[Federal Register Volume 86, Number 189 (Monday, October 4, 2021)]
[Rules and Regulations]
[Pages 54587-54588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-21504]



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 Rules and Regulations
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  Federal Register / Vol. 86, No. 189 / Monday, October 4, 2021 / Rules 
and Regulations  

[[Page 54587]]



DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4280

[Docket Number: RBS-20-BUSINESS-0044]
RIN 0570-AB02


Rural Microentrepreneur Assistance Program

AGENCY: Rural Business-Cooperative Service, Department of Agriculture 
(USDA).

ACTION: Final rule; confirmation.

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SUMMARY: The Rural Business-Cooperative Service, a Rural Development 
agency of USDA, hereinafter referred to as ``RBCS'' or ``the Agency,'' 
published in the Federal Register on May 14, 2021, a final rule with 
request for comments. This document presents the opportunity for the 
Agency to provide its responses to the public comments received on the 
final rule and to confirm the final rule as published.

DATES: October 4, 2021.

FOR FURTHER INFORMATION CONTACT: David Chestnut, Program Management 
Division, U.S. Department of Agriculture, 1400 Independence Avenue SW, 
Washington, DC 20250-3201; telephone: (202) 692-5233; email: 
[email protected].

SUPPLEMENTARY INFORMATION: RBCS published a final rule with request for 
comments in the Federal Register on May 14, 2021, at 86 FR 26348. The 
final rule modified the interim rule with comment published in the 
Federal Register on May 28, 2010 (75 FR 30114), as amended by the 
correcting amendments published in the Federal Register on July 19, 
2010 (75 FR 41695), and incorporated amendments to the Consolidated 
Farm and Rural Development Act (ConAct) made by the Agriculture 
Improvement Act of 2018 (2018 Farm Bill). The Agency implemented other 
changes to make the Rural Microentrepreneur Assistance Program (RMAP) 
run more efficiently, be more user-friendly and be more consistent with 
other RBCS programs.
    Within the preamble to the final rule, the Agency addressed each of 
the 29 public comments that were received on the interim rule. RBCS 
carefully reviewed each of the comments and modified the regulation 
based on analysis of the responsive comments received as well as 
program delivery experience. The final rule allowed the Agency to: (a) 
Implement changes required by the 2018 Farm Bill, (b) address comments 
received after publication of the interim rule, and (c) implement the 
final regulation.
    Due to the length of time that transpired between the publication 
of the interim rule and the final rule, the Agency invited comments 
from the public on the provisions outlined in the final rule. The 
comment period on the final rule closed July 13, 2021. Comments were 
received from four respondents. The comments provided and Agency 
responses are as follows:
    Comment: ``All the mandatory grants should be funded at the 
authorized 25 percent of the loan balances. We support this change. It 
can be difficult for financial intermediaries to secure adequate 
funding for technical assistance programs. This is a concern for any 
potential MDO that may consider utilizing the RMAP program for the 
first time. The adjustment recorded here will help minimize a clear 
disincentive by making it easier for a new entrant to manage necessary 
costs.''
    Agency Response: The Agency agrees and the regulation at Sec.  
4280.313(a) was modified to allow for microlenders to receive up to 25 
percent of their new loan amount as a technical assistance grant. 
Previously, this was limited to 25 percent of the first $400,000, then 
5 percent of any amount above $400,000. The 2018 Farm Bill amended 
Section 379E of the Consolidated Farm and Rural Development Act 
(Contact) to require that annual grant amounts to Microenterprise 
Development Organizations (MDOs) be in an amount equal to not less than 
20 percent and not more than 25 percent of the total outstanding 
balance of microloans made by MDOs. The Agency clarified the annual 
grant process at Sec.  4280.313(a)(1) to enact this change. The 
previous regulation did not have a minimum threshold percentage for the 
replenishment of an MDO's technical assistance funds.
    Comment: ``USDA should relinquish its first lien position on all 
funds in the Rural Microentrepreneur revolving fund except those 
derived from the Rural Microenterprise loan itself. We recommend that 
USDA implement a process by which MDOs can request a drawdown of 
accumulated interest earnings within the Rural Microentrepreneur 
Revolving Fund (RMRF). The collateral provided to USDA by the cash in 
the RMRF, the loans outstanding, and the cash in the Loan Loss Reserve 
Fund (LLRF), should be adequate to protect USDA from losses. MDOs 
typically use the interest earnings from microloans to help cover costs 
of operating programs. Because USDA maintains a first lien position on 
all assets in the RMRF and does not provide a process by which MDOs can 
request a drawdown of accumulated earnings, MDOs are unable to use 
earnings from RMAP loans to help cover operating costs. This may 
dissuade some MDOs from utilizing the RMAP program, and we have heard 
at least one MDO identify this as the reason they left the program.''
    Agency Response: The Agency disagrees with the release of its lien 
position in the revolving loan funds. The accounts serve as collateral 
for the Agency loan to the MDO, which is a debt obligation of the MDO 
and protects the Agency in cases of default by the MDO. The Agency 
disagrees with the commenter that MDOs are unable to use earnings from 
RMAP loans to help cover costs of operating programs. MDOs may use 
interest and fee earnings to make principal and interest payments to 
the Agency loan and to help cover operating costs in accordance with 
their annual operating budget. In addition, the Agency does permit the 
use of up to 10 percent of their technical assistance grant funds for 
administrative expenses from which they can operate their RMAP and 
other programs.
    Comment: ``The current methodology of calculating the annual MDO 
grant based on the amount of outstanding loan balances is inadequate. 
We recommend an adjustment to the methodology used to calculate the 
annual technical assistance grants to MDOs. At current, USDA calculates 
the

[[Page 54588]]

technical assistance grant for the following fiscal year on June 30 of 
the prior fiscal year. USDA then subtracts the unspent balance from the 
prior year award from the new award. USDA is making this calculation 9 
months into a 12-month grant contract. An MDO seeking to use their 
technical assistance award to support staff to provide continuous 
technical assistance to clients over a 12-month period receives a 
penalty for having 3 months of funds remaining when there are 3 months 
remaining in the contract. We recommend that USDA instead calculate the 
grant based on the loans outstanding on June 30 without regard for 
funds remaining in the prior year grant. USDA already requires grant 
spending to take place within the 12-month contract period, so there is 
no need to calculate the remaining balance at the end of 9 months from 
the grant for the following year.''
    Agency Response: The Agency has a consistent process for the 
calculation of an MDO annual grant with its annual June 30 calculation 
date. An MDO can use their grant funds in each month of the year, thus 
the 9-month comment for use of the funds is not relevant. The annual 
grant award calculation must include the amount of any unused/remaining 
technical assistance funds from prior years to ensure that the total 
amount of awarded and available grant funds to an MDO does not exceed 
the 25 percent maximum amount.
    Comment: ``Sec.  4280.313(a)(1). We support this change. Technical 
assistance needs are ongoing. According to the Aspen Institute, the 
business owners who participate in technical assistance and training 
have higher rates of business survival, revenue growth, and employment 
growth than those who do not. Of the new business owners who receive 
technical assistance, 84 percent will still be operating their business 
five years later. The median revenue of these businesses will grow by 
60 percent. Our ability to make ongoing technical assistance available 
can be the difference between business failure and success.''
    Agency Response: Thank you for the comment.
    Comment: ``Rural Microentrepreneur Assistance Program--Seeking 
clarification on eligibility of microbusiness as it relates to 
location. Rural areas are growing and microbusinesses are expanding. 
Please provide feedback on the following scenarios. 1. Owners of 
business live in a rural area and business in located in an urban area. 
2. Business has a location in an urban area and is expanding to a rural 
area and owners live in an urban area. Is there language to clarify 
eligibility?''
    Agency Response: The eligible rural area determination is made by 
where the project is located and where the RMAP funds will be used. 
Businesses located in an urbanized area are not eligible to receive 
funding from this Rural Development program. A business located in an 
urbanized area that is expanding to a rural area may use RMAP funds 
only for the project and expenses in the rural area location. The 
location of the business owner has no impact on the project 
eligibility.
    The Agency did not receive any significant adverse comments during 
the public comment period on the final rule, and therefore confirms the 
rule without change.

Karama Neal,
Administrator, Rural Business-Cooperative Service.
[FR Doc. 2021-21504 Filed 10-1-21; 8:45 am]
BILLING CODE 3410-XY-P