provide feedback on the following scenarios. 1. Owners of
business live in a rural area and business in located in an urban area.
2. Business has a location in an urban area and is expanding to a rural
area and owners live in an urban area. Is there language to clarify
eligibility?''
Agency Response: The eligible rural area determination is made by
where the project is located and where the RMAP funds will be used.
Businesses located in an urbanized area are not eligible to receive
funding from this Rural Development program. A business located in an
urbanized area that is expanding to a rural area may use RMAP funds
only for the project and expenses in the rural area location. The
location of the business owner has no impact on the project
eligibility.
The Agency did not receive any significant adverse comments during
the public comment period on the final rule, and therefore confirms the
rule without change.
Karama Neal,
Administrator, Rural Business-Cooperative Service.
[FR Doc. 2021-21504 Filed 10-1-21; 8:45 am]
BILLING CODE 3410-XY-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on October 4, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.