Rural entrepreneur and microenterprise assistance program

Subtitle D of the Consolidated Farm and Rural Development Act is amended by inserting after section 364 (7 U.S.C. 2006f) the following:

365.

Rural entrepreneur and microenterprise assistance program

(a)

Definitions

In this section: (1)

Economically disadvantaged microentrepreneur

The term economically disadvantaged microentrepreneur means an owner, majority owner, or developer of a microenterprise that has the ability to compete in the private sector but has been impaired because of diminished capital and credit opportunities, as compared to other microentrepreneurs in the industry. (2)

Indian tribe

The term Indian tribe has the meaning given the term in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b). (3)

Intermediary

The term intermediary means a private, nonprofit entity that provides assistance— (A)to a microenterprise development organization; or (B)for a microenterprise development program. (4)

Low-income individual

The term low-income individual means an individual with an income (adjusted for family size) of not more than the greatest of— (A)80 percent of median income of an area; (B)80 percent of the statewide non-metropolitan area median income; or (C)80 percent of the national median income. (5)

Microcredit

The term microcredit means a business loan or loan guarantee of not more than $50,000 that is provided to a rural entrepreneur. (6)

Microenterprise

The term microenterprise means— (A)a sole proprietorship; or (B)a business entity with not more than 10 full-time-equivalent employees. (7)

Microenterprise development organization

(A)

In general

The term microenterprise development organization means a private, nonprofit entity that— (i)provides training and technical assistance to rural entrepreneurs; and (ii)facilitates access to capital or another service described in subsection (b) for rural entrepreneurs. (B)

Inclusions

The term microenterprise development organization includes an organization described in subparagraph (A) with a demonstrated record of delivering services to economically disadvantaged microentrepreneurs, or an effective plan to develop a program to deliver microenterprise services to rural entrepreneurs effectively, as determined by the Secretary. (8)

Microenterprise development program

The term microenterprise development organization means a program administered by an organization serving a rural area. (9)

Microentrepreneur

The term microentrepreneur means the owner, operator, or developer of a microenterprise. (10)

Program

The term program means the rural entrepreneur and microenterprise program established under subsection (b)(1). (11)

Qualified organization

The term qualified organization means— (A)a microenterprise development organization or microenterprise development program that has a demonstrated record of delivering microenterprise services to rural entrepreneurs, or an effective plan to develop a program to deliver microenterprise services to rural entrepreneurs effectively, as determined by the Secretary. (B)an intermediary that has a demonstrated record of delivery assistance to microenterprise development organizations or microenterprise development programs; (C)a microenterprise development organization or microenterprise development program that serves rural entrepreneurs; (D)an Indian tribe, the tribal government of which certifies to the Secretary that no microenterprise development organization or microenterprise development program exists under the jurisdiction of the Indian tribe; (E)a group of 2 or more organizations or Indian tribes described in any of subparagraphs (A) through (D) that agree to act jointly as a qualified organization under this section; or (F)for purposes of subsection (b), a public college or university. (12)

Rural area

The term rural area means any community that is rural in character and has a population of not more than 25,000 individuals. (13)

Rural capacity building service

The term rural capacity building service means a service provided to an organization that— (A)is, or is in the process of becoming, a microenterprise development organization or microenterprise development program; and (B)serves rural areas for the purpose of enhancing the ability of the organization to provide training, technical assistance, and other related services to rural entrepreneurs. (14)

Rural entrepreneur

The term rural entrepreneur means a microentrepreneur, or prospective microentrepreneur— (A)the principal place of business of which is in a rural area; and (B)that is unable to obtain sufficient training, technical assistance, or microcredit elsewhere, as determined by the Secretary. (15)

Secretary

The term Secretary means the Secretary of Agriculture, acting through the Rural Business-Cooperative Service. (16)

Tribal government

The term tribal government means the governing body of an Indian tribe. (b)

Rural Entrepreneurship and Microenterprise Program

(1)

Establishment

The Secretary shall establish a rural entrepreneurship and microenterprise program. (2)

Purpose

The purpose of the program shall be to provide low-income individuals and moderate-income individuals with— (A)the skills necessary to establish new small businesses in rural areas; and (B)continuing technical and financial assistance as individuals and business starting or operating small businesses. (3)

Grants

(A)

In general

The Secretary may make a grant under the program to a qualified organization— (i)to provide training, operational support, or a rural capacity building service to a qualified organization to assist the qualified organization in developing microenterprise training, technical assistance, market development assistance, and other related services, primarily for business with 5 or fewer full-time-equivalent employees; (ii)to assist in researching and developing the best practices in delivering training, technical assistance, and microcredit to rural entrepreneurs; and (iii)to carry out such other projects and activities as the Secretary determines to be consistent with the purposes of this section. (B)

Subgrants

Subject to such regulations as the Secretary may promulgate, a qualified organization that receives a grant under this paragraph may use the grant to provide assistance to other qualified organizations, such as small or emerging qualified organizations. (C)

Diversity

In making grants under this paragraph, the Secretary shall ensure, to the maximum extent practicable, that grant recipients include qualified organizations— (i)of varying sizes; and (ii)that serve racially- and ethnically-diverse populations. (D)

Cost sharing

(i)

Federal share

The Federal share of the cost of a project carried out using funds from a grant made under this paragraph shall be 75 percent. (ii)

Form of non-Federal share

The non-Federal share of the cost of a project described in clause (i) may be provided— (I)in cash (including through fees, grants (including community development block grants), and gifts); or (II)in kind. (4)

Rural Microloan Program

(A)

Establishment

In carrying out the program, the Secretary may carry out a rural microloan program. (B)

Purpose

The purpose of the rural microloan program shall be to provide technical and financial assistance to sole proprietorships and small businesses located in rural areas with a particular focus on those businesses with 5 or fewer full-time equivalent employees. (C)

Authority of secretary

In carrying out the rural microloan program, the Secretary may— (i)make direct loans to qualified organizations for the purpose of making short-term, fixed interest rate microloans to startup, newly established, and growing rural microbusiness concerns; and (ii)in conjunction with those loans, provide grants in accordance with subparagraph (E) to those qualified organizations for the purpose of providing intensive marketing, management, and technical assistance to small business concerns that are borrowers under this paragraph. (D)

Loan duration; interest rates; conditions

(i)

Loan duration

A loan made by the Secretary under this paragraph shall be for a term of 20 years. (ii)

Applicable interest rates

A loan made by the Secretary under this paragraph to a qualified organization shall bear an annual interest rate of at least 1 percent. (iii)

Deferral of interest and principal

The Secretary may permit the deferral of payments, for principal and interest, on a loan made under this paragraph for a period of not more than 2 years, beginning on the date on which the loan was made. (E)

Grant amounts

(i)

In general

Except as otherwise provided in this section, each qualified organization that receives a loan under this paragraph shall be eligible to receive a grant to provide marketing, management, and technical assistance to small business concerns that are borrowers or potential borrowers under this subsection. (ii)

Maximum amount of grant for microenterprise development organizations

Each microenterprise development organization that receives a loan under this paragraph shall receive an annual grant in an amount equal to not more than 25 percent of the total outstanding balance of loans made to the microenterprise development organization under this paragraph, as of the date of provision of the grant. (iii)

Matching Requirement

(I)

In general

As a condition of any grant made to a qualified organization under this subparagraph, the Secretary shall require the qualified organization to match not less than 15 percent of the total amount of the grant. (II)

Sources

In addition to cash from non-Federal sources, a matching share provided by the qualified organization may include indirect costs or in-kind contributions funded under non-Federal programs. (c)

Administrative expenses

Not more than 10 percent of assistance received by a qualified organization for a fiscal year under this section may be used to pay administrative expenses. (d)

Funding

(1)

In general

Not later than 30 days after the date of enactment of this Act, and on October 1, 2008, and each October 1 thereafter through October 1, 2012, out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall transfer to the Secretary to carry out this section $50,000,000, to remain available until expended. (2)

Allocation of funds

Of the amount made available by paragraph (1) for each fiscal year— (A)not less than $30,000,000 shall be available for use in carrying out subsection (b)(3); and (B)not less than $20,000,000 shall be available for use in carrying out subsection (b)(4), of which not more than $7,000,000 shall be used to support direct loans. (C)

Receipt and acceptance

The Secretary shall be entitled to receive, shall accept, and shall use to carry out this section the funds transferred under paragraph (1), without further appropriation.