51714 Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Proposed Rules 

DEPARTMENT OF AGRICULTURE 

Rural Business—Cooperative Service 

7 CFR Part 4280 

RIN 0570–AA71 

Rural Microentrepreneur Assistance 

Program 

AGENCY: Rural Business-Cooperative 

Service, USDA. 

ACTION: Proposed rule. 

SUMMARY: The Food, Conservation, and 

Energy Act of 2008 (the Act), which 

amends Section 6022 of the Farm 

Security and Rural Investment Act of 

2002, established the Rural 

Microentrepreneur Assistance Program. 

The program will provide technical and 

financial assistance in the form of loans 

and grants to qualified Microenterprise 

Development Organizations to support 

microentrepreneurs in the development 

and ongoing success of rural 

microenterprises. The Agency proposes 

to implement the program to meet the 

goals and requirements of the Act. 

DATES: Comments on the proposed rule 

must be received on or before November 

23, 2009 to be assured of consideration. 

The comment period for the information 

collection under the Paperwork 

Reduction Act of 1995 continues 

through December 7, 2009. 

ADDRESSES: You may submit comments 

to this proposed rule by any of the 

following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments 

electronically. 

• Mail: Submit your written 

comments via the U.S. Postal Service to 

the Branch Chief, Regulations and 

Paperwork Management Branch, U.S. 

Department of Agriculture, Stop 0742, 

1400 Independence Avenue, SW., 

Washington, DC 20250–0742. 

• Hand Delivery/Courier: Submit 

your written comments via Federal 

Express mail, or other courier service 

requiring a street address, to the Branch 

Chief, Regulations and Paperwork 

Management Branch, U.S. Department 

of Agriculture, 300 7th Street, SW., 7th 

Floor, Washington, DC 20024. 

All written comments will be 

available for public inspection during 

regular work hours at the 300 7th Street, 

SW., 7th Floor address listed above. 

FOR FURTHER INFORMATION CONTACT: Lori 

Washington, Loan Specialist, Business 

Programs, Specialty Programs Division, 

USDA, Rural Development, Rural 

Business—Cooperative Service, Room 

6868, South Agriculture Building, Stop 

3225, 1400 Independence Avenue, SW., 

Washington, DC 20250–3225, 

Telephone: (202) 720–9815, E-mail: 

lori.washington@wdc.usda.gov. 

SUPPLEMENTARY INFORMATION: The 

information presented in this preamble 

is organized as follows: 

I. Background 

A. Statutory Authority 

B. Nature of the Program 

II. Discussion of Public Meeting and Request 

for Comments 

III. Discussion of the Proposed Rule 

A. Purpose and Scope 

B. Definitions and Abbreviations 

C. Exception Authority 

D. Review or Appeal Rights 

E. Compliance With Other Federal Laws 

F. Program Requirements for 

Microenterprise Development 

Organizations 

G. Loan Provisions for Agency Loans to 

MDOs 

H. Grant Provisions 

I. MDO Application and Submission 

Information 

J. Application Scoring 

K. Selection of Applications for Funding 

L. Grant Administration 

M. Loan and Grant Servicing 

N. Loans From the MDOs to 

Microentrepreneurs and 

Microenterprises 

O. Ineligible Microloan Purposes 

IV. Administrative Requirements 

A. Executive Order 12866 

B. Unfunded Mandates Reform Act 

C. Environmental Impact Statement 

D. Executive Order 12988, Civil Justice 

Reform 

E. Executive Order 13132, Federalism 

F. Regulatory Flexibility Act 

G. Executive Order 12372, 

Intergovernmental Review of Federal 

Program 

H. Executive Order 13175, Consultation 

and Coordination With Indian Tribal 

Governments 

I. Programs Affected 

J. Paperwork Reduction Act 

K. E-Government Act Compliance 

I. Background 

A. Statutory Authority 

Title VI, Section 6022 of the Food, 

Conservation, and Energy Act of 2008 

(Pub. L. 110–246 established the Rural 

Microentrepreneur Assistance Program 

(RMAP). The Act mandates that the 

Secretary of Agriculture establish a 

program to make loans and grants to 

microenterprise development 

organizations (MDOs) to support 

microentrepreneurs in the development 

and ongoing success of rural 

microenterprises. The Act further 

mandates that, under this program, 

MDOs will use funds borrowed from the 

Agency to make fixed interest rate 

microloans of not more than $50,000 to 

microentrepreneurs for startup and 

growing rural microenterprises. 

The Secretary shall also make annual 

grants to borrower MDOs to provide 

marketing management and other 

technical assistance (TA) to 

microentrepreneurs that have received 

or are seeking a microloan from an MDO 

under this program. Such grants will be 

in an amount equal to not more than 25 

percent of the total outstanding balance 

of microloans made by the MDO, under 

this program, as of the date the grant is 

awarded or $100,000, whichever is less. 

The Secretary shall also make grants 

to MDOs to provide training or other 

operational enhancement activities or 

services for MDOs that serve rural 

microentrepreneurs. Maximum grant 

amounts for these enhancement grants 

will be announced annually and will be 

based on appropriations and 

consideration of program needs. In all 

cases, the maximum enhancement grant 

funding awarded to a single MDO will 

not exceed $25,000 or ten percent of the 

available funding, whichever is less, in 

any given year. 

In making loans to MDOs, the Act 

requires the Agency to make direct 

loans to MDOs to provide fixed rate 

microloans for startup and growing 

microenterprises. In making grants to 

MDOs, the Act requires the Agency to 

place an emphasis on MDOs serving 

microentrepreneurs located in rural 

areas that have suffered significant 

outmigration. The Agency shall also 

ensure, to the maximum extent 

practicable, that grant recipients include 

MDOs of varying sizes and that serve 

racially and ethnically diverse 

populations. MDOs will be eligible to 

receive TA grants to provide assistance 

to microentrepreneurs who have 

received, or are seeking, a microloan 

from the MDO under this program. 

The following section describes the 

proposed RMAP. 

B. Nature of the Program 

This subpart contains the provisions 

and procedures by which the Agency 

will administer the Rural 

Microenterprise Assistance Program 

(RMAP). The purpose of the program is 

to support the development and ongoing 

success of rural microentrepreneurs and 

microenterprises (businesses generally 

with ten employees or fewer and in 

need of financing in the amount of 

$50,000 or less). To meet this purpose, 

the program will make financial 

assistance, business based training, and 

technical assistance available to startup 

and growing microenterprises in rural 

areas, including agricultural producers 

that meet the definition of a 

microenterprise. Loans and training will 

be delivered to microenterprises via a 


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Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Proposed Rules 51715 

network of microenterprise 

development organizations (MDOs). 

An MDO is an organization that 

provides access to capital and businessbased training services to very small 

(micro) businesses. A 

microentrepreneur is an owner and 

operator, or prospective owner and 

operator, of a rural business with not 

more than 10 full-time equivalent 

employees who is unable to obtain 

sufficient training, technical assistance, 

or credit. The definition of a 

Mircoenterprise Development 

Organization and a mircoentrepreneur is 

included in the rule at § 4280.302. 

In addition to assisting 

microenterprises, MDOs may also 

receive grant funding to improve their 

own capabilities for providing services 

to their microborrowers. 

Microenterprises will not receive 

funds directly from the government. 

Rather, microlenders (i.e., MDOs that 

have been approved for participation in 

this program) will receive direct loans 

and grants. Direct loans will be used to 

capitalize rural revolving loan funds for 

the exclusive purposes of making 

microloans in rural areas, accepting 

payments from microborrowers, and 

repaying the Agency as required in their 

loan agreements. Grants will be used to 

fund business-based training and 

technical assistance, which will be 

provided to microenterprises by or in 

concert with the microlender that has 

provided one or more microloans to the 

microborrower seeking training. 

In following these guidelines, the 

Agency hopes to help build stronger 

rural communities by supporting rural 

microentrepreneurship, keeping and 

creating jobs, lessening outmigration, 

and working toward universal inclusion 

in the business sector. 

The Act provides mandatory funding 

for the program during years 2009 

through 2011 in the amount of $4 

million dollars per fiscal year and also 

provides for $3 million of mandatory 

funding for FY 2012, plus such other 

funding as may be appropriated. During 

any of those years, additional funding 

may be appropriated. The number of 

loans and grants will vary from year to 

year, based on availability of funds and 

the quality of applications. The 

maximum annual loan and grant 

amounts a microlender may receive in 

any given year will also vary based on 

the availability of funds and will be 

announced annually in the Federal 

Register. The maximum loan amount to 

any one microlender will never exceed 

$500,000. 

Neither TA grant funds nor 

enhancements grant funds can be used 

by microlenders to repay their Agency 

loans. 

MDOs seeking to become 

microlenders under this program will 

submit application materials to USDA 

Rural Development through their local 

or state Rural Development Business 

Programs office. Microenterprises 

seeking financial or technical assistance 

under this program will submit 

application materials directly to their 

local microlender. 

A list of local microlenders will be 

made available at the State Rural 

Development, Business Programs office 

and will be made available on the USDA 

Rural Development Web site. 

II. Discussion on Public Meeting and 

Request for Comments 

Prior to the development of this 

proposed rule, USDA published in the 

Federal Register a notice of public 

meeting [January 21, 2009, 74 FR 3550] 

inviting interested parties to attend and 

present their ideas and opinions 

regarding the proposed program. The 

meeting was held on January 26, 2009 

in Washington, DC. Eight speakers 

presented comments on the authorizing 

provisions of the Act regarding program 

development and operation. USDA 

considered that input when developing 

this proposed rule. The comments 

received during the meeting will be 

included with those received during the 

public comment period for proposed 

rule. All comments and USDA’s 

responses to those comments will be 

summarized and considered during the 

development of the final rule. 

As a part of today’s proposed 

rulemaking, the Agency is requesting 

comments on the program being 

proposed. The Agency is specifically 

seeking input in the following areas: 

1. The scoring section as it applies to 

administrative funds. 

2. The provisions for a maximum loan 

amount to any one single microlender 

and a maximum cap of $2.5 million over 

time as provided in § 4280.311(e)(1). 

The Agency will balance comments, 

where possible, with the need to 

establish requirements that meet the 

goals and rules of the program. 

Applicants and the Agency must meet 

all applicable laws, regulations and 

executive orders. Applicants must 

provide the Agency with appropriate 

information so that all compliance 

issues can be evaluated in a fair and 

objective process. 

Submit comments to the Agency as 

indicated in the DATES and ADDRESSES

sections above. The Agency will 

consider all comments during 

development of the final rule. 

III. Discussion of the Proposed Rule 

The following paragraphs present a 

discussion of the provisions of each 

section of the proposed rule in the order 

that they appear. 

A. Purpose and Scope (§ 4280.301) 

This section describes the purpose, 

scope and applicability of the program 

and applies to all potential MDO 

applicants. An MDO selected to receive 

a direct loan will be automatically 

eligible to receive a TA grant. As such, 

RMAP applications will include all 

information necessary to make a loan 

and grant determination. Grant dollars 

will be disbursed as microloans are 

distributed. The amount of a TA grant 

may be equal to no more than 25 

percent of the total outstanding balance 

of microloans made by an MDO under 

this program or $100,000, whichever is 

less. 

B. Definitions and Abbreviations 

(§ 4280.302) 

This section presents program specific 

definitions. Some of these definitions 

are included in the statute. Others are 

proposed for use by the Agency to more 

clearly implement the program. 

Statutorily defined terms. The Act 

defines several terms that are used in 

this document. Because the terms are 

defined by statute, the Agency cannot 

change the definitions. These terms are: 

• Indian tribe, 

• Microenterprise development 

organization, 

• Microentrepreneur, 

• Microloan, 

• Program, and 

• Rural microenterprise. 

For the purposes of this rule, rural 

microentrepreneur and 

microentrepreneur are synonymous. 

Proposed non-statutory terms herein 

include: 

• Administrative expenses, 

• Agency personnel, 

• Award, 

• Business incubator, 

• Default, 

• Delinquency, 

• Enhancement grant, 

• Facilitation of capital, 

• Indian tribal government employee, 

• Loan loss reserve fund, 

• Microlender, 

• Military personnel, 

• Rural microloan revolving fund, 

• Rural or rural area, 

• Significant outmigration, 

• Technical assistance and training, 

and 

• Technical assistance grant. 

With regard to the definition of 

Agency personnel, the Agency is 


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51716 Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Proposed Rules 

proposing the following definition: 

‘‘Individuals employed by the United 

States Department of Agriculture-Rural 

Development Agency, who are more 

than 6 months from separating from the 

Agency.’’ While the Agency does not 

want to allow the program to provide 

assistance to Agency personnel, the 

Agency at the same time wants to 

ensure that that a person retiring or 

leaving the Agency and wishing to 

pursue self employment can obtain the 

services he or she needs to be ready for 

self employment at the time of 

separation. Therefore, the Agency is 

proposing that the definition of Agency 

personnel ends at 6 months prior to the 

expected date of separation in order to 

allow for pre-separation preparation and 

to allow these individuals to be 

considered as non-agency personnel. 

The Agency is also proposing a similar 

condition for the definition of military 

personnel. 

C. Exception Authority (§ 4280.303) 

This section explains the 

Administrator’s limited authority to 

make exceptions to regulatory 

requirements, or provisions. It 

specifically excludes permissions to 

make exceptions for applicant or project 

eligibility, the rural area definition, to 

accept applicants that would not score 

at an acceptable level, and to accept 

applicants that have not successfully 

completed. Further, it requires that any 

exceptions be in the best financial 

interest of the Federal government and 

that exceptions not be in conflict with 

any applicable laws. 

D. Review or Appeal Rights and 

Administrative Concerns (§ 4280.304) 

This section provides the legal basis 

by which an unsuccessful applicant 

may request an Agency review or file an 

appeal with the USDA National Appeals 

Division, in accordance with 7 CFR part 

11. This section also provides contact 

information for microborrowers that 

have any concerns over the 

implementation of this program. 

E. Compliance With Other Federal Laws 

(§ 4280.305) 

Applicants and the Agency must meet 

all applicable laws, regulations and 

executive orders including, but not 

limited to, the Equal Employment 

Opportunities Act of 1972, the 

Americans with Disabilities Act, the 

Equal Credit Opportunity Act, and the 

Civil Rights Act of 1964. Applicants 

must provide the Agency with 

appropriate information so that all 

compliance issues can be evaluated in a 

fair and objective process. 

This section also presents USDA’s 

policy of prohibiting discrimination in 

all its programs and activities. 

F. Program Requirements for 

Microenterprise Development 

Organizations (§ 4280.310) 

This section explains the basic criteria 

for applicant eligibility that apply to all 

applicants. Requirements specific to 

direct loan applicants (potential 

microlenders), grants to enhance the 

capabilities of the microlender (referred 

to as enhancement grants) and grants to 

assist microentrepreneurs (TA grants to 

microlenders) are also explained. This 

section also describes eligibility issues, 

and application qualification issues. 

G. Loan Provisions for Agency Loans to 

MDOs (§ 4280.311) 

This section explains, in detail, 

provisions specific to the direct loan 

program, including loan purposes; 

eligible and ineligible activities; the 

requirement for making microloans and 

loan terms and conditions for MDO 

borrowers. Loan funds must be used to 

capitalize rural microloan revolving 

funds. The account containing the funds 

may only be used to make microloans to 

rural microentrepreneurs and rural 

microenterprises; to accept repayments 

from those borrowers, and to repay the 

Agency. The Agency will require MDOs 

to report regularly on the status of their 

microloan portfolios using aging reports 

and narrative information. Sanctions 

may be imposed on non-performing 

lenders deemed to be in either 

performance or financial default under 

the program to include loan funds being 

called immediately due and payable and 

grant funds being held. Interest rates 

may be raised on funding that has not 

been disbursed to microborrowers. 

Restrictions regarding limitations on 

microloans are discussed in § 4280.322. 

Loan funding limitations are defined 

in this section. The minimum loan 

amount from the Agency to any 

microlender will be $50,000. The 

maximum loan amount to any 

microlender will be announced 

annually based on the availability of 

funds, but will never exceed $500,000. 

The Agency believes that setting 

minimum and maximum loan amounts 

will best serve rural communities and 

allow for greater program participation. 

Loans made to microlenders must be 

fully supported by the ability to relend 

the money in accordance with 

§ 4280.311 and with the ability to repay 

the loan over an 18-year amortization. 

Because the minimum loan to a 

microlender is equal to the maximum 

loan amount for a microloan, and to 

ensure that rural microloan revolving 

funds are not exposed to danger of 

collapse based on a single microloan, no 

microloan will be made for an amount 

that is equal to more than $50,000 or 20 

percent of the amount loaned to the 

microlender under a single 

capitalization, whichever is less. 

This section also discusses protection 

against losses, presenting loan loss 

reserve fund (LLRF) requirements and 

Agency oversight. The Agency is 

requiring quarterly reporting and 

provision of evidence that the sum of 

the unexpended amount in the RMRF, 

plus the amount in the LLRF, plus debt 

owed by the microborrowers is equal to 

or greater than 105 percent of the 

amount owed by the MDO to the 

Agency. The Agency will hold first lien 

position on the RMRF account, the 

LLRF, and all notes receivable from 

microloans. 

H. Grant Provisions (§ 4280.312) 

This section presents the 

requirements for technical assistance 

and microlender enhancement grants. 

General provisions include cost share 

and matching requirements. The Federal 

share of the cost of any project under 

this program will not exceed 75 percent. 

Oversight includes quarterly reporting. 

To help ensure that MDOs can cover the 

cost of administering this program, and 

to ensure that Agency grant funds are 

used to support rural microenterprise 

development, the Agency allows each 

MDO to utilize up to 10 percent of any 

TA grant received to be used to pay 

administrative expenses, consistent 

with the statute. However, the Agency is 

reserving the right to deny the 10 

percent and to fund administrative 

expenses at a lower percentage. No part 

of an enhancement grant will be used 

for administrative expenses. The 

purpose of these grants is to assist the 

microlender with obtaining training to 

improve internal organizational 

efficiency, lending and training 

capacity, and skills to better serve 

microentreprenuers and 

microenterprises. Because the 

enhancement grants do not directly 

assist these clients, no lending or 

training administrative costs are 

associated with the grant. 

Ineligible grant purposes include 

application costs, project costs incurred 

prior to application date, and those 

purposes prohibited by law. 

In this section, we also describe the 

purposes, selection criteria and award 

amounts for grants, which must be used 

to support rural microenterprise 

development through the provision of 

training or other operational 

improvement services to MDOs. 

Microlender enhancement grants are to 


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be used to allow MDOs to seek out 

training and other enhancement services 

to strengthen their own organizations. 

To the extent practicable, the Agency 

will place an emphasis on providing 

financial assistance to MDOs of various 

sizes, that serve microentrepreneurs in 

rural areas suffering significant 

outmigration; and that serve racially and 

ethnically diverse populations. 

Maximum amounts for enhancement 

grants will be determined and 

announced annually by the Agency 

based on program needs and the 

availability of funds. In all cases, the 

maximum enhancement grant funding 

awarded to a single MDO will not 

exceed $25,000 or ten percent of the 

available funding, whichever is less, in 

any given year. 

The statute requires the Agency to 

make technical assistance (TA) grants to 

MDOs to provide marketing, 

management and other technical 

assistance to microentrepreneurs that 

have received a loan from the MDO 

under this program. Applicant MDOs 

seeking a direct loan under this program 

must submit Standard Forms 424, 

‘‘Application for Federal Assistance’’; 

424A, ‘‘Budget Information—Nonconstruction Programs’’; and 424B, 

‘‘Assurances—Non-construction 

Programs’’ as a part of the application. 

An organization selected to become a 

microlender will be eligible to receive a 

TA grant in an amount less than or 

equal to 25 percent of the total 

outstanding balance of program funded 

microloans made by that organization or 

$100,000, whichever is less. 

This section also discusses grant 

administration issues such as 

determination of grant amount and grant 

disbursement. 

I. MDO Application and Submission 

Information (§ 4280.315) 

This section explains those loan 

application requirements that will be 

regulatory. Submission details such as 

dates, times, and locations will be 

announced annually in the Federal 

Register. Forms that are required to be 

submitted with each application are 

listed in this section of the proposed 

rule. Form submissions may vary based 

on the type of assistance being sought. 

J. Application Scoring (§ 4280.316) 

This section discusses documentation 

that applicants must provide to meet 

eligibility requirements for loans and 

grants. Applicants must clearly indicate 

the category of funding for which they 

are applying. These categories are 

microlenders with 3 or more years 

experience, microlenders with less than 

3 year experience, and MDOs seeking 

enhancement grant funding. Scoring 

requirements vary for each category. 

This section also provides details 

regarding the scoring criteria, which is 

divided into four subsections. 

Subsection (a) applies to all applicants. 

Subsections (b) and (c) apply to MDOs 

seeking to be microlenders depending 

on the number of years of their 

experience. Subsection (b) describes the 

additional information that will be 

scored for MDOs with three or more 

years experience, while subsection (c) 

describes the additional information 

that will be scored for MDOs with less 

than three years experience. 

Because a successful microlending 

program integrates training and 

technical assistance prior to, during, 

and after the loan making process, 

MDOs selected to participate as 

microlenders must include in their 

applications, along with other required 

documentation, a description of their 

technical assistance and training 

program. This information, along with 

the applicable Standard Form 424, will 

be considered the grant application so 

that a separate application package will 

not be required for the TA grant. While 

the maximum TA grant amount is 25 

percent of the loan amount or $100,000, 

whichever is less, grant amounts may be 

adjusted downward based on 

information provided in the application. 

Subsection (d) describes the 

additional criteria by which any MDO 

seeking funding for enhancement grants 

will be scored. Additionally, the dollar 

amount of TA grants will be based on 

the loan amount made to the MDO, in 

accordance with the statute, and the 

program microloan portfolio owed to 

the MDO. 

Lastly, subsection (e) describes 

optional application provisions for 

microlenders who have participated in 

this program for at least five years. The 

optional application provisions reduce 

the amount of paperwork required to 

apply for future funding under this 

program. 

K. Selection of Applications for Funding 

(§ 4280.317) 

This section further explains the 

selection process by which funds will 

be awarded. Applications from 

microlenders with 3 or more years 

experience and applications from 

microlenders with less than 3 years 

experience will be ranked together. 

Enhancement grant applications will be 

ranked separately from the microlender 

applications. Subject to the availability 

of funds, the highest scoring 

applications will be funded in 

descending order. 

Given the current funding level, 

during the initial year of operations, 

applications will be submitted to the 

State Offices for initial review, 

intergovernmental review, and 

comments. The applications will be 

submitted by the Rural Development 

State Offices to the Rural Development 

National Office for final scoring and 

selection. Applications will be accepted 

in the National Office on a quarterly 

basis using Federal Fiscal Quarters. The 

Agency reserves the right, as funding for 

the program increases, to update this 

method of program administration in 

future years, including managing the 

program through Rural Development’s 

state offices. 

L. Grant Administration (§ 4280.320) 

Discusses the quarterly reporting, site 

visits, and inspection of records that the 

Agency will utilize to provide oversight 

of any organization receiving a grant 

under this program. Also explains that 

the Agency will make grant payments 

not more often than on a quarterly basis. 

M. Loan and Grant Servicing 

(§ 4280.321) 

Presents a listing of other regulations 

that will be applicable for servicing 

loans and grants made to MDOs. 

N. Loans From the MDOs to the 

Microentrepreneurs and 

Microenterprises (§ 4280.322) 

Discusses requirements for 

microloans from the MDO to the 

microborrowers. Presents information 

on the maximum microloan amounts, 

terms and conditions, insurance 

requirements, the appeal of MDO 

lending decisions, and eligible 

microloan purposes. 

O. Ineligible Microloan Purposes 

(§ 4280.323) 

Describes those activities for which 

Agency microloan funds may not be 

used. 

IV. Administrative Requirements 

A. Executive Order 12866 

This proposed rule has been reviewed 

under Executive Order (EO) 12866 and 

has been determined significant by the 

Office of Management and Budget. The 

EO defines a ‘‘significant regulatory 

action’’ as one that is likely to result in 

a rule that may: (1) Have an annual 

effect on the economy of $100 million 

or more or adversely affect, in a material 

way, the economy, a sector of the 

economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local, or tribal 

governments or communities; (2) create 

a serious inconsistency or otherwise 


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interfere with an action taken or 

planned by another agency; (3) 

materially alter the budgetary impact of 

entitlements, grants, user fees, or loan 

programs or the rights and obligations of 

recipients thereof; or (4) raise novel 

legal or policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in this EO. 

The Agency conducted a cost-benefit 

analysis to fulfill the requirements of 

Executive Order 12866. The Agency has 

identified potential benefits to 

prospective program participants and 

the Agency that are associated with 

improving the availability of microlevel 

business capital, business-based training 

and technical assistance, and enhancing 

the ability of microlenders to service the 

microentrepreneurs to whom they are 

making their microloans. 

B. Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Public 

Law 104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 

and tribal governments and the private 

sector. Under section 202 of the UMRA, 

Rural Development must prepare, to the 

extent practicable, a written statement, 

including a cost-benefit analysis, for 

proposed and final rules with ‘‘Federal 

mandates’’ that may result in 

expenditures to State, local, or tribal 

governments, in the aggregate, or to the 

private sector, of $100 million or more 

in any one year. With certain 

exceptions, section 205 of UMRA 

requires Rural Development to identify 

and consider a reasonable number of 

regulatory alternatives and adopt the 

least costly, most cost-effective, or least 

burdensome alternative that achieves 

the objectives of the rule. 

This proposed rule contains no 

Federal mandates (under the regulatory 

provisions of Title II of the UMRA) for 

State, local, and tribal governments or 

the private sector. Thus, this rule is not 

subject to the requirements of sections 

202 and 205 of the UMRA. 

C. Environmental Impact Statement 

This document has been reviewed in 

accordance with 7 CFR part 1940, 

subpart G, ‘‘Environmental Program.’’ 

Rural Development has determined that 

this action does not constitute a major 

Federal action significantly affecting the 

quality of the human environment and, 

in accordance with the National 

Environmental Policy Act (NEPA) of 

1969, 42 U.S.C. 4321 et seq., an 

Environmental Impact Statement is not 

required. 

D. Executive Order 12988, Civil Justice 

Reform 

This rule has been reviewed in 

accordance with Executive Order 12988, 

Civil Justice Reform. Except where 

specified, all State and local laws and 

regulations that are in direct conflict 

with this rule will be preempted. 

Federal funds carry Federal 

requirements. No person is required to 

apply for funding under this program, 

but if they do apply and are selected for 

funding, they must comply with the 

requirements applicable to the Federal 

program funds. This rule is not 

retroactive. It will not affect agreements 

entered into prior to the effective date 

of the rule. Before any judicial action 

may be brought regarding the provisions 

of this rule, the administrative appeal 

provisions of 7 CFR parts 11 and 780 

must be exhausted. 

E. Executive Order 13132, Federalism 

It has been determined, under 

Executive Order 13132, Federalism, that 

this proposed rule does not have 

sufficient Federalism implications to 

warrant the preparation of a Federalism 

Assessment. The provisions contained 

in the proposed rule will not have a 

substantial direct effect on States or 

their political subdivisions or on the 

distribution of power and 

responsibilities among the various 

government levels. 

F. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601–602) generally requires an 

agency to prepare a regulatory flexibility 

analysis of any rule subject to notice 

and comment rulemaking requirements 

under the Administrative Procedure Act 

or any other statute. If an agency 

certifies that the rule will not have a 

significant economic impact on a 

substantial number of small entities, 

this analysis is not required. Small 

entities include small businesses, small 

organizations, and small governmental 

jurisdictions. 

In compliance with the RFA, Rural 

Development has determined that this 

action will not have a significant 

economic impact on a substantial 

number of small entities for the reasons 

discussed below. While, the majority of 

MDOs expected to participate in this 

Program will be small businesses, the 

average cost to an MDO is estimated to 

be approximately 1 percent of the total 

mandatory funding available to the 

program in fiscal years 2009 through 

2012. Rural Development estimates that 

most of the administrative costs 

incurred by MDOs participating in the 

program will be covered by the interest 

rate spread between the one percent 

loan from Rural Development and the 

interest rate on loans made to the 

microentrepreneur by the MDO. 

Further, this regulation only affects 

MDOs that choose to participate in the 

program. 

G. Executive Order 12372, 

Intergovernmental Review of Federal 

Programs 

This program is subject to Executive 

Order 12372, which requires 

intergovernmental consultation with 

State and local officials. 

Intergovernmental consultation will 

occur for the assistance to MDOs in 

accordance with the process and 

procedures outlined in 7 CFR part 3015, 

subpart V. Assistance to rural 

microenterprises will not require 

intergovernmental review. 

Rural Development will conduct 

intergovernmental consultation using 

RD Instruction 1940–J, 

‘‘Intergovernmental Review of Rural 

Development Programs and Activities,’’ 

available in any Rural Development 

office, on the Internet at http:// 

www.rurdev.usda.gov/regs, and in 7 

CFR part 3015, subpart V. Note that not 

all States have chosen to participate in 

the intergovernmental review process. A 

list of participating States is available at 

the following Web site: http:// 

www.whitehouse.gov/omb/grants/ 

spoc.html. 

H. Executive Order 13175, Consultation 

and Coordination With Indian Tribal 

Governments 

This executive order imposes 

requirements on Rural Development in 

the development of regulatory policies 

that have tribal implications or preempt 

tribal laws. Rural Development has 

determined that the proposed rule does 

not have a substantial direct effect on 

one or more Indian tribe(s) or on either 

the relationship or the distribution of 

powers and responsibilities between the 

Federal Government and the Indian 

tribes. Thus, the proposed rule is not 

subject to the requirements of Executive 

Order 13175. 

I. Programs Affected 

Catalog of Federal Domestic 

Assistance (CFDA) Number. This 

program is listed in the Catalog of 

Federal Domestic Assistance under 

Number 10.870. 

J. Paperwork Reduction Act 

The collection of information 

requirements contained in this proposed 

rule have been submitted to the Office 

of Management and Budget (OMB) for 

clearance. In accordance with the 


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Paperwork Reduction Act of 1995, 

USDA Rural Development will seek 

standard OMB approval of the reporting 

requirements contained in this proposed 

rule and hereby opens a 60-day public 

comment period. 

Title: Rural Microentrepreneur 

Assistance Program. 

Type of Request: New Collection. 

Abstract: The collection of 

information is vital to Rural 

Development to make decisions 

regarding the eligibility of projects and 

loan and grant recipients in order to 

ensure compliance with the regulations 

and to ensure that the funds obtained 

from the Government are being used for 

the purposes for which they were 

awarded. Microdevelopment 

organizations seeking funding under 

this program will have to submit 

applications that include specified 

information, certifications, and 

agreements. This information will be 

used to determine applicant eligibility 

and to ensure that funds are used for 

authorized purposes. Applications for 

continued participation in the program 

will include primarily any needed 

updates to the information submitted 

with the initial application. 

Once an MDO has been approved for 

participation in the program, it must 

submit additional documents, reports, 

and certifications to the Agency. For 

MDOs receiving loans, the necessary 

documents are required around loan 

closing. For MDOs receiving grant 

funds, the MDO must submit a financial 

status report and request for 

advancement or reimbursement. In 

addition, all MDOs that are awarded 

funds under this program must submit 

quarterly reports to the Agency to 

provide information on their 

performance. Some grantees will also be 

required to submit other reports on 

occasion in the event of poor 

performance or other such occurrences 

that require more than the usual set of 

reporting information. Lastly, grantees 

that plan to spend technical assistance 

grant funds on administrative expenses 

must submit an annual budget of 

proposed administrative expenses for 

Agency approval. 

In summary, this collection of 

information is necessary in order to 

implement this program. 

The following estimates are based on 

the anticipated average over the first 

three years the program is in place. 

Estimate of Burden: Public reporting 

for this collection of information is 

estimated to average 2 hours per 

response. 

Respondents: Microenterprise 

development organizations (nonprofit 

entities, Indian tribes, and public 

institutions of higher education). 

Estimated Number of Respondents: 

66. 

Estimated Number of Responses per 

Respondent: 36. 

Estimated Number of Responses: 

2,379. 

Estimated Total Annual Burden 

(Hours) on Respondents: 4,462. 

Copies of this information collection 

can be obtained from Cheryl Thompson, 

Regulations and Paperwork 

Management Branch at (202) 692–0043. 

Comments 

Comments are invited regarding: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of Rural 

Development, including whether the 

information will have practical utility; 

(b) the accuracy of Rural Development’s 

estimate of the burden of the proposed 

collection of information including the 

validity of the methodology and 

assumptions used; (c) ways to enhance 

the quality, utility and clarity of the 

information to be collected; and (d) 

ways to minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology. 

Comments may be sent to Cheryl 

Thompson, Regulations and Paperwork 

Management Branch, Support Services 

Division, U.S. Department of 

Agriculture, Rural Development, Stop 

0742, 1400 Independence Ave., SW., 

Washington, DC 20250–0742. All 

responses to this proposed rule will be 

summarized and included in the request 

for OMB approval. All comments will 

also become a matter of public record. 

K. E-Government Act Compliance 

USDA is committed to complying 

with the E-Government Act of 2002 

(Pub. L. 107–347, December 17, 2002), 

to promote the use of the Internet and 

other information technologies to 

provide increased opportunities for 

citizen access to government 

information and services, and for other 

purposes. 

List of Subjects in 7 CFR 4280 

Business programs, Grant programs, 

Loan programs, Microenterprise 

development organization, 

Microentrepreneur, Rural development, 

Small business, Rural areas. 

For the reasons set forth in the 

preamble, part 4280 of title 7 of the 

Code of Federal Regulations is proposed 

to be amended as follows: 

PART 4280—LOANS AND GRANTS 

1. The authority citation for part 4280 

is revised to read as follows: 

Authority: 7 U.S.C. 1989(a), 7 U.S.C. 

2009s. 

2. Part 4280 is amended by adding a 

new subpart D to read as follows: 

Subpart D—Rural Microentrepreneur 

Assistance Program 

Sec. 

4280.301 Purpose and scope. 

4280.302 Definitions and abbreviations. 

4280.303 Exception authority. 

4280.304 Review or appeal rights and 

administrative concerns. 

4280.305 Nondiscrimnation and 

compliance with other Federal laws. 

4280.306–4280.309 [Reserved] 

4280.310 Program requirements for MDOs. 

4280.311 Loan provisions for Agency loans 

to microlenders. 

4280.312 Grant provisions. 

4280.313–4280.314 [Reserved] 

4280.315 MDO application and submission 

information. 

4280.316 Application scoring. 

4280.317 Selection of applications for 

funding. 

4280.318–4280.319 [Reserved] 

4280.320 Grant administration. 

4280.321 Loan and grant servicing. 

4280.322 Loans from the microlenders to 

the microentrepreneurs and 

microenterprises. 

4280.323 Ineligible microloan purposes. 

4280.324–4280.400 [Reserved] 

Subpart D—Rural Microentrepreneur 

Assistance Program 

§ 4280.301 Purpose and scope. 

(a) This subpart contains the 

provisions and procedures by which the 

Agency will administer the Rural 

Microenterprise Assistance Program 

(RMAP). The purpose of the program is 

to support the development and ongoing 

success of rural microentrepreneurs and 

microenterprises (businesses generally 

with ten employees or fewer and in 

need of financing in the amount of 

$50,000 or less). To meet this purpose, 

the program will make financial 

assistance, business based training, and 

technical assistance available to 

microenterprises in rural areas and will 

deliver direct loans and technical 

assistance (TA) grants to 

Microenterprise Development 

Organizations (MDOs). These funds will 

be used by MDOs to assist 

microentrepreneurs by provision of 

integrated financial assistance, business 

training, and technical support. The 

program will also provide enhancement 

grants to enhance the capabilities of 

MDOs to support rural microenterprise 

development. In addition, program 

funds will be used to support other such 

activities as deemed appropriate by the 


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Secretary to ensure the development 

and ongoing success of rural 

microenterprises. 

(b) The Agency will make direct loans 

to microlenders, as defined in 

§ 4280.302, to capitalize microloan 

revolving funds to provide fixed interest 

rate microloans to microentrepreneurs 

for startup and growing 

microenterprises. Technical assistance 

grants will be awarded to microlenders 

to provide technical assistance to 

microentrepreneurs who have received 

one or more microloans from the MDO 

under this program. 

(c) To ensure that MDOs are able to 

provide appropriate training to 

microentrepreneurs, operate efficiently, 

and stay up-to-date on business training 

practices, the Agency will make 

enhancement grants to microlenders 

that have successfully completed the 

application scoring process for such 

grants, whether or not they receive other 

funding under this program, to enhance 

their ability to provide training, 

operational support, business planning, 

market development assistance, and 

other related services to rural 

microentrepreneurs. 

§ 4280.302 Definitions and abbreviations. 

(a) General definitions. The following 

definitions apply to the terms used in 

this subpart. 

Administrative expenses. Those 

expenses incurred by an MDO for the 

operation of services under this 

program. Not more than 10 percent of 

TA grant funding may be used for such 

expenses. 

Agency. USDA Rural Development, 

Rural Business-Cooperative Service or 

its successor organization. 

Agency personnel. Individuals 

employed by the United States 

Department of Agriculture-Rural 

Development Agency, who are more 

than 6 months from separating from the 

Agency. 

Applicant. The eligible legal entity, 

also referred to as a microenterprise 

development organization or MDO, 

submitting the application. 

Application. The forms and 

documentation submitted by an MDO 

for acceptance into the program. 

Award. The written documentation, 

executed by the Agency after the 

application is approved, containing the 

terms and conditions for provision of 

financial assistance to the applicant. 

Financial assistance may constitute a 

loan or a grant or both. 

Business incubator. An organization 

that provides temporary premises, and 

also provides technical assistance, 

advice, use of equipment, and may 

provide access to capital, or other 

facilities or services to 

microentrepreneurs and 

microenterprises starting or growing a 

business. 

Default. Default may be monetary or 

performance based. 

(i) Monetary default is failure by a 

participating MDO to meet any financial 

obligation or term of a loan or grant. An 

MDO will be considered in monetary 

default if it fails to make 3 or more 

scheduled loan payments in a row; if it 

misuses grant funding; or if it has less 

than a total of 105 percent of the dollars 

lent to it under this program and still 

owed to the Agency in a combination of 

the Rural Microloan Revolving Fund 

(RMRF), the Loan Loss Reserve Fund 

(LLRF), and the total outstanding 

balance of microloans made. 

(ii) Performance default is failure by 

a participating MDO to meet any 

regulatory requirement or any 

requirement in program guidance. 

Delinquency. Failure by an MDO to 

make a scheduled loan payment by the 

due date or within any grace period as 

stipulated in the promissory note and 

loan agreement. 

Enhancement grant. A grant whose 

funds are used to improve the internal 

operations of a microlender 

participating under this program in a 

manner that allows the microlender to 

improve their capabilities in delivering 

training, operational support, business 

planning, market development 

assistance, and other related services to 

rural microentrepreneurs 

Facilitation of capital. For purposes of 

this program, facilitation of capital 

means assisting a technical assistance 

client in obtaining a microloan whether 

or not the microloan is wholly or 

partially capitalized by funds provided 

under this program. 

Fiscal year (FY). Fiscal year means the 

12-month period beginning October 1 of 

any given year and ending on 

September 30 of the following year. 

Full-time equivalent employee (FTE). 

The Agency uses the Bureau of Labor 

Statistics definition of full-time jobs as 

its standard definition. For purposes of 

this program, a full-time job is a job that 

has at least 35 hours in a work week. As 

such, one full-time job with at least 35 

hours in a work week equals one FTE; 

two part-time jobs with combined hours 

of at least 35 hours in a work week 

equals one FTE, and three seasonal jobs 

equals one FTE. If an FTE calculation 

results in a fraction, it should be 

rounded up to the next whole number. 

Indian tribal government employee. 

An individual currently employed by its 

Indian tribal government with more 

than 6 months remaining in his/her 

contract or other agreement to remain a 

paid, full-time employee of the tribal 

government. If no written agreement 

exists, then there must be an 

understanding with the tribe that the 

employee is expected to remain 

employed on a full-time basis with the 

tribe for 6 months or more. 

Indian tribe. The term ‘‘Indian tribe’’ 

as defined in the Indian SelfDetermination and Education 

Assistance Act (25 U.S.C. 450b)—means 

‘‘any Indian tribe, band, nation, or other 

organized group or community, 

including any Alaska Native village or 

regional or village corporation as 

defined in or established pursuant to the 

Alaska Native Claims Settlement Act (85 

Stat. 688) [43 U.S.C. 1601 et seq.], which 

is recognized as eligible for the special 

programs and services provided by the 

United States to Indians because of their 

status as Indians.’’ 

Loan loss reserve fund (LLRF). An 

interest-bearing deposit account an 

MDO must establish to pay any shortage 

in the rural microloan revolving fund 

caused by delinquencies or losses on 

microloans. The LLRF account must be 

maintained in an amount equal to at 

least 5 percent of the outstanding 

balance of funds owed to the Agency by 

the MDO under this program. The 

Agency will hold a security interest in 

the account and all funds therein, until 

the MDO has repaid its debt to the 

Agency under this program. 

Microenterprise development 

organization (MDO). An organization 

that: 

(i) Is a non-profit entity; an Indian 

tribe (the government of which tribe 

certifies that no MDO serves the tribe 

and no RMAP exists under the 

jurisdiction of the Indian tribe); or a 

public institution of higher education; 

and 

(ii) Provides training and technical 

assistance to rural microentrepreneurs; 

and 

(iii) Facilitates access to capital or 

another related service; and 

(iv) Has a demonstrated record of 

delivering services to rural 

microentrepreneurs, or an effective plan 

to develop a program to deliver such 

services. 

Microentrepreneur. An owner and 

operator, or prospective owner and 

operator, of a rural microenterprise who 

is unable to obtain sufficient training, 

technical assistance, or credit other than 

under this section, as determined by the 

Secretary. For purposes of this 

regulation, rural microentrepreneur and 

microentrepreneur are synonymous. All 

microentrepreneurs assisted under this 

regulation must be located in rural 

areas. Microenterprises include 

businesses employing 10 people or 


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fewer that are in need of $50,000 or less 

in business financing and/or in need of 

business based technical assistance and 

training. Such businesses may include 

any type of legal business that meets 

local standards of decency. Business 

types may also include agricultural 

producers provided they meet the 

stipulations in this definition. 

Microlender. An MDO that has been 

approved by the Agency for 

participation under this subpart. 

Microloan. A business loan of not 

more than $50,000 with a fixed interest 

rate that is provided to a rural 

microentrepreneur for startup and 

growing rural microenterprises. 

Military personnel. Individuals, 

regardless of rank, currently enlisted in 

active military service with more than 6 

months remaining in their service 

requirement. 

Nonprofit entity. An entity, 

determined by State Law, to be 

conducting business so as to be defined 

as a nonprofit entity and that has 

applied for or received such designation 

from the U.S. Internal Revenue Service. 

Program. The Rural 

Microentrepreneur Assistance Program 

(RMAP). 

Rural microenterprise. The term ‘rural 

microenterprise’ means: 

(i) A sole proprietorship located in a 

rural area; or 

(ii) A business entity with not more 

than 10 full-time-equivalent employees 

located in a rural area. 

Rural microloan revolving fund 

(RMRF). An interest-bearing account 

into which an MDO shall deposit loan 

funds received from the Agency, from 

which loans shall be made by the MDO 

to microentrepreneurs, and from which 

repayments to the Agency shall be 

made. The Agency will hold a security 

interest in the RMRF account and on 

any funds therein until such time as the 

MDO repays its debt to the Agency 

under this program. 

Rural or rural area. For the purposes 

of this program, the terms ‘rural’ and 

‘rural area’ are defined as any area of a 

State not in a city or town that has a 

population of more than 50,000 

inhabitants, according to the latest 

decennial census of the United States; 

and the contiguous and adjacent 

urbanized area. 

(i) For purposes of this definition, 

cities and towns are incorporated 

population centers with definite 

boundaries, local self-government, and 

legal powers set forth in a charter 

granted by the State. 

(ii) Notwithstanding any other 

provision of this paragraph, within the 

areas of the County of Honolulu, 

Hawaii, and the Commonwealth of 

Puerto Rico, the Secretary may 

designate any part of the areas as a rural 

area if the Secretary determines that the 

part is not urban in character, other than 

any area included in the Honolulu 

census designated place (CDP) or the 

San Juan CDP. 

Significant outmigration. The 

movement of population, other than 

migrant worker populations, away from 

a defined area at a rate of 15 percent or 

higher based on the three most recent 

decennial censuses as demonstrated by 

data supplied by the U.S. Census 

Bureau. 

Technical assistance and training. 

The provision of education, guidance, or 

instruction to one or more 

microentrepreneur(s) to prepare them 

for self-employment; to improve the 

state of their current microbusiness; to 

increase their capacity in a specific 

technical aspect of the subject business; 

and, to assist the microentrepreneur(s) 

in achieving a degree of business 

preparedness and/or functioning that 

will allow them to obtain, or have the 

ability to obtain, one or more 

microloans of $50,000 or less whether or 

not from program funds. 

Technical assistance grant. A grant 

whose funds are used to provide 

technical assistance and training, as 

defined in this section. 

(b) Abbreviations. The following 

abbreviations apply to the terms used in 

this subpart: 

FTE—Full-time employee. 

LLRF—Loan loss reserve fund. 

MDO—Microenterprise development 

organization. 

RMAP—Rural microentrepreneur assistance 

program. 

RMRF—Rural microloan revolving fund. 

TA—Technical assistance. 

§ 4280.303 Exception authority. 

The Administrator may make limited 

exceptions to the requirements or 

provisions of this subpart. Such 

exceptions must be in the best financial 

interest of the Federal government, such 

as agreeing to the terms of a new 

repayment agreement to ensure 

repayment by a defaulted microlender. 

No exceptions may be made regarding 

applicant eligibility, project eligibility, 

or the rural area definition. In addition, 

exceptions may not be made: 

(a) To accept an applicant into the 

program that would not normally be 

accepted under the scoring system; 

(b) To fund an interested party that 

has not successfully competed for 

funding in accordance with the 

regulations. 

§ 4280.304 Review or appeal rights and 

administrative concerns. 

(a) Review or appeal rights. An 

applicant MDO may seek a review of an 

Agency decision under this subpart 

from the appropriate Agency official 

that oversees the program in question, 

or appeal to the National Appeals 

Division in accordance with 7 CFR part 

11. 

(b) Administrative concerns. If a 

microborrower has any questions or 

concerns regarding the administration of 

the program, including action of the 

microlender, contact: Business 

Programs, Specialty Programs Division, 

USDA, Rural Development, Rural 

Business—Cooperative Service, Room 

6868, South Agriculture Building, Stop 

3225, 1400 Independence Avenue, SW., 

Washington, DC 20250–3225 or the 

USDA Rural Development State Office 

in the State in which the microborrower 

is located. 

§ 4280.305 Nondiscrimination and 

compliance with other Federal laws. 

(a) Applicants must comply with 

other applicable Federal laws, including 

the Equal Employment Opportunities 

Act of 1972, the Americans with 

Disabilities Act, the Equal Credit 

Opportunity Act, the Civil Rights Act of 

1964, Section 504 of the Rehabilitation 

Act of 1973, the Age Discrimination Act 

of 1975, and 7 CFR part 1901–E. 

(b) The U.S. Department of 

Agriculture (USDA) prohibits 

discrimination in all its programs and 

activities on the basis of race, color, 

national origin, age, disability, and 

where applicable, sex, marital status, 

familial status, parental status, religion, 

sexual orientation, genetic information, 

political beliefs, reprisal, or because all 

or part of an individual’s income is 

derived from any public assistance 

program. (Not all prohibited bases apply 

to all programs.) Persons with 

disabilities who require alternative 

means for communication of program 

information (Braille, large print, 

audiotape, etc.) should contact USDA’s 

TARGET Center at (202) 720–2600 

(voice and TDD). Any applicant that 

believes it has been discriminated 

against as a result of applying for funds 

under this program should contact: 

USDA, Director, Office of Adjudication 

and Compliance, 1400 Independence 

Avenue, SW., Washington, DC 20250– 

9410, or call (800) 795–3272 (voice) or 

(202) 720–6382 (TDD) for information 

and instructions regarding the filing of 

a Civil Rights complaint. USDA is an 

equal opportunity provider, employer, 

and lender. 

(c) A pre-award compliance review 

will take place at the time of application 


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when the applicant completes Form RD 

400–8, ‘‘Compliance Review’’ (or 

successor form). Post award compliance 

reviews will take place once every three 

years after the beginning of participation 

in the program and until such time as 

a microlender leaves the program. 

§§ 4280.306–4280.309 [Reserved] 

§ 4280.310 Program requirements for 

MDOs. 

(a) Eligibility requirements for 

applicant MDOs. To be eligible for a 

direct loan or grant award under RMAP, 

an applicant must meet each of the 

criteria set forth in paragraphs (a)(1) 

through (8) of this section, as applicable. 

(1) Type of applicant. The applicant 

must meet the definition of an MDO 

under this program. 

(2) Citizenship. To be eligible to apply 

for status as an MDO, the applicant 

must be at least 51 percent controlled by 

persons who are either: 

(i) Citizens of the United States, the 

Republic of Palau, the Federated States 

of Micronesia, the Republic of the 

Marshall Islands, American Samoa, or 

the Commonwealth of Puerto Rico; or 

(ii) Legally admitted permanent 

residents residing in the U.S. 

(3) Legal authority and responsibility. 

The applicant must have the legal 

authority necessary to carry out the 

purpose of the award. 

(4) Direct loans. The applicant will be 

considered for a direct loan to capitalize 

a revolving loan fund if it submits an 

application that scores sufficiently to 

indicate that the applicant is 

appropriately qualified to perform 

under this program and will use 

program funding exclusively for making 

and administering a microloan 

revolving fund in one or more rural 

areas; and 

(i) Has demonstrated experience in 

the management of a revolving loan 

fund; or 

(ii) Certifies that it, or its employees, 

have received education and training 

from a qualified microenterprise 

development training entity to the 

extent that it has the capacity to manage 

such a revolving loan fund; or 

(iii) Is actively and successfully 

participating as an intermediary lender 

in good standing under the U.S. Small 

Business Administration (SBA) 

Microloan Program or other similar loan 

programs as determined by the 

Administrator. 

(5) Grants to support rural 

microenterprise development 

(enhancement grants). Any microlender 

participating in the program will be 

considered eligible to apply for an 

enhancement grant. Such grants must be 

used to improve the internal operations 

of the microlender so that they can 

improve their ability to deliver training, 

operational support, business planning, 

market development assistance, and 

other related services to rural 

microentrepreneurs. Other related 

services include improvement in the 

microlender’s ability to make and 

service loans, arrive at sound lending 

decisions, improve operational 

efficiency, improve their marketing 

strategies so as to reach an increased 

number of potential microborrowers, 

enhance record keeping and data 

gathering, and penetrating new markets 

as they develop such as sustainable 

small farming, the greening of existing 

businesses, development of new green 

businesses, and other sectors yet to be 

developed. Any microlender that 

receives an enhancement grant to 

pursue an internal enhancement project 

must enter into an agreement with a 

trainer/service provider within 90 days 

of notification of the grant award. If the 

microlender does not enter into such 

agreement within these 90 days, the 

enhancement grant will be forfeited. 

(6) Grants to support 

microentrepreneurs (TA grants). The 

capacity of the applicant MDO to 

provide an integrated program of 

microlending and technical assistance 

will be evaluated during the scoring 

process. Therefore, an applicant MDO 

will be considered eligible to receive TA 

grant funding if it receives funding to 

provide microloans under this program, 

and agrees to use TA grant funding 

exclusively for providing technical 

assistance and training to eligible 

microentrepreneurs, with the exception 

that up to 10 percent of the grant funds 

may be used to cover administrative 

expenses, except as may be reduced as 

provided under § 4280.312(a)(5). The 

following limitations will apply to TA 

grant funding: 

(i) Administrative expenses should be 

kept to a minimum. As such, the 

applicant MDO is required, in the 

application materials, to provide an 

administrative budget plan indicating 

the amount of funding it will need for 

administrative purposes. 

(ii) While operating the program, the 

selected microlender will be expected to 

adhere to the estimates it provides in 

the application. If for any reason, the 

microlender cannot meet the 

expectations of the application, it must 

contact the Agency in writing to request 

a budget adjustment. 

(iii) Budget adjustments will be 

considered and approved on a case by 

case basis. 

(7) Ineligible applicants. An applicant 

will be considered ineligible if it does 

not meet the definition of an MDO as 

provided in § 4280.302; if it is debarred, 

suspended or otherwise excluded from, 

or ineligible for, participation in Federal 

assistance programs. The applicant will 

also be considered ineligible if it has an 

outstanding judgment against it, 

obtained by the United States in a 

Federal Court (other than U.S. Tax 

Court), is delinquent in meeting U.S. 

Internal Revenue Service (IRS) 

requirements, or cannot meet the 

requirements of paragraph (a)(6) of this 

section. 

(8) Delinquencies. No applicant will 

be eligible to receive a loan if it is 

delinquent on a Federal debt. (Note: See 

31 U.S.C. 3720B, an applicant is still 

eligible for a grant if they are delinquent 

on a Federal debt; however, see 28 

U.S.C. 3201, Federal judgment debtors 

(other than tax debts) are ineligible for 

Federal loans and grants). 

(b) Application eligibility. An 

application will be considered eligible 

for funding if it is submitted by an 

eligible MDO and will qualify for 

funding based on the results of review, 

scoring, and other procedures as 

indicated in this subpart, and will 

either: 

(1) Establish, or add capital to, an 

RMRF originally capitalized under this 

program; or 

(2) Establish or continue a training 

and TA program for rural 

microentrepreneurs as defined. 

(c) Business incubators. Because the 

purpose of a business incubator is to 

provide business-based technical 

assistance and an environment in which 

micro-level, very small, and small 

businesses may thrive, a microlender 

that owns and operates a small business 

incubator, as described, will be 

considered eligible to apply. In 

addition, a business incubator selected 

to participate as a microlender may use 

RMAP funding to lend to an eligible 

microenterprise tenant, without 

imposing a conflict of interest on itself. 

§ 4280.311 Loan provisions for Agency 

loans to microlenders. 

(a) Purpose of the loan. Loans will be 

made to eligible and qualified 

microlenders to capitalize RMRFs. An 

RMRF will be an exclusive account, 

from which fixed interest rate 

microloans will be made to 

microentrepreneurs and 

microenterprises; into which payments 

from microborrowers and 

reimbursements from the LLRF will be 

deposited; and from which payments 

will be made by the microlender to the 

Agency. Interest earnings accrued by the 

RMRF will become part of the RMRF 

and may be used only for the purposes 


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stated above. However, with advance 

written approval by the Agency, the 

microlender may increase the funding 

in its LLRF with interest earnings from 

the RMRF. The Agency will hold first 

lien position on the RMRF account, the 

LLRF, and all notes receivable from 

microloans. 

(b) Eligible activities. Microlenders 

may make microloans for qualified 

business activities as specified in 

§ 4280.322 and may use Agency loan 

funds only for the purposes stated in 

§ 4280.322. 

(c) Ineligible activities. Microlenders 

may not use Agency loan funds for 

administrative costs or expenses and 

may not make microloans under this 

program for ineligible purposes as 

specified in § 4280.323. 

(d) Loan terms and conditions for 

microlenders. Loans will be made to 

microlenders under the following terms 

and conditions: 

(1) Funds received from the Agency 

will be deposited into an interest 

bearing account that will be the RMRF 

account. 

(2) The RMRF account may be used to 

make microloans, to accept repayments 

from microborrowers, to repay the 

Agency and, with the advance written 

approval of the Agency, to supplement 

the LLRF with interest earnings from the 

RMRF. The Agency will only approve 

the use of interest earning the RMPF 

account to supplement the LLRF in 

those cases where the microlender’s 

portfolio is highly performing, where 

the RMRF account is at an appropriate 

level to guarantee the ability to repay, 

and the microlender’s repayment 

history has been highly satisfactory. 

(3) The term of a loan made to a 

microlender will not exceed 20 years 

and may be less, as determined by the 

Agency. 

(4) Loan repayments will be made in 

equal monthly installments to the 

Agency beginning on the last day of the 

24th month of the life of the loan. 

(5) A microlender may make partial or 

full repayment of its debt to the Agency 

at any time without penalty. 

(6) The microlender is responsible for 

full repayment of its loan to the Agency 

regardless of the performance of its 

microloan portfolio. 

(7) The Agency may call the entire 

loan due and payable prior to the end 

of the 20-year period, due to nonperformance, delinquency, or default. 

(8) Each loan made to a microlender 

will automatically receive a 2-year 

deferral during which time no 

repayment will be due to the Agency. 

(i) Interest will accrue during the 

deferral period on funds drawn down 

from (disbursed by) the Agency. 

(ii) The deferral period will begin on 

the day the loan to the microlender is 

closed. 

(9) Loan closing between the 

microlender and the Agency must take 

place within 60 days of loan approval or 

funds will be forfeited. 

(10) Microlenders will be eligible to 

receive a disbursement of up to 25 

percent of the total loan amount at the 

time of loan closing. Interest will accrue 

on all funds disbursed to the 

microlender beginning on the date of 

disbursement. 

(11) A microlender must make one or 

more microloans within 30 days of any 

disbursement it receives from the 

Agency. 

(12) Microlenders may receive 

additional disbursements not more than 

quarterly, until the full amount of the 

loan to the microlender is disbursed, or 

until the end of the thirty sixth month 

of the loan, whichever occurs first. To 

ensure that microleners utilize their 

funding in an appropriate manner, 

requests for disbursement must be 

accompanied by a description of the 

incoming microloan pipeline. Requests 

for funding should generally be in the 

amount of the incoming pipeline plus 

20 percent of that amount. Requests in 

excess of that amount must be 

explained. 

(13) Each loan made to a microlender 

will bear an interest rate equal to the 

rate applicable to five-year obligations 

of the United States treasury, adjusted to 

the nearest one-eighth percent, subject 

to: 

(i) A minimum interest rate of at least 

1 percent, and 

(ii) An adjustment as provided in 

paragraph (d) (17) of this section 

(14) Each loan to a microlender will 

accrue interest at a rate of 1 percent 

during the initial deferral period. 

Interest accrued during this period will 

be capitalized as described in paragraph 

(d)(15) of this section. 

(15) On the first day of the twentysecond month of the initial deferral 

period, the microlender’s debt to the 

Agency will be calculated and 

amortized over an 18-year period. The 

first payment will be due to the Agency 

on the last day of the twenty-fourth 

month of the life of the loan. Interest 

accrued during the deferral period will 

be calculated into the payment and 

repaid over the 18-year payment period. 

(i) A microlender requesting 

disbursements after the repayment 

calculation may inadvertently subject 

itself to negative amortization. Such a 

microlender may request to have the 

loan expeditiously re-amortized by the 

Agency. 

(ii) All loans to microlenders will be 

automatically re-amortized at the end of 

the thirty-fourth month of the life of the 

loan. 

(16) Funds not disbursed to the 

microlender by the end of the thirtyfourth month of the loan from the 

Agency will be de-obligated. 

(17) All loans will receive an 

evaluation during the thirty-fourth 

month of the loan, so that: 

(i) A microlender that has re-loaned 

all of its Agency funding to 

microentrepreneurs will adjust to the 

rate provided in paragraph (d)(13) of 

this section less 200 basis points for the 

life of the loan. 

(ii) A microlender that has not fully 

re-loaned all of its Agency funding to 

microentrepreneurs, as of month 

twenty-four, will adjust to the rate 

provided in paragraph (d)(13) less 100 

basis points for the life of the loan. 

(18) The Agency will hold first lien 

position on the RMRF account, the 

LLRF, and all notes receivable from 

microloans. 

(19) If a microlender makes a 

withdrawal from the RMRF for any 

purpose other than to make a microloan, 

repay the Agency, or, with advance 

written approval, transfer an 

appropriate amount of non-Federal 

funds to the LLRF, the Agency may 

impose a lien on the account, restricting 

further access to withdrawals from the 

account by the microlender O. 

(20) In the event a microlender fails 

to meet its obligations to the Agency, 

the Agency may: 

(i) Take possession of the RMRF and/ 

or any microloans outstanding, and/or 

the LLRF; or 

(ii) Call the loan due and payable in 

full; or 

(iii) Enter into a workout agreement 

acceptable to the Agency, which may or 

may not include transfer or sale of the 

portfolio to another microlender 

(whether or not funded under this 

program) deemed acceptable to the 

Agency; or 

(iv) Pursue any combination of 

actions specified in paragraphs (d)(20)(i) 

through (iii) on this section. 

(e) Loan funding limitations. (1) 

Minimum and maximum loan amounts. 

The minimum loan amount a 

microlender may borrow under this 

program will be $50,000 (fifty thousand 

dollars). The maximum any microlender 

may borrow in a single funding under 

this program will be $500,000 provided 

certain limitations are met. In no case 

will the aggregate debt owed to the 

program by any single microlender 

exceed $2,500,000. 

(2) Use of funds. Loans must be used 

only to establish an RMRF out of which 


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microloans will be made, into which 

microloan payments will be deposited, 

and from which repayment will be 

made to the Agency. Interest earned by 

the microlender on these funds may, 

with advance written authorization from 

the Agency, be used to help fund the 

LLRF. 

(f) Loan loss reserve fund. Each 

microlender that receives one or more 

loans under this program will be 

required to establish an LLRF. 

(1) Purpose. The purpose of the LLRF 

is to protect the microlender and the 

Agency against losses that may occur as 

the result of the failure of one or more 

microentrepreneurs to repay their loans 

on a timely basis. 

(2) Capitalization and maintenance. 

The LLRF must: 

(i) Be held in a Federally-insured 

deposit account separate and distinct 

from any other fund owned by the 

microlender; and 

(ii) Be maintained in an amount equal 

to not less than 5 percent of the amount 

owed by the microlender to the Agency 

under this program; and 

(iii) Be capitalized using non-Federal 

funding; and 

(iv) Remain open, appropriately 

capitalized, and active until such time 

as: 

(A) All obligations owed to the 

Agency by the microlender under this 

program are paid in full; or 

(B) It is used to assist with full 

repayment/prepayment of the 

microlender’s debt. 

(3) Use of LLRF funds. The LLRF must 

be used only to: 

(i) Recapitalize the RMRF in the event 

of the loss and write-off of a microloan; 

that is, when a loss has been paid to the 

RMRF, from the LLRF, the microlender 

must refresh the LLRF to the required 

level from its own funding; and 

(ii) Accept non-Federal deposits as 

required for maintenance of the fund at 

a level equal to 5 percent or more of the 

outstanding microloan balance; and 

(iii) Accrue interest; interest earnings 

accrued by the LLRF will become part 

of the LLRF and may be used only for 

eligible purposes; and 

(iv) Prepay or repay the Agency. 

(4) LLRF funded in advance. The 

LLRF account must be established and 

partially funded by the microlender 

prior to the closing of the loan from the 

agency. Such funds must come from 

private sector sources. Federal funds 

will not be accepted as appropriate for 

the LLRF. At all times, the microlender 

must maintain the LLRF at a minimum 

of 5 percent of the total amount owed 

by the microlender, under this program, 

to the Agency. In the event of exhibited 

weaknesses on the part of a 

microlender, the Agency may require 

additional funding be put into the LLRF; 

however, the Agency may never require 

an LLRF of more than 10 percent of the 

total amount owed to the microlender. 

(g) Loan approval and obligating 

funds. The loan will be considered 

approved on the date the signed copy of 

Form RD 1940–1, ‘‘Request for 

Obligation of Funds,’’ (or successor 

form(s)) is mailed to the microlender. 

Form RD 1940–1 authorizes funds to be 

obligated and may be executed by the 

loan approving official provided the 

microlender has the legal authority to 

contract for a loan, and to enter into 

required agreements, including an 

Agency-approved loan agreement, and 

has signed Form RD 1940–1. 

(h) Loan closing. (1) Prior to loan 

closing, microlenders providing 

microloans must provide evidence that 

the RMRF and LLRF bank accounts have 

been set up and 5 percent of the initial 

disbursement has been deposited. 

USDA will have a first lien on these 

accounts. The evidence shall consist of: 

(i) A pre-authorized debit form 

allowing the agency to withdraw 

payments from the RMRF account, and 

in the event of a repayment workout, 

from the LLRF account; 

(ii) An Agency-approved automatic 

deposit authorization form from the 

depository institution providing the 

Agency with the RMRF account number 

into which funds may be deposited at 

time of disbursement to the 

microlender; and 

(iii) A statement from the depository 

institution as to the amount of cash in 

the LLRF account. 

(2) At loan closing, the microlender 

must certify that: 

(i) All requirements of the letter of 

conditions have been met and 

(ii) There have been no material 

adverse change(s) in the microlender or 

its financial condition since the 

issuance of the letter of conditions. If 

one or more adverse changes have 

occurred, the microlender must explain 

the change(s) and the Agency must 

review the changes to determine that the 

microlender remains eligible and 

qualified to participate as an MDO. 

(iii) An Agency-approved promissory 

note must be executed at loan closing or 

prior to disbursement of funds. 

(3) Agency personnel will not sign 

any documents other than those 

specifically provided for in this subpart. 

(4) Upon reviewing the conditions 

and requirements in the letter of 

conditions, the applicant must 

complete, sign, and return Form RD 

1942–46, ‘‘Letter of Intent to Meet 

Conditions,’’ (or successor form) to the 

Agency; or if certain conditions cannot 

be met, the applicant may propose 

alternate conditions. The processing 

officer will review any requests for 

changes to the letter of conditions. The 

processing officer will approve only 

minor changes that do not materially 

affect the microlender. Changes in legal 

entities or where tax considerations are 

the reason for the change will not be 

approved. 

(5) The microlender will provide 

sufficient evidence to enable the Agency 

to ascertain that no claim or liens of 

laborers, materials, contractors, 

subcontractors, suppliers of machinery 

and equipment, or other parties are 

against the security of the microlender, 

and that no suits are pending or 

threatened that would adversely affect 

the security of the microlender when 

the security instruments are filed. 

(i) Recordkeeping, reporting, and 

oversight. Microlenders must maintain 

all records applicable to the program, to 

be made available to the Agency upon 

request, and must submit quarterly 

reports as specified in paragraphs (i)(1) 

through (4) of this section. 

(1) On a quarterly basis, within 30 

days of the end of the calendar quarter, 

each microlender that has an 

outstanding loan under this section 

must provide to the Agency: 

(i) Quarterly reports, using an Agencyapproved form, containing such 

information as the Agency may require, 

and in accordance with OMB circulars 

and guidance, to ensure that funds 

provided are being used for the 

purposes for which the loan to the 

microlender was made. At a minimum, 

these reports should include a 

discussion reconciling the microlender’s 

actual results for the period against its 

goals, milestones, and objectives as 

previously communicated to the 

Agency; 

(ii) SF–269, ‘‘Financial Status report 

(or successor form)’’; and 

(iii) SF–270, ‘‘Request for Advance or 

Reimbursement’’ (or successor form). 

(2) Microlenders must provide 

evidence that the sum of the 

unexpended amount in the RMRF, plus 

the amount in the LLRF, plus debt owed 

by the microborrowers is equal to a 

minimum of 105 percent of the amount 

owed by the microlender to the Agency 

unless the Agency has established a 

higher LLRF reserve requirement for a 

specific microlender. 

(3) If a microlender has more than one 

loan from the Agency, a separate report 

must be made for each unless the 

Agency has given authorization for the 

microlender to combine its RMRF 

accounts. The Agency will give 

authorization to combine RMRF 

accounts only if (1) the underlying loans 


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have the same terms and conditions and 

(2) if the combined report allows the 

Agency to effectively administer the 

program, including providing the same 

level of transparency and information 

for each loan as if separate reports had 

been prepared. 

(4) The quarterly loan reports will 

include RD Form 1951–4, ‘‘Report of 

RMAP/RMRF Lending Activity,’’ (or 

successor form(s)) as well as a 

discussion of any delinquent loans and 

the steps being taken to cure the 

delinquencies. Other reports may be 

required from time to time in the event 

of poor performance, one or more work 

out agreements or other such 

occurrences that require more than the 

usual set of reporting information. 

(5) Because microloans made by 

microlenders to microborrowers are not 

underwritten by the Agency prior to 

loan making, the Agency may, at any 

time, choose to visit the microlender 

and inspect its files to ensure that 

program requirements are being met. 

§ 4280.312 Grant provisions. 

(a) General. The following provisions 

apply to both TA and enhancement 

grants, unless otherwise specified. 

(1) Grant amounts. Maximum grant 

amounts for enhancement grants will be 

determined and announced annually 

based on the availability of funds. The 

maximum enhancement grant funding 

awarded to a single microlender will not 

exceed $25,000 or ten percent of the 

available funding, whichever is less, in 

any given year. The maximum TA grant 

amount is 25 percent of the loan amount 

or $100,000, whichever is less. The 

Agency may adjust the maximum TA 

grant amount downward based on 

information provided in the application. 

(2) Cost share. The Federal share of 

the cost of a grant (technical assistance 

or enhancement) provided under this 

section will not exceed 75 percent. 

(3) Matching requirement. 

Microlenders must provide a 10 percent 

non-Federal cash matching contribution 

against any grant awarded under this 

program. Microlenders must also 

provide a 15 percent non-Federal cash 

or in-kind contribution against any grant 

awarded under this program. The total 

matching requirement is 25 percent of 

the amount of the grant. The nonFederal match against a grant is separate 

and distinct from the funds required to 

be deposited in the LLRF. RD will be 

able to monitor this match based on the 

SF 270 which is the Request for 

Advance or Reimbursement form. The 

first disbursement will require a match 

of that disbursement. Using the SF 270, 

no second grant disbursement would be 

made unless the matching funds were 

accounted for in advance. 

(4) Oversight. Microlenders receiving 

a grant must submit reports, as specified 

in paragraphs (a)(4)(i) through (iv) of 

this section. 

(i) On a quarterly basis, within 30 

days after the end of the fiscal calendar 

quarter, a microlender that receives a 

grant will provide to the Agency an 

Agency-approved quarterly report 

containing such information as the 

Agency may require to ensure that funds 

provided are being used for the 

purposes for which the grant was made, 

including SF–269 or SF–272, ‘‘Federal 

Cash Transaction Report,’’ (or successor 

form(s)), as appropriate, SF–270 (or 

successor form) if requesting grant 

funding at the time of reporting, and 

narrative reporting information as 

required by OMB circulars. 

(ii) If a microlender has more than one 

grant from the Agency, a separate report 

must be made for each. 

(iii) The reports will include Standard 

Form 270 and Standard Form 272 (or 

successor forms) along with a narrative 

report as required in OMB Circulars A– 

102 and A–110. This report will include 

information on the microlender’s 

technical assistance, training, and/or 

enhancement activity, and grant 

expenses, milestones met, or unmet, 

explanation of difficulties, observations 

and other such information. 

(iv) Other reports may be required by 

the Agency from time to time in the 

event of poor performance or other such 

occurrences that require more than the 

usual set of reporting information. 

(5) Administrative expenses. Not more 

than 10 percent of a TA grant received 

by a microlender for a fiscal year (FY) 

may be used to pay administrative 

expenses. Microlenders must submit an 

annual budget of proposed 

administrative expenses for Agency 

approval. The Agency has the right to 

deny the 10 percent and to fund 

administration expenses at a lower 

level. 

(6) Ineligible grant purposes. Grant 

funds may not be used for: 

(i) Grant application preparation 

costs; 

(ii) In the case of a TA grant, any costs 

incurred prior to the application date of 

the first microloan funded; 

(iii) In the case of a enhancement 

grant, costs incurred prior to the 

obligation date of the grant and capital 

improvements; 

(iv) Political or lobbying activities; 

(v) Assistance to any ineligible entity; 

(vi) Payment of any judgment or debt 

owed to the United States; and 

(vii) Payment of any costs other than 

those allowed in paragraphs (b)(1) and 

(c)(1) of this section. 

(b) Grants to enhance a microlender 

capabilities (Enhancement Grants). 

(1) Purpose. The Agency will make 

enhancement grants to microlenders to 

carry out projects and activities that 

enhances the microlender’s capabilities 

to provide training, operational support, 

business and strategic planning, and 

market development assistance, and 

other related services to assist the 

microlender in its ability to deliver 

services to rural microentrepreneurs. 

(2) Grant amounts. The maximum 

enhancement grant amount will be 

announced annually based on the 

availability of funds. The maximum 

enhancement grant funding awarded to 

a single microlender will not exceed 

$25,000 or ten percent of the available 

funding, whichever is less, in any given 

year. Funds cannot be used to pay off 

any loan amount. 

(c) Grants to assist 

microentrepreneurs (Technical 

Assistance (TA) Grants). (1) Purpose. 

The Agency shall make TA grants to 

microlenders to assist them in providing 

marketing, management, and other 

technical assistance to 

microentrepreneurs that have received 

one or more microloans from the 

microlender. 

(2) Grant amounts. TA grants will be 

limited to an amount equal to not more 

than 25 percent of the total outstanding 

balance of microloans made and active 

by the microlender as of the date the 

grant is awarded or $100,000, whichever 

is less. However, the minimum TA grant 

amount will be no less than 15 percent 

of the outstanding balance of microloans 

owed to the microlender. Funds cannot 

be used to pay off the loans. During the 

first year of operation, the percentage 

will be determined based on the amount 

of the loan to the microlender, but will 

be disbursed on a quarterly basis based 

on the amount of microloans made. Any 

grant dollars obligated, but not spent, 

from the initial grant, will be subtracted 

from the subsequent year grant to ensure 

that obligations cover only microloans 

made and active. 

(d) Grant agreement. The Agency will 

notify the approved applicant in 

writing, using an Agency-approved form 

(RD 4280–3, ‘‘Rural Economic 

Development Grant Agreement,’’ or 

successor form), setting out the 

conditions under which the grant will 

be made. The form will include those 

matters necessary to ensure that the 

proposed grant is completed in 

accordance with the proposed project 

and budget, that grant funds are 

expended for authorized purposes, and 


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that the applicable requirements 

prescribed in the relevant Department 

regulations are complied with. 

§§ 4280.313–314 [Reserved] 

§ 4280.315 MDO application and 

submission information. 

(a) Initial and subsequent 

applications. Applications shall be 

submitted in accordance with the 

provisions of this subpart unless 

adjusted by the Agency in an annual 

Notice for Solicitation of Applications 

(NOSA) or a Notice of Funding 

Availability (NOFA), depending on the 

availability of funds at the time of 

publication. 

(b) Content and form of submission. 

Content and form requirements will 

differ based on the nature of the 

application. All applicants must provide 

the information specified in 

§ 4280.316(a). 

(1) An applicant with 3 or more years 

experience as an MDO seeking 

participation as a microlender must 

provide the additional information 

specified in § 4280.316(b). Such an 

applicant will be applying for a loan to 

capitalize an RMRF to be accompanied 

by a TA grant. 

(2) An applicant with less than 3 

years experience as an MDO seeking 

participation as a microlender must 

provide the additional information 

specified in § 4280.316(c). Such an 

applicant will also be applying for a 

loan to capitalize an RMRF to be 

accompanied by a TA grant. 

(3) An applicant seeking enhancement 

grant funding for a specific 

enhancement project, internal to its 

organization, must provide the 

additional information specified in 

§ 4280.316(d). 

(c) Application submission 

requirements. All applicants must 

submit the following forms (or their 

successor forms) and information in 

order to be considered: 

(1) Standard Form–424, ‘‘Application 

for Federal Assistance.’’ 

(2) Standard Form–424A, ‘‘Budget 

Information—Non-construction 

Programs.’’ 

(3) Standard Form–424B, 

‘‘Assurances—Non-construction 

Programs.’’ 

(4) For entities that are applying for 

more than $150,000 in loan funds and/ 

or more than $100,000 in grant funds, 

only, SF LLL, ‘‘Disclosure of Lobbying 

Activities.’’ 

(5) AD 1047, ‘‘Certification Regarding 

Debarment, Suspension, and other 

Responsibility Matters—Primary 

Covered Transaction.’’ 

(6) Form RD 1910–11, ‘‘Certification 

of No Federal Debt.’’ Note that this form 

is only required for loan applicants. 

(7) Evidence that the applicant 

organization meets the citizenship 

requirements. 

(8) Form RD 400–8, ‘‘Compliance 

Review.’’ 

(d) Additional documentation. The 

information required in this section is 

necessary for an application to be 

considered complete. 

(1) Eligibility to apply. In addition to 

the forms and information required 

above, each applicant must demonstrate 

that it is eligible to apply to participate 

in this program by submitting 

documentation that the applicant is an 

MDO as defined in § 4280.302, as 

follows: 

(i) Copies of the applicant’s IRS 

designation indicating that the applicant 

is legally considered a non-profit 

organization; or 

(ii) Evidence that the applicant is a 

Federally recognized Indian tribe, and 

that the tribe neither operates, nor is 

served by an existing MDO; or 

(iii) Evidence that the applicant is a 

public institution of higher education. 

(iv) A Certificate of Good Standing 

from the applicant’s home state’s Office 

of the Secretary of State. 

(2) Separate applications. Applicants 

must submit separate applications for 

loan funding and for enhancement grant 

funding. 

(i) An entity applying for loan funding 

as a Microlender will be an MDO, 

eligible to apply based on the 

documentation provided under 

paragraph (b) of this section, that has a 

demonstrated history of providing 

microloans and technical assistance and 

training to rural microentrepreneurs, if 

it has 3 or more years of experience as 

an MDO or has an effective plan to 

develop a program for delivering 

services to rural microentreprenuers if it 

has less than 3 years experience as an 

MDO. Microlenders will apply for loan 

funds to capitalize an RMRF, and, if 

selected, will automatically be eligible, 

though may not receive, a grant for 

provision of technical assistance and 

training to rural microentrepreneurs. It 

will depend on the applicant’s score 

and the number and scores of the other 

applicant’s who apply. 

(ii) An entity applying for an 

enhancement grant must be a 

microlender participating in this 

program and must be selected through 

a separate application process based on 

the applicant’s score and the number 

and scores of other microlenders 

applying for enhancement grants. 

(e) Completed applications. 

Applications that fulfill the 

requirements specified in paragraphs (a) 

through (d) of this section will be fully 

reviewed, scored, and ranked in 

accordance with the provisions of 

§ 4280.316. Scoring requirements will 

vary based on the level of the 

applicant’s experience as an MDO and 

on the type of funding sought. 

§ 4280.316 Application scoring. 

Applications will be scored based on 

the criteria specified in this section 

using the information submitted in the 

application. The total available points 

per application are 100. Points will be 

awarded as shown in paragraphs (a) 

through (e) of this section. Awards will 

be based on the ranking, with the 

highest ranking applications funded 

first subject to available funding. 

(a) Application requirements for all 

loan applications. All applicants for a 

loan must submit the information 

specified in paragraphs (a)(1) through 

(7) of this section. This information 

provides a baseline for determination of 

capacity. Additional information are 

specified depending on whether the 

applicant has 3 or more years of 

experience or less than 3 years of 

experience. The maximum points 

available in this paragraph (a) is 45. All 

applicants must submit: 

(1) An organizational chart clearly 

showing the positions and naming the 

individuals in those positions. Of 

particular interest to the Agency are 

management positions and those 

positions essential to the operation of 

microlending and TA programming. Up 

to 5 points will be awarded. 

(2) Information indicating an 

understanding of microlending. For all 

applicants, this must be those parts of 

your policy and procedures manual that 

deal with the provision of loans, 

management of loan funds, and 

provision of technical assistance. Up to 

5 points will be awarded. 

(3) A succession plan to be followed 

in the event of the departure of 

personnel key to the operation of the 

applicant’s RMAP activities. Up to 5 

points will be awarded. 

(4) Resumes for each of the 

individuals shown on the organizational 

chart and indicated as key to the 

operation of the activities to be funded 

under this program. Points will be 

awarded based on the quality of the 

resumes and on the ability of the key 

personnel to administer the program. 

Up to 5 points will be awarded. 

(5) Copies of the applicant’s most 

recent, and two years previous, financial 

statements. Points will be awarded 

based on the demonstrated ability of the 

applicant to maintain or grow its bottom 

line fund balance, its ability to manage 


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one or more Federal programs, and its 

capacity to manage multiple funding 

sources, restricted and non-restricted 

funding sources, income, earnings, and 

expenditures. Up to 10 points will be 

awarded. 

(6) A copy of the applicant’s 

organizational mission statement. The 

mission statement will be rated based 

on its relative connectivity to 

microenterprise development and 

general economic development. The 

mission statement may or may not be a 

part of a larger statement. Up to 5 points 

will be awarded. 

(7) Information regarding the 

geographic service area to be served. 

Describe the service area. State the 

number of counties or other 

jurisdictions to be served. Describe the 

demographics of the service area and 

whether or not it is rural, as defined; 

suffering from significant outmigration 

as defined; and enjoying a diverse 

population. Note that you will not be 

scored on the size of the service area but 

on the perceived ability to fully cover 

the service area as described as well as 

the needs of the service area. Up to 10 

points will be awarded. (b) Application requirements for 

microlenders with 3 or more years 

experience seeking loans only. In 

addition to the information specified in 

paragraph (a) of this section, applicants 

with 3 or more years experience as an 

MDO seeking a loan must provide the 

information specified in paragraphs 

(b)(1) through (4) of this section. The 

total number of points available under 

this paragraph, in addition to the up to 

45 points available in paragraph (a) of 

this section, is 55, for a total of 100. 

(1) History of provision of microloans. 

Provide data regarding your history of 

making microloans for the three years 

previous to your application by 

answering the questions in paragraphs 

(b)(1)(i) through (vi) of this section. This 

information should be provided clearly 

and concisely in numerical format as 

the data will be used to calculate points 

as noted. Figure 1 presents an example 

of the format and data required. The 

total number of available points 

regarding history is 23. 

FIGURE 1—EXAMPLE OF FORMAT AND DATA REQUIREMENTS

Data item FY2006 FY2007 FY2008 Total 

Total # of Microloans Made. 

Total $ Amount of Microloans Made. 

# of Microloans Made in Rural Areas. 

Total $ Amount of Microloans Made in Rural Areas. 

# of Microloans Made to [enter demographic group A]. 

# of Microloans Made to [enter demongraphic group B]. 

# of Microloans Made to [enter demographic groupd C]. 

# of Microloans Made in Areas of Outmigration. 

(i) Number and amount of microloans 

made during each of the three previous 

FYs. Do not include current year 

information. If you would like, please 

include a narrative as a separate 

attachment; not in the body of the table. (ii) Number and amount of 

microloans made in rural areas. From 

the data provided above, please indicate 

the number and amount of microloans 

made in rural areas in each of those 

years. If the history of providing 

microloans in rural areas shows: 

(A) More than the three consecutive 

years immediately prior to this 

application, 4 points will be awarded; (B) At least two of the years but not 

more than the three consecutive years 

immediately prior to this application, 2 

points will be awarded; (C) Less than the one year 

immediately prior to this application, 1 

point will be awarded. (iii) Percentage of number of loans 

made in rural areas. Calculate and enter 

the percentage of the total portfolio of 

microloans that have made in rural 

areas for the past three FYs. If the 

percentage of the total portfolio of 

microloans made in rural areas is: 

(A) 75 percent or more, 4 points will 

be awarded; 

(B) At least 50 percent but less than 

75 percent, 2 points will be awarded; (C) At least 25 but less than 50 

percent, 1 point will be awarded. (iv) Percent of dollar amount of loans 

made in rural areas. Enter the dollar 

amount of the total portfolio of 

microloans you have made in rural areas 

in the previous three FYs. If the dollar 

amount of the microloans you made in 

rural areas is: 

(A) 75 percent or more of the total 

amount, 4 points will be awarded; (B) At least 50 percent but less than 

75 percent, 2 points will be awarded; (C) At least 25 percent but less than 

50 percent, 1 point will be awarded. (v) Diversity of microloan portfolio. 

Each MDO shall compare the diversity 

of its microloan portfolio to the 

demographic makeup of its service area 

(as determined by the U.S. Census 

found in the latest decennial census) 

based on the number of microloans 

made to microentrepreneurs during the 

three years preceding applying for a 

loan under this program. Demographic 

groups shall include gender, race, 

ethnicity, disability, and socioeconomic status. Points will be awarded 

on the basis of how close the MDO’s 

microloan portfolio matches the 

demographic makeup of its service area. 

A maximum of 7 points will be 

awarded. 

(A) If at least one loan is made to each 

demographic group and if the 

percentage of loans made to each 

demographic group is each within 5 or 

fewer percentage points of the 

demographic makeup, 7 points will be 

awarded. 

(B) If at least one loan is made to each 

demographic group and if the 

percentage of loans made to each 

demographic group is each within 10 or 

fewer percentage points of the 

demographic makeup, 4 points will be 

awarded. 

(C) If at least one loan is made to each 

demographic group and if the 

percentage of loans made to one or more 

of the demographic groups is greater 

than 10 percentage points of the 

demographic makeup OR if no loans are 

made to one of the demographic groups 

and if the percentage of loans made to 

each of the other demographic groups is 

each within 10 or fewer percentage 

points of the demographic makeup, 2 

points will be awarded.. 

(D) If no loans have been made to two 

or more demographic groups, no points 

will be awarded. 

(vi) Percentage of the total portfolio of 

microloans made to microentrepreneurs 

in areas of outmigration for the previous 

three FYs. If the percentage of the total 

portfolio of microloans made to 

microentrepreneurs in areas of 

outmigration is: 

(A) 75 percent or more, 4 points will 

be awarded; 

(B) At least 50 percent but less than 

75 percent, 2 points will be awarded; 

(C) At least 25 percent but less than 

50 percent, 1 point will be awarded. 

(2) Portfolio management. Each 

applicant’s ability to manage its 

portfolio will be determined based on 


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the data provided in response to 

paragraphs (b)(2)(i) and (ii) of this 

section and scored accordingly. Total 

available points will be 8. 

(i) Enter the total number of your 

microloans paying on time for the three 

previous FYs. If the total number of 

microloans paying on time at the end of 

each year over the prior three FYs is: 

(A) 95 percent or more, 4 points will 

be awarded; 

(B) At least 85 percent but less than 

95 percent, 2 points will be awarded; 

(C) Less than 85 percent, 0 points will 

be awarded. 

(ii) Enter the total number of 

microloans 30 to 90 days in arrears or 

that have been written off at year end for 

the three previous FYs. If the total 

number of these microloans is: 

(A) 5 percent or less of the total 

portfolio, 4 points will be awarded; 

(B) More than 5 percent, 0 points will 

be awarded. 

(3) History of provision of technical 

assistance to microentrepreneurs. Each 

applicant’s history of provision of 

technical assistance to 

microentrepreneurs and/or 

microborrowers, and their ability to 

reach diverse communities and 

microborrowers, will be scored based on 

the data specified in paragraphs (b)(3)(i) 

through (vi) of this section. The 

maximum number of points available 

will be 15. 

(i) Provide the total number of rural 

microentrepreneurs that received both 

microloans and TA services for each of 

the previous three FYs. 

(ii) Provide the percentage of the total 

number of rural microentrepreneurs that 

received both microloans and TA 

services for each of the previous three 

FYs (calculate this as the total number 

of rural microloans made divided by the 

total number of loans made during the 

past three FYs). If provision of both 

microloans and technical assistance to 

rural microentrepreneurs is 

demonstrated at a rate of: 

(A) 75 percent or more, 4 points will 

be awarded; 

(B) At least 50 percent but less than 

75 percent, 2 points will be awarded; 

(C) At least 25 percent but less than 

50 percent, 1 point will be awarded. 

(iii) Provide the percentage of the total 

number of rural minority, sociallydisadvantaged, or disabled 

microentreprenuers that received both 

microloans and TA services for each of 

the previous 3 FYs. If the demonstrated 

provision of microloans and technical 

assistance to these rural 

microentrepreneurs is at a rate of: 

(A) 75 percent or more, 7 points will 

be awarded; 

(B) At least 50 percent but less than 

75 percent, 4 points will be awarded; 

(C) At least 25 percent but less than 

50 percent, 1 point will be awarded. 

(iv) Enter the percentage of the total 

number of microentrepreneurs that 

received both microloans and TA 

services, for each of the previous three 

FYs, who were located in areas of 

outmigration. Demonstration of 

provision of microloans and technical 

assistance to microentrepreneurs 

located in areas of outmigration at a rate 

of: 

(A) 75 percent or more, 4 points will 

be awarded; 

(B) At least 50 percent but less than 

75, 2 points will be awarded; 

(C) At least 25 percent but less than 

50 percent, 1 point will be awarded. 

(4) Ability to provide technical 

assistance to microentrepreneurs. In 

addition to providing a statistical 

history of their provision of technical 

assistance to microentrepreneurs and 

microborrowers, applicants must 

provide a narrative of not more than five 

pages describing the teaching and 

training method(s) used by the applicant 

organization and discussing the 

outcomes of their endeavors. Technical 

assistance is defined in § 4280.302. The 

narrative will be scored as specified in 

paragraphs (b)(4)(i) through (iv) of this 

section and the maximum number of 

points available will be 5 and: 

(i) Applicants that have used more 

than one method of training and 

technical assistance (such as classroom 

training, peer-to-peer discussion groups, 

individual assistance, distance learning) 

will be awarded 2 points. 

(ii) Applicants that provide success 

stories to demonstrate the effects of 

technical assistance on their clients will 

be awarded 1 point. 

(iii) Applicants that provide evidence 

that they require evaluations by the 

clients of their training programs and 

indicate that the level of evaluation 

scores is ‘‘good’’ or higher will be 

awarded 1 point. 

(iv) Applicants that present their 

narrative information clearly and at a 

level expected by trainers and teachers 

will be awarded 1 point. 

(5) Proposed administrative expenses 

to be spent from TA grant funds. The 

maximum total number of points under 

this criterion is 4. If the percentage of 

grant funds to be used for administrative 

purposes is: 

(i) Less than 5 percent of the TA grant 

funding, 4 points will be awarded; 

(ii) Between 5 percent and 8 percent, 

but not including 8 percent, 2 points 

will be awarded; and 

(iii) Between 8 percent up to and 

including 10 percent, 0 points will be 

awarded. 

(c) Application requirements for 

microlenders with less than 3 years 

experience seeking loans only. In 

addition to the information required 

under paragraph (a) of this section, an 

applicant with less than 3 years 

experience as an MDO seeking a loan 

must submit the information specified 

in paragraphs (c)(1) through (7) of this 

section. The total number of points 

available under this paragraph, in 

addition to the up to 45 points available 

in paragraph (a) of this section, is 55, for 

a total of 100. 

(1) The applicant must provide a 

narrative work plan that clearly 

indicates its intention for the use of 

funding. Provide goals and milestones 

for planned activities. In relation to the 

information requested in paragraph (a) 

of this section, the applicant must 

describe how it will incorporate its 

mission statement, utilize its employees, 

and maximize its human and capital 

assets to meet the goals of this program. 

The applicant must provide its strategic 

plan and organizational development 

goals and clearly indicate its lending 

goals for the five years after the date of 

application. The narrative work plan 

should be not more than 7 pages in 

length. Up to 13 points will be awarded. 

(2) The applicant will provide the 

date that it opened its doors for business 

as an MDO or other provider of business 

education and/or facilitator of capital. 

‘‘In business’’ means licensed to do 

business, in good standing with the 

Secretary of State in which it is 

registered to do business, and having 

regular paid staff to conduct business on 

a daily basis. If you have been in 

business for: 

(i) More than 2 years but less than 3 

years, 4 points will be awarded; 

(ii) At least 1 year, but not more than 

2 years, 2 points will be awarded; 

(iii) At least 6 months, but not more 

than 1 year, 1 point will be awarded; 

(iv) Less than 6 months, or more than 

3 full years, 0 points will be awarded. 

(3) The applicant must describe in 

detail any microenterprise development 

organization training received by it as a 

whole, or its employees as individuals, 

to date. The training received will be 

rated on its topical variety, the quality 

of the description, and its relative value 

to the narrative requested above, and to 

the organization’s strategic plan. Do not 

submit training brochures or conference 

announcements. Up to 9 points will be 

awarded. 

(4) The applicant must indicate its 

current number of employees, those that 

concentrate on microentrepreneurial 

development, and the current average 

caseload for each. 


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Indicate how the caseload ratio does 

or does not optimize the ability to 

perform the services described in the 

work plan and how Agency funding will 

be used to assist with program delivery. 

Up to 4 points will be awarded. 

(5) The applicant must indicate any 

training organizations with which it has 

a working relationship. Provide contact 

information which will be used as 

references regarding the applicant’s 

capacity to perform the work plan 

provided. If the recommendations 

received from references are: 

(i) Generally excellent, 9 points will 

be awarded; 

(ii) Generally above average, 6 points 

will be awarded; 

(iii) Generally average, 3 points will 

be awarded; 

(iv) Generally less than average, 0 

points will be awarded. 

(6) Describe any plans for continuing 

training relationship(s), including 

ongoing or future training plans and 

goals, and the timeline for same. Up to 

4 points will be awarded. 

(7) The applicant will describe its 

internal benchmarking system for 

determining client success, reporting on 

client success, and following client 

success for up to 5 years after 

completion of a training relationship. 

Up to 9 points will be awarded. 

(8) The application will identify their 

proposed administrative expenses to be 

spent from TA grant funds. The 

maximum total number of points under 

this criterion is 4. If the percentage of 

grant funds to be used for administrative 

purposes is: 

(i) Less than 5 percent of the TA grant 

funding, 4 points will be awarded; 

(ii) Between 5 percent and 8 percent, 

but not including 8 percent, 2 points 

will be awarded; and 

(iii) Between 8 percent up to and 

including 10 percent, 0 points will be 

awarded. 

(d) Application requirements for 

microlenders seeking enhancement 

grants only. Enhancement grants may be 

provided to microlenders seeking 

assistance with specific or general 

operational issues based on the strength 

of the application and the availability of 

funds. An applicant seeking an 

enhancement grant must submit the 

information specified in paragraphs 

(d)(1) through (8) of this section. The 

total number of points available is 100. 

(1) A fully completed Standard Form 

(SF)424 with attachments as 

appropriate. If the form and attachments 

are satisfactorily completed, 5 points 

will be awarded. 

(2) A discussion of the internal selfevaluation plan that led the microlender 

to determine that external assistance 

would be helpful. Up to 15 points will 

be awarded. 

(3) A statement of the internal issue(s) 

to be overcome, why grant funding is 

necessary, and the ultimate goal of the 

enhancement project. Up to 15 points 

will be awarded. 

(4) A project description statement of 

how the grant will be used to overcome 

the issue. Such statement must include 

the names of the potential trainers or 

service providers that will be used by 

the microlender for the described 

project. Up to 15 points will be 

awarded. 

(5) A clear benchmarking plan 

delineating progress expectations, an 

anticipated timeline, and an anticipated 

completion date. Up to 15 points will be 

awarded. 

(6) A discussion of how the trainer/ 

service provider will be or has been 

selected. Up to 15 points will be 

awarded. 

(7) A discussion of which employees 

will be directly involved in the project 

and how they fit into the microlender 

organization. Up to 10 points will be 

awarded. 

(8) A letter, if available from the 

potential trainer/service provider 

describing their role in helping the 

microlender reach its enhancement 

goals. Up to 10 points will be awarded 

based on the description. If no letter is 

submitted, 0 points will be awarded. 

(e) Application requirements for 

microlenders with more than 5 years 

experience as an MDO under this 

program. (1) Generally, microlenders 

develop success patterns over time 

which will be evidenced in the 

submitted quarterly reports. To take 

advantage of these patterns, to fully 

utilize the data available, to help ensure 

efficiency, and to ensure that any 

paperwork burden for the microlender 

is kept to a minimum, microlender 

applicants with more than 5 years of 

experience as an MDO under this 

program may choose to submit a 

shortened loan/grant application. For 

these microlenders to apply for 

subsequent funding, they will be 

required to submit: 

(i) A letter of request for funding 

stating the amount needed, 

(ii) An indication of the loan and 

grant amounts being requested 

accompanied by a completed SF 424 

and any pertinent attachments, 

(iii) An indication of the number of 

businesses to which loans were made 

that have been made that remained in 

business for two years or more after loan 

repayment, and 

(iv) A recent resolution of the 

applicant’s Board of Directors approving 

the application for debt. 

(2) The Agency, using this request, 

and data available in the reports 

submitted under previous fundings, will 

review the overall program performance 

of the applicant to determine its 

eligibility for subsequent funding. 

Benchmarks will include: 

(i) A default rate of 5 percent or less 

over the previous 5 years, 

(ii) A pattern of delinquencies of 10 

percent or less, 

(iii) A pattern of successful use of TA 

dollars, 

(iv) A pattern of long term success of 

program microborrowers (two years or 

more) after loan repayment, 

(v) A pattern of appropriate reporting, 

and 

(vi) Other such issues as deemed 

appropriate. 

(3) Abridged applications will be 

rated on a pass or fail basis. Passing 

scores will be assigned a score of 90 

percent and will be ranked accordingly 

in the quarterly competitions. 

§ 4280.317 Selection of applications for 

funding. 

All applications received will be 

scored using the scoring criteria 

specified in § 4280.316. Applications 

from microlenders with 3 or more year 

experience and applications from 

microlenders will less than 3 years 

experience will be ranked together. 

Enhancement grant applications will be 

ranked separately from the microlender 

applications. Subject to the availability 

of funds, the highest scoring 

applications will be funded in 

descending order. 

(a) Availability of funds. If an 

application is received, scored, and 

ranked, but insufficient funds remain to 

fully fund it, the Agency may elect to 

fund an application requesting a smaller 

amount that has a lower score. Before 

this occurs, the Agency, as applicable, 

will provide the higher scoring 

applicant the opportunity to reduce the 

amount of its request to the amount of 

funds available. If the applicant agrees 

to lower its request, it must certify that 

the purposes of the project can be met, 

and the Agency must determine that the 

project is financially feasible at the 

lower amount. 

(b) Applicant notification. The 

National Office will be responsible for 

notifying the appropriate State Offices 

of the outcome of the competition. State 

Offices will be responsible for 

notification of applicants regarding 

selection or non-selection, provision of 

appeal rights, closing the loans and 

grants to awardees, and notifying the 

National Office for obligation purposes. 

(c) Regarding successful applications. 

The National Office will transfer funds 


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to the appropriate State office for 

obligation of successful awards. 

Awardees unable to complete closing 

for obligation within the stated 

timeframe will forfeit their funding. 

Such funding will revert back to the 

Agency for later use. 

(d) Regarding unsuccessful 

applications. If your application is 

unsuccessful, the National Office will 

provide a copy of the final score sheet 

to the appropriate State Office for 

inclusion in the notification of nonselection. The National Office may use 

the score sheet to provide a debriefing 

to any unsuccessful applicant. 

(e) Regarding the timing and 

submission of applications. (1) All 

applications must be submitted as a 

complete application, in one package. 

(2) Applications will be accepted on 

a quarterly basis using Federal Fiscal 

Quarters. Deadlines and specific 

instructions will be published annually. 

(3) Applications received will be 

reviewed, scored, and ranked quarterly. 

The Agency will retain unsuccessful 

applications for consideration in 

subsequent reviews, through a total of 

four quarterly reviews. 

§§ 4280.318–319 [Reserved] 

§ 4280.320 Grant administration. 

(a) Oversight. Any organization 

receiving a grant under this program is 

subject to oversight. Quarterly reporting 

as described in § 4 280.312(a)(5) and in 

accordance with OMB circular A–102 

and A–110 will be required. That is, on 

a quarterly basis, each grantee will 

submit SF 269 and/or 272 (or successor 

forms) as appropriate and other 

information as required in 

§ 4280.312(a)(5). Accompanying the 

Standard Forms will be a narrative 

report discussing milestones and 

benchmarks; whether or not they were 

met; if not, why not; successes, and 

concerns. Site visits and inspection of 

records will occur at the discretion of 

the Agency. 

(b) Payments. The Agency will make 

grant payments not more often than on 

a quarterly basis. The first payment may 

be made in advance and will equal no 

more than one fourth of the grant award. 

Payment requests must be submitted on 

an SF270 and will only be paid if 

reports are up to date and approved. 

§ 4280.321 Loan and grant servicing. 

In addition to the ongoing servicing in 

regard to oversight of the microlender: 

(a) Grants. Grants will be serviced in 

accordance with: 

(1) Department of Agriculture 

regulations including, but not limited to 

7 CFR, Part 1951, Subparts E and O, 

(2) Department of Agriculture 

regulations including but not limited to 

7 CFR Parts 3015, 3016, 3017, 3018, 

3019, and 3052; and 

(3) Office of Management and Budget 

regulations including, but not limited 

to, 2 CFR 215, 220, 230, and Circulars 

A–110 and A–133. 

(b) Loans. Revolving loan funds will 

be serviced in accordance with the 

following: 

(1) Department of Agriculture 

regulations 7 CFR Part 1951, Subparts E, 

R, and O, and 

(2) Other Department of Agriculture 

regulations as may be applicable, 

(3) Office of Management and Budget 

Circular A–129. 

§ 4280.322 Loans from the microlenders to 

the microentrepreneurs and 

microenterprises. 

The primary purpose of making a loan 

to a microlender is to enable that 

microlender to make microloans, as 

defined, to end user microentrepreneurs 

and microenterprises. It is the 

responsibility of each microborrower to 

repay the microlender in accordance 

with the terms and conditions agreed to 

with the microlender. It is the 

responsibility of each microlender to 

make microloans in such a fashion that 

the terms and conditions of the 

microloan will support success for 

microborrowers while enabling the 

microlenderto repay the Federal 

Government. 

(a) Maximum microloan amount. The 

maximum amount of a microloan made 

under this program will be $50,000. 

(b) Microloan terms and conditions. 

The terms and conditions for 

microloans made by microlenders will 

be negotiated by the microborrower and 

the microlender, with the following 

limitations: 

(1) The maximum margin a 

microlender may impose on a 

microborrowers is 7.5 percent over the 

microlender’s cost of funds; 

(2) The cost of funds to the 

microborrower will be established at the 

closing of the loan from the Agency to 

the microlender; and 

(3) No microloan may have a term of 

more than 10 years. 

(c) Microloan insurance requirements. 

The requirement of hazard, key 

personnel, and other insurance will be 

at the discretion of the microlender 

except that no insurance requirement 

should be of a nature to make the 

payment, combined with the microloan 

payment, or the coverage excessive. 

(d) Credit elsewhere test. 

Microborrowers will be subject to 

‘‘credit elsewhere’’ test so that the 

microlender will make loans only to 

those borrowers that cannot obtain 

business funding of $50,000 or less at 

affordable rates and on acceptable 

terms. Each microborrower file must 

contain evidence that the 

microborrower has sought credit 

elsewhere and has been turned down 

(e.g., a turn down letter) or that the rates 

and terms available within the 

community at the time were outside the 

range of the microborrower’s ability to 

be a successful borrower from another 

source of funding (e.g., a comparison of 

rates for other funding sources 

compared to the microlender rates 

offered to the microborrower). It is not 

the intent to require denial letters from 

other lenders. It is the intent to ensure 

that program funds are loaned in a way 

to ensure that funds go to those 

businesses traditionally lacking in 

access to capital. 

(e) Fair credit requirements. To ensure 

fairness, microlenders must publicize 

their rates and terms on a regular basis. 

Microlenders are also subject to Fair 

Credit lending laws as discussed in 

§ 4280.305. 

(f) Eligible microloan purposes. 

Microlenders may make microloans 

under this program for qualified 

business activities including: 

(1) Working capital, 

(2) The purchase of furniture, fixtures, 

supplies, inventory or equipment, and 

(3) The purchase or lease of real estate 

that is already improved and will be 

used for the location of the subject 

business only, provided no demolition 

or construction will be accomplished 

with program funding. Interior 

decorating is not considered to be 

demolition or construction. 

§ 4280.323 Ineligible microloan purposes. 

Agency loan funds may not be used 

for the payment of administrative costs 

or expenses and microlenders may not 

make microloans under this program for 

any of purposes identified as ineligible 

in paragraphs (a) through (g) of this 

section. 

(a) Construction costs. 

(b) Any amount in excess of that 

needed by the microborrower to 

accomplish the immediate business 

goal. 

(c) Assistance that will cause a 

conflict of interest or the appearance of 

a conflict of interest including but not 

limited to: 

(1) Financial assistance to principals, 

directors, officers, or employees of the 

microlender, or their families (including 

parents, children, sisters, brothers, 

aunts, uncles, first cousins, or 

grandparents), 

(2) Financial assistance to any entity 

the result of which would appear to 


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Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Proposed Rules 51731 

benefit the microlender or its principals, 

directors, or employees, in any way 

other than the normal repayment of 

debt. 

(d) Distribution or payment to the 

microentrepreneur or his/her family 

members when such will use any 

portion of the microloan for other than 

the purpose for which it was intended. 

(e) Charitable institutions not gaining 

revenue from sales or fees to support the 

operation and repay the microloan. 

(f) Fraternal organizations. 

(g) Any microloan to an applicant that 

has an RMAP funded microloan 

application pending with another 

microlender or that has an RMAPfunded microloan outstanding with 

another microlender that would cause 

the applicant to owe more than $50,000 

under this program. 

(h) Assistance to USDA Rural 

Development (Agency) employees, or 

their families. 

(i) Assistance to military personnel, 

except that a microloan may be made by 

a microlender to any otherwise qualified 

microenterprise owned in whole or in 

part by one or more members of the 

National Guard or the reserve services 

who are not on active duty with longer 

than 6 months until their anticipated 

termination of active duty status, or 

members of the regular service, who are 

within 6 months of their anticipated 

separation date and who are, or plan to 

be, small business owners. This 

provides microlenders the opportunity 

to make microloans to: 

(1) Any microenterprise owned in 

whole or in part by one or more 

individuals, regardless of rank; and 

(i) Who are enlisted in the National 

Guard or reserve services, or are nonAgency employees or their families; and 

(ii) That have recently been 

deactivated from regular service, but are 

considered to be in reserve in the event 

of national need or emergency. 

(2) Military personnel who plan to 

leave active military service within 6 

months and who, upon leaving, plan to 

be self-employed and are in need of 

business continuation, expansion, or 

startup capital or of technical assistance. 

(j) Assistance to employees of Native 

American tribal governments when the 

employer is the tribal government MDO 

from which the microentrepreneur is 

seeking funding except that, a microloan 

may be made to such employee without 

danger of a conflict of interest when the 

tribal government employee: 

(1) Is a part-time employee with 

reasonable expectation of capacity to 

operate a successful microenterprise 

while working part-time, and 

(2) Does not have access to another 

lending MDO, and 

(3) Is the person who will operate the 

funded business, and 

(4) Will be required by the tribal 

government MDO to participate in 

technical assistance and training to help 

ensure the success of the business, and 

(5) Due to an impending change of 

tribal government leaders, can expect to 

leave his or her job within six months 

of applying for the microloan. 

(k) Any illegal activity. 

(l) Any project that is in violation of 

either a Federal, State, or local 

environmental protection law, 

regulation, or enforceable land use 

restriction unless the microloan will 

result in curing or removing the 

violation. 

(m) Lending and investment 

institutions and insurance companies. 

(n) Golf courses, race tracks, gambling 

facilities or swimming pools. 

(o) Any purpose deemed to be of a 

prurient sexual nature as determined by 

local standards, 

(p) Any purpose, not already stated, 

that would contribute to a conflict of 

interest or the appearance of a conflict 

of interest. 

(q) Any lobbying activities as 

described in 7 CFR 3018. 

§§ 4280.324–4280.400 [Reserved] 

Dated: September 30, 2009. 

Judith A. Canales, 

Administrator, Rural Business—Cooperative 

Service. 

[FR Doc. E9–24025 Filed 10–6–09; 8:45 am] 

BILLING CODE 3410–XY–P 


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