Rural Microentrepreneur Assistance Program

• Published date: 14 May 2021
• Citation: 86 FR 26348
• Record Number: 2021-10146
• Section: Rules and Regulations
• Court: Rural Business-cooperative Service

26348

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

it will publish, in a timely manner, a

document in the Federal Register

withdrawing this direct final rule.

Regulatory Flexibility Analysis

Pursuant to requirements set forth in

the Regulatory Flexibility Act (RFA) (5

U.S.C. 601–612), AMS considered the

economic impact of this action on small

entities. Accordingly, AMS prepared

this regulatory flexibility analysis.

The purpose of the RFA is to fit

regulatory actions to the scale of

businesses that are subject to such

actions so that small businesses will not

be unduly or disproportionately

burdened by the action. Marketing

orders issued pursuant to the Act, and

the rules issued thereunder, are unique

in that they are brought through group

action of essentially small entities acting

on their own behalf.

Presently, there are approximately 22

handlers of raisins subject to regulation

under the Order and approximately

2,000 raisin producers in the regulated

area.

Small agricultural service firms are

defined by the Small Business

Administration (SBA) as those having

annual receipts of less than $30,000,000,

and small agricultural producers are

defined as those having annual receipts

of less than $1,000,000 (13 CFR

121.201).

AMS multiplied RAC estimated

shipments of 327,323 tons for the 2020

season by the average handler price of

$2,000 per ton to derive total estimated

annual handler receipts of

$474,646,000. Dividing the total

estimated handler receipts by the

number of handlers (22) results in

estimated average handler receipts of

$21,574,818.

According to RAC estimates for the

most recent year, the average raisin

grower price was $1,300 per ton.

Multiplying the average grower price by

total 2020 production of 211,115 tons

results in $274,449,500 estimated

returns to growers. Dividing estimated

grower returns by the total number of

growers (2,000) provides an estimated

return per grower of $137,225 for the

2020 season. Thus, the majority of raisin

handlers and growers may be classified

as small entities according to SBA

definitions.

There are no known negative impacts

or additional costs incurred by small

handlers because of this action.

This rule contains no information

collection or recordkeeping

requirements under the Paperwork

Reduction Act of 1995 (44 U.S.C. 3501

et seq.).

AMS is committed to complying with

the E-Government Act 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.

USDA has not identified any relevant

Federal rules that duplicate, overlap, or

conflict with this final rule.

List of Subjects in 7 CFR Part 989

Grapes, Marketing agreements,

Raisins, Reporting and recordkeeping

requirements.

For the reasons set forth in the

preamble, 7 CFR part 989 is amended as

follows:

PART 989—RAISINS PRODUCED

FROM GRAPES GROWN IN

CALIFORNIA

■1. The authority citation for 7 CFR

part 989 continues to read as follows:

Authority: 7 U.S.C. 601–674.

■2. In § 989.80, revise paragraph (c) to

read as follows:

§ 989.80 Assessments.

* * * * *

(c) The Secretary shall fix the rate of

assessment to be paid by all handlers on

the basis of a specified rate per ton. At

any time during or after a crop year, the

Secretary may increase the rate of

assessment to obtain sufficient funds to

cover any later finding by the Secretary

relative to the expenses of the

committee. Each handler shall pay such

additional assessment to the committee

upon demand. In order to provide funds

to carry out the functions of the

committee, the committee may accept

advance payments from any handler to

be credited toward such assessments as

may be levied pursuant to this section

against such handler during the crop

year. In the event cash flow needs of the

committee are above cash available

generated by handler assessments, the

committee may borrow from a

commercial lending institution. The

payment of assessments for the

maintenance and functioning of the

committee, and for such purposes as the

Secretary may pursuant to this subpart

determine to be appropriate, may be

required under this part throughout the

period it is in effect, irrespective of

whether particular provisions thereof

are suspended or become inoperative.

* * * * *

Erin Morris,

Associate Administrator, Agricultural

Marketing Service.

[FR Doc. 2021–10148 Filed 5–13–21; 8:45 am]

BILLING CODE P

DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4280

[Docket No. RBS–20–BUSINESS–0044]

RIN 0570–AB02

Rural Microentrepreneur Assistance

Program

AGENCY

: Rural Business-Cooperative

Service, USDA,

ACTION

: Final rule; request for

comments.

SUMMARY

: The Rural Business-

Cooperative Service (RBCS or the

Agency), a Rural Development (RD)

agency of the United States Department

of Agriculture (USDA or the

Department), is issuing a final rule with

comment for the Rural

Microentrepreneur Assistance Program

(RMAP or the Program). This final rule

modifies the interim rule published in

the Federal Register on May 28, 2010,

as amended by the correcting

amendments published in the Federal

Register on July 19, 2010, and

incorporates amendments to the

Consolidated Farm and Rural

Development Act (ConAct) made by the

Agriculture Improvement Act of 2018

(2018 Farm Bill). The Agency is

implementing other changes to make the

Program run more efficiently, be more

user-friendly and be more consistent

with other RBCS programs.

DATES

:

Effective date: This final rule is

effective May 14, 2021.

Comment date: Comments due on or

before July 13, 2021.

ADDRESSES

: You may submit comments,

identified by docket number RBS–20–

BUSINESS–0044 and Regulatory

Information Number (RIN) number

0570–AB02 through https://

www.regulations.gov.

Instructions: All submissions received

must include the Agency name and

docket number or RIN for this

rulemaking. All comments received will

be posted without change to https://

www.regulations.gov, including any

personal information provided.

Docket: For access to the docket to

read background documents or

comments received, go to https://

www.regulations.gov.

FOR FURTHER INFORMATION CONTACT

: For

general inquiries, contact David

Chestnut, Program Management

Division, U.S. Department of

Agriculture, 1400 Independence Avenue

SW, Washington, DC 20250–3201;

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26349

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

telephone: (202) 692–5233; email:

david.chestnut@usda.gov.

SUPPLEMENTARY INFORMATION

:

I. Background

Rural Development is a mission area

within USDA comprising the Rural

Utilities Service, Rural Housing Service,

and Rural Business-Cooperative Service.

Rural Development’s mission is to

increase economic opportunity and

improve the quality of life for all rural

Americans. Rural Development meets

its mission by providing loans, loan

guarantees, grants and technical

assistance through more than 40

programs aimed at creating and

improving housing, business, and

infrastructure throughout rural America.

The Rural Microentrepreneur Assistance

Program, administered by the Rural

Business-Cooperative Service, was

authorized by Section 379E of the

Consolidated Farm and Rural

Development Act (ConAct). The ConAct

established the RMAP to provide loans

and grants to support

microentrepreneurs in the development

and ongoing success of rural

microenterprises. The loans establish or

augment a rural microentrepreneur

revolving loan fund and the grants

provide technical assistance and

training to microenterprises.

II. Discussion of Public Comments From

Interim Rule

On May 28, 2010, the Agency

published an interim rule with

comments in the Federal Register (75

FR 30114) implementing RMAP. The

interim rule was amended by the

correcting amendments published in the

Federal Register on July 19, 2010 (75 FR

41695). Twenty-nine combined

comments were received from one

industry respondent, five sponsoring

organizations and one individual. The

Agency reviewed and considered all

comments that were received. The

following discusses each comment and

the Agency’s response:

Comment: The Loan Loss Reserve

Fund (LLRF) usage and replenishment

is too restrictive and a more workable

approach is to utilize the Intermediary

Relending Program (IRP) regulation 7

CFR 4274–D.

Agency response: The Agency agreed,

and the regulation has been revised to

be more in line with the Intermediary

Relending Program (IRP).

Comment: Having a hard deadline of

90 days to close the loans was too

difficult to meet in some cases.

Agency response: The Agency agreed,

and the language was changed to permit

the Agency, with justification and at its

sole discretion, to extend the closing

date deadline when circumstances

warrant.

Comment: Concern was expressed for

only being able to draw down funds to

make loans every quarter as being

unworkable. The 30-day micro borrower

loan closing should be eliminated.

Agency response: The Agency agreed,

and language was changed from ‘must’

to ‘should’ for the draw of funds which

will allow the drawdown of funds as

needed. The Agency disagrees with a

change to the microborrower 30-day

loan closing requirements as a

Microenterprise Development

Organization’s (MDO) should only draw

down funds for an identified project.

This prevents an MDO from paying

interest on unused funds in their

account that are not generating revenue

for the program loan repayment.

Comment: The Agency should make it

clear that one of the Agency’s remedies

for loan default was to withhold all

mandatory grant payments until the

microlender comes back into

compliance.

Agency response: The Agency agreed,

and the information has been delineated

in the loan servicing section.

Comment: Making the Agency

responsible to approve all key personnel

changes is intrusive. The Legislative

Affairs notification is set forth in

another Rural Development regulation

and is not needed here.

Agency response: The Agency agreed

but will still require notification of

significant personnel changes as such

changes may impact the MDO’s ability

to manage a revolving loan fund. The

Legislative Notification has been

removed from Section 4280.313.

Comment: The technical assistance

only grant portion of the regulation is

not authorized by the Farm Bill, but

rather technical assistance training

grants are authorized by the Farm Bill.

Additionally, the current regulation

ignores the training aspect of the law.

Agency response: The technical

assistance only grant provisions are in

the authorizing statute and were not

eliminated in the 2018 Farm Bill

language. Agency agreed with the

training provisions comment and the

regulation has been changed in Section

4280.313 to reflect that these grants

should be for training type technical

assistance to active and potential

mircoborrowers as well as any

microlenders who may wish to

strengthen their technical skills through

training.

Comment: Most commenters included

comments on scoring: abandon the dual

application system, scoring is

subjective, scoring is overly complex,

TA grant scoring does not reflect

operating realities, scoring disfavors

microlenders who specialize in

servicing traditionally underserved

populations, disfavors smaller MDOs

who need to use the legally allowed 10

percent for administrative expenses,

scoring uses vague definitions of current

and delinquent borrowers, disfavors

non-rural MDOs, and disfavors MDOs

who provide training versus those

MDOs who only make loans.

Agency response: The Agency

considered each of the comments and

reviewed the scoring system for possible

revisions. Changes are described in

Section III below.

Comment: Several comments were

made concerning application

processing. One of the commenters

stated that a Loan Fund Work Plan or

Scope of Work should be required of all

applicants, and that some forms listed

for the applicant to complete were

internal forms and should be deleted.

Agency response: The Agency agreed,

and the regulation has been revised to

require a work plan from all applicants

(§ 4280.316(c)(1)) and internal forms

have been removed from the applicant’s

requirements.

Comment: One group of commenters

cited several existing laws which define

significant outmigration as a locality

which has a loss of 10 percent or more

in population in the past 20 years.

Agency response: The Agency agreed,

and the definition was changed to

conform with the definition used by the

Economic Research Service.

Comment: The definition of full-time

equivalent does not agree with other

Rural Development definitions.

Agency response: The Agency agreed,

and the definition was revised to be

similar to other Agency regulations.

Comment: The definition of

delinquency should be redefined to the

dollars and number of loans behind

more than 30 days in any one-year

period.

Agency response: The Agency agreed

in principle and included in the

definition that the year be the federal

fiscal year. Delinquency parameters

were added to § 4280.311(e)(4) to better

define satisfactory performance.

Comment: Non-profit organizations

cannot have citizenship and the

wording should be changed to state

organized under the laws of the state.

Agency response: The Agency agrees

that non-profit entities have no

ownership but retain its requirement

that non-profit entities must be

controlled by a majority of US citizens.

The provisions for state organization of

a non-profit remains in § 4280.310(a)(2)

and a tribal provision is now included

in that section as well.

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26350

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

Comment: The limited 20-year loan

term should include a restructure

provision that would permit extending

beyond the initial 20-year limit. The

deferral period should be 3 years and

annual payments rather than monthly

be utilized.

Agency response: The Agency retains

its monthly loan payment requirement

as a change to annual payments would

reduce the amount of program funding

available. The 20-year loan limitation

and the 2-year deferral period are

statutory requirements and cannot be

changed.

Comment: USDA should use its

current Intermediary Relending Program

and Rural Business Enterprise Grant

regulations which have been very

successful to manage technical

assistance grants and the Intermediary

relending of monies through a revolving

fund for many years now.

Agency’s response: The RMAP

program does utilize the technical

assistance models utilized by other

programs and requires MDO reporting to

ensure that the program requirements

are being met.

Comment: USDA is placing too much

funding in the loan portion of the RMAP

and insufficient funding for the grant

portion of the program to ensure its

success.

Agency’s response: The Agency did

not agree with this comment. The

Agency takes into account, on a year to

year basis, the needs of the stakeholders

of the RMAP program based on funds

available for that fiscal year.

Comment: USDA should relinquish

its first lien position on all funds in the

Rural Microentrepreneur Revolving

Fund (RMRF) except those derived from

the Rural Microenterprise loan itself.

Agency response: The Agency did not

agree with this comment. The Agency

must adhere to prudent lending

practices which would require a first

lien position on all assets in the

revolving loan fund. An MDO is

prohibited from co-mingling other entity

funds with funds on deposit in its

RMAP revolving loan account

(§ 4280.311(e)(1)).

Comment: It was Congress’ intent to

permit the 5 percent LLRF funding

requirement to be met using loan funds.

Agency response: Agency disagreed.

The LLRF is intended to protect the

Microenterprise Development

Organization’s (MDO) fund by

maintaining the value of the fund as

required by the servicing regulation, 7

CFR. Part 1951 (Subpart R). If loan

funds were used to capitalize the LLRF,

and consequently were distributed to

cover losses (either by loan payments to

the Agency or to cover liquidation costs

of the microloan), the longevity of the

fund might be in question. This stress

would be enhanced if multiple loans

required liquidation before the interest

earned could rebuild the LLRF.

Comment: The 2 percent interest rate

was double the 1 percent minimum rate

set by Congress.

Agency response: The Agency

disagreed. The current cost to maintain

the program requires an interest rate of

2 percent. Microlenders in the Program

for more than 5 years have the

opportunity to borrow Agency funds at

1 percent when making an application

for additional loan funds. (Section

4280.311(e)(4)) It is the Agency’s

position that the interest rate (cost of

funds to the MDO) should be

incorporated into the structure of their

microloans.

Comment: The loan making process is

too restrictive for a microloan program.

Agency response: The loan

application process is used to ensure

that program funds are awarded to

entities with experience in managing

revolving loan funds and technical

assistance programs.

Comment: The $2.5 million MDO debt

limitation was arbitrary, not in the law,

and may unduly restrict an MDO’s

ability to meet demand.

Agency response: The Agency

disagrees that the limit restricts an

MDO’s ability to make microloans. The

$50,000 limitation to one microborrower

would allow an MDO to have 50 or

more loans outstanding at any time.

MDOs with significant loan activity are

also eligible to apply for IRP program

awards for their revolving loan funds.

Comment: All the mandatory grants

should be funded at the authorized 25

percent of the loan balances.

Agency response: The 2018 Farm Bill

amended Section 379E of the Con Act

to require that grant amounts to 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.

Comment: The current methodology

of calculating the annual MDO grant

based on the amount of outstanding

loan balances is inadequate.

Agency response: The Agency

disagrees with this comment as

technical assistance funds are to be used

for existing and potential

microborrowers and offers no

alternative methodology to determining

the amount of technical assistance

provided.

Comment: The Agency should accept

collaborative applications stating that

MDOs often partner to leverage areas of

expertise, expand service areas, and

lower costs.

Agency response: The Agency

understands that entities will use

collaborative resources to administer

their programs and does allow for such

in the applicant’s scope of work and

program management, including

microborrower application reviews.

Comment: There are many reasons for

communities to be considered

underserved including but not limited

to loss of major employer, natural

disasters, chronic low income, and they

suggested that the TA training grants be

targeted to underserved communities.

Agency response: The Agency agrees

that there are many reasons for a

community to be considered

underserved and elected not to define or

limit the requirements for an

underserved community as this is best

applied by local knowledge.

Comment: The definition of

microentrepreneur needs to be clarified

to include the number of employees,

ability to obtain conventional financing,

and the maximum dollars needed for

the project.

Agency response: An eligible

microentrepreneur must meet the

definition of a microenterprise, which is

defined as an entity with 10 or fewer

employees. The definition of

microenterprise provides that business

types may also include agricultural

producers provided they meet the

stipulations in this definition. The

microentrepreneur is subject to a credit

elsewhere test in Section 4280.322(d).

The maximum loan amount for a project

is the lesser of $50,000 or 75 percent of

the project cost as stated in the

regulation.

Comment: Several comments on the

cost structure of projects. One

commenter suggested utilizing the IRP

regulation; two groups suggested that a

microborrower’s equity in its business

be allowed to be considered for the 25

percent non-federal portion of the

project. And, finally two groups of

commenters point out that the 75

percent federal fund limitations do not

apply to a micro borrower’s project.

Agency Response: The Agency did not

agree. The 25 percent non-federal funds

requirement is to meet project equity

and also for program leverage to protect

the MDO from credit losses. This

generally cannot be met by allowing

only balance sheet equity.

Comment: The value of matching

funds serves no purpose.

Agency response: The Agency did not

agree as program leverage is used as a

credit enhancement to the

microborrower’s project costs and

protects the MDO from increased credit

losses.

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26351

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

Comment: Priority designations for

race and ethnicity within populations is

discriminatory.

Agency response: The Agency does

not agree with the comment as there is

not a priority designation based on race

and ethnicity and the application

scoring criteria is based on the diversity

of the MDO’s loan portfolio matching

the diversity of their program service

area. The race and ethnicity criteria is

often used in the determination of an

underserved community and such

information is also obtained voluntarily

from applicants for compliance with

Federal civil rights requirements.

The Agency has carefully reviewed

the above comments and is modifying

the regulation based on an analysis of

responsive comments received, program

delivery experience, and changes

required by Section 379E of the 2018

Farm Bill.

The modifications to the Program’s

regulations will allow the Agency to

implement the requirements of the 2018

Farm Bill, address comments received

after publication of the interim

regulation in 2010 and implement the

final regulation.

III. Summary of Changes to the Rule

This section presents the major

changes to the existing RMAP interim

rule.

The authority citation was updated

from 7 U.S.C. 1989(a), 7 U.S.C. 2009s to

accurately read as 7 U.S.C. 1989(a), 7

U.S.C. 2008s.

The definitions of ‘‘close relative’’,

‘‘Indian tribe’’ and ‘‘rural or rural area’’

were modified to match the definitions

in other RD programs. These changes

will provide consistency across RD

programs as well as clarify the

definitions for applicants.

The definitions of ‘‘loan loss reserve

fund (LLRF)’’ and ‘‘rural microloan

revolving fund (RMRF)’’ were modified

to remove the requirement for the

deposit accounts to be interest-bearing.

Microenterprise Development

Organizations have found it difficult to

obtain interest-bearing accounts and

when they are available, the monthly

bank fees often exceed the interest

earned.

At § 4280.310, ‘‘Program requirements

for MDOs,’’ a requirement for all

applicants to be registered in the System

for Awards Management (SAM) prior to

submitting an application was added.

This requirement was added as a result

of the Office of Management and

Budget’s publication of revisions to

OMB Guidance for Grants and

Agreements (2 CFR part 200) at 85 FR

49506, on August 13, 2020.

At § 4280.310(c), the minimum score

required to be considered eligible to

participate in the program was reduced

from 70 to 60 points. The Agency’s

experience shows that 70 points was too

restrictive and eliminated many small,

rural MDOs from the program.

Section 4280.311(e) was revised to

more closely align with the application

and servicing process flows.

Clarification was provided, at

§ 4280.311(e)(3), that, in the event that

the repayment terms of a loan are

modified by the Agency, the term of the

loan may not exceed a 20-year period

from the loan origination date.

As a satisfactory participation

designation impacts lending practices of

the MDO after the first five years of

participation in the program, additional

information was added to

§ 4280.311(e)(4) to expand and clarify

the performance metrics that must be

met to be considered in ‘‘satisfactory

participation’’ for the program.

Provisions were added to

§ 4280.311(e)(10) to allow for a greater

than 25 percent disbursement of loan

proceeds at closing to the extent that

there are commitments to fund projects

within 60 days of loan closing. This

provision allows MDOs to promote their

programs and provide funds needed by

the small business community.

The frequency of fund distribution

was changed at § 4280.311(e)(11) from

‘‘not more often than quarterly’’ to

‘‘should be not more often than

quarterly’’ to allow some flexibility to

the MDOs to request funds to more

readily meet the needs of their

customers.

At § 4280.311(e)(14), the Agency

strengthened the penalties for using

revolving microloan revolving funds for

other than approved purposes to

include default due to non-performance

rather than just restricting access to

future withdrawals. This provides the

Agency with an additional option in the

event of egregious or multiple instances

of improper use of loan funds.

In order to meet the requirements of

the 2018 Farm Bill, § 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. Currently, the amount is limited

to 25 percent of the first $400,000 of

loans, then 5 percent of any amount

over $400,000. The change will

potentially increase the amount of

technical assistance available to

microborrowers.

The Agency clarified the annual grant

process at § 4280.313(a)(1). The

additional language provides

information to applicants and grantees

regarding grant awards, that are non-

competitive and based on the

microlender’s loan balance as of June

30th of each year, as well as

replenishment levels and the process

used to distribute funds if full

replenishment is not possible within

available grant funds. This clarification

provides details needed by grantees for

planning and budgeting purposes.

Applicants are reminded at

§ 4280.315(a) to provide the

documentation listed for a complete

application and scoring purposes. Some

applicants were confused as to what

constituted a complete application. The

Agency believes this reminder will

reduce that confusion.

The scoring criteria at § 4280.316 was

modified to clarify requirements for

applicants and emphasize Agency

priorities for the overall delivery of the

program. While there are numerous

changes, the total score possible has not

changed. These changes include:

•Replacing ‘‘within’’ with ‘‘between’’

at § 4280.316.(b)(3)(iii)(A) and (B) to

more accurately state that the calculated

ratio must be within the intervals of the

listed ratio in each priority level.

•Increased points from 1 to 2 for

applicants that provide success stories

to demonstrate the effect of technical

assistance on their clients at

§ 4280.316(b)(4)(ii). This change allows

the Agency to further prioritize this

action.

•Removed § 4280.316(b)(4)(iv)

‘‘Applicants that present their narrative

clearly and concisely (five pages or less)

and at a level expected by trainers and

teachers will be awarded 1 point.’’ This

paragraph was removed as the Agency

determined that it was vague and too

subjective.

•At § 4280.316(b)(5)(iii),

§ 4280.316(c)(8)(iii) and

§ 4280.316(d)(4)(iii) the Agency

removed, ‘‘up to and including 10

percent’’. This change made the criteria,

‘‘8 percent or greater, 0 points will be

awarded’’. The Agency prioritizes

maximizing the amount of actual

technical assistance provided. This

change serves to meet the goal of

reducing the amount of grant funds that

will be used for administrative

expenses.

•Changed § 4280.316(c)(5) to remove

subjective scoring for references and

recommendations from other entities, to

awarding one point for each support

letter received from potential program

beneficiaries or a local organization. The

maximum points for this section is

unchanged at five points.

•Merged the previous

§ 4280.316(d)(1)(i) and (ii) into one item

at § 4280.316(d)(1)(i). The previous

§ 4280.316(d)(1)(i) was a data collection

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26352

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

request that was needed to support

subsequent paragraphs and not a scoring

priority in and of itself.

•Changed § 4280.316(d)(2)(iii) from

subjective scoring of client evaluations

to awarding 3 points if the Applicant

conducts client evaluations. A scoring

method for the evaluations is included

with an additional 2 points awarded if

the evaluation average is above 3.0 on

a 5-point scale. The maximum total of

5 points for the criterion is unchanged.

•Changed § 4280.316(d)(4)(i) from

‘‘less than 5 percent’’ to ‘‘up to and less

than 5.0 percent’’ so that 5.0 percent is

included in this scoring criterion.

Paragraph (ii) was changed to ‘‘more

than 5.0 percent but less than 8 percent’’

from ‘‘between 5 percent and 8 percent,

. . .’’ so that 5.0 percent is not included

in this score and lastly

§ 4280.316(d)(4)(iii) was changed from

‘‘Between 8 percent up to and including

10 percent’’ to ‘‘8 percent or greater’’ so

that all percentages greater than 8 are

included.

•At § 4280.316(e)(3) information was

added to provide information to

applicants on how the Agency will

handle unsuccessful applications under

this section.

Application submission information

at § 4280.317(a)(1) was updated to

remove the requirement for the

application package to be submitted in

a three-ring binder.

Section 4280.317(a)(2) was modified

to provide clarity to applicants on

application submission and acceptance

and funding cycles.

The Agency added clarifying language

at § 4280.322(a) emphasizing that the

total outstanding loan balance to any

one microborrower may not exceed

$50,000. The language was added as

previous language limited individual

loans to $50,000 not the total loans

outstanding.

To comply with the provisions of

Executive Order 13559 (Fundamental

Principles and Policymaking Criteria for

Partnerships With Faith-Based and

Other Neighborhood Organizations), the

Agency has added ‘‘Loans supporting

explicitly religious activities, such as

worship, religious instruction or

proselytization’’ as an ineligible project

type at § 4280.323(k). This addition

provides additional guidance to

applicants on activities that cannot be

supported with Agency grant funds.

IV. Executive Orders/Acts

Executive Order 12866, Regulatory

Impact Analysis

This rule has been determined to be

not significant for purposes of Executive

Order 12866 and, therefore, has not

been reviewed by the Office of

Management and Budget.

Congressional Review Act

Pursuant to the Congressional Review

Act (5 U.S.C. 801 et seq.), the Office of

Information and Regulatory Affairs

designated this rule as not a major rule,

as defined by 5 U.S.C. 804(2).

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic

Assistance (CFDA) number assigned to

the Rural Microentrepreneur Assistance

Program is 10.870. All active CFDA

programs and the CFDA Catalog can be

found at the following website: https://

beta.sam.gov/. The Government Printing

Office (GPO) prints and sells the CFDA

to interested buyers. For information

about purchasing the Catalog of Federal

Domestic Assistance from GPO, call the

Superintendent of Documents at 202–

512–1800 or toll free at 866–512–1800,

or access GPO’s on-line bookstore.

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 2 CFR part 415,

subpart C. Assistance to rural

microenterprises will not require

intergovernmental review.

Rural Development will conduct

intergovernmental consultation using

RD Instruction 1970–I

‘‘Intergovernmental Review,’’ available

in any Rural Development office, on the

internet at http://www.rd.usda.gov/sites/

default/files/1970i.pdf and in 2 CFR

part 415, subpart C. Note that not all

States have chosen to participate in the

intergovernmental review process. A list

of participating States is available at the

following website: https://

www.whitehouse.gov/omb/

management/office-federal-financial-

management/.

Executive Order 12988, Civil Justice

Reform

This final rule has been reviewed

under Executive Order 12988, Civil

Justice Reform. The Agency has

determined that this rule meets the

applicable standards provided in

section 3 of the Executive Order. In

addition, all State and local laws and

regulations that are in conflict with this

rule will be preempted. No retroactive

effect will be given to this rule, and, in

accordance with Sec. 212(e) of the

Department of Agriculture

Reorganization Act of 1994 (7 U.S.C.

Sec. 6912(e)), administrative appeal

procedures, if any, must be exhausted

before an action against the Department

or its agencies may be initiated.

Information Collection and

Recordkeeping Requirements

This rule contains no new reporting

or recordkeeping burdens under OMB

control number 0570–0062 that would

require approval under the Paperwork

Reduction Act of 1995 (44 U.S.C. 3501

et seq.).

National Environmental Policy Act

In accordance with the National

Environmental Policy Act of 1969,

Public Law 91–190, this final rule has

been reviewed in accordance with 7

CFR part 1970 (‘‘Environmental Policies

and Procedures’’). The Agency has

determined that (i) this action meets the

criteria established in 7 CFR 1970.53(f);

(ii) no extraordinary circumstances

exist; and (iii) the action is not

‘‘connected’’ to other actions with

potentially significant impacts, is not

considered a ‘‘cumulative action’’ and is

not precluded by 40 CFR 1506.1.

Therefore, the Agency has determined

that the action does not have a

significant effect on the human

environment, and therefore neither an

Environmental Assessment nor an

Environmental Impact Statement is

required.

Regulatory Flexibility Act

The Regulatory Flexibility Act (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

(‘‘APA’’) or any other statute. The APA

exempts from notice and comment

requirements rules ‘‘relating to agency

management or personnel or to public

property, loans, grants, benefits, or

contracts’’ (5 U.S.C. 553(a)(2)), so

therefore an analysis has not been

prepared for this rule.

Unfunded Mandates Reform Act

This final rule contains no federal

mandates (under the regulatory

provisions of Title II of the Unfunded

Mandates Reform Act of 1995) for state,

local, and tribal governments or the

private sector. Therefore, this rule is not

subject to the requirements of § 202 and

205 of the Unfunded Mandates Reform

Act of 1995.

Executive Order 13132—Federalism

The policies contained in this rule do

not have any substantial direct effect on

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26353

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

states, on the relationship between the

National Government and the states, or

on the distribution of power and

responsibilities among the various

levels of government. Nor does this rule

impose substantial direct compliance

costs on state and local governments.

Therefore, consultation with the states

is not required.

Executive Order 13175—Consultation

and Coordination With Indian Tribal

Governments

This executive order imposes

requirements on the Agency in the

development of regulatory policies that

have tribal implications or preempt

tribal laws. The Agency has determined

that the 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 Indian tribes. Thus,

this rule is not subject to the

requirements of Executive Order 13175.

If tribal leaders are interested in

consulting with RBCS on this rule, they

are encouraged to contact USDA’s Office

of Tribal Relations or RD’s Native

American Coordinator at: AIAN@

usda.gov to request such a consultation.

E-Government Act Compliance

Rural Development is committed to

the E-Government Act of 2002, which

generally requires government agencies

to provide the public the option of

submitting information or transacting

business electronically to the maximum

extent possible.

Civil Rights Impact Analysis

Rural Development, a mission area for

which RBCS is an agency, has reviewed

this rule in accordance with USDA

Departmental Regulation 4300–4, Civil

Rights Impact Analysis,’’ to identify any

major civil rights impacts the rule might

have on program participants on the

basis of age, race, color, national origin,

sex or disability. Based on the analysis

of the final rule, available data

(including anecdotal), program purpose,

application submission and eligibility

criteria, issuance of this Final Rule is

not likely to adversely or

disproportionately impact very low, low

and moderate-income populations,

minority populations, women, Indian

tribes or persons with disabilities, by

virtue of their race, color, national

origin, sex, age, disability, or marital or

familiar status.

USDA Non-Discrimination Policy

In accordance with Federal civil

rights law and the Department’s civil

rights regulations and policies, the

USDA, its Agencies, offices, and

employees, and institutions

participating in or administering USDA

programs are prohibited from

discriminating based on race, color,

national origin, religion, sex, gender

identity (including gender expression),

sexual orientation, disability, age,

marital status, family/parental status,

income derived from a public assistance

program, political beliefs, or reprisal or

retaliation for prior civil rights activity,

in any program or activity conducted or

funded by USDA (not all bases apply to

all programs). Remedies and complaint

filing deadlines vary by program or

incident.

Persons with disabilities who require

alternative means of communication for

program information (e.g., Braille, large

print, audiotape, American Sign

Language, etc.) should contact the

Agency or USDA’s TARGET Center at

(202) 720–2600 (voice and TTY) or

contact USDA through the Federal Relay

Service at (800) 877–8339. Additionally,

program information may be made

available in languages other than

English.

To file a program discrimination

complaint, complete the USDA Program

Discrimination Complaint Form, AD–

3027, found online at https://

www.usda.gov/oascr/how-to-file-a-

program-discrimination-complaint and

at any USDA office or write a letter

addressed to USDA and provide in the

letter all of the information requested in

the form. To request a copy of the

complaint form, call (866) 632–9992.

Submit your completed form or letter to

USDA by: (1) Mail: U.S. Department of

Agriculture, Office of Adjudication,

1400 Independence Avenue SW,

Washington, DC 20250–9410; (2) fax:

(202) 690–7442; or (3) email: OAC@

usda.gov.

USDA is an equal opportunity

provider, employer, and lender.

List of Subjects in 7 CFR Part 4280

Business and industry, Energy, Grant

programs-business, Loan programs-

business, Rural areas.

Accordingly, for the reasons

discussed in the preamble, the Agency

amends 7 CFR part 4280 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. 2008s

■2. Revise 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 Nondiscrimination and

compliance with other Federal laws.

4280.306 Forms, regulations, and

instructions.

4280.307–4280.309 [Reserved]

4280.310 Program requirements for MDOs.

4280.311 Loan provisions for Agency loans

to microlenders.

4280.312 Loan approval and closing.

4280.313 Grant provisions.

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 Grant and loan servicing.

4280.322 Loans from the microlenders to

the microentrepreneurs.

4280.323 Ineligible microloan purposes and

uses.

4280.324–4280.399 [Reserved]

4280.400 OMB control number.

Subpart D—Rural Microentrepreneur

Assistance Program

§ 4280.301 Purpose and scope.

(a) This subpart contains the policies

and procedures by which the Agency

will administer the Rural

Microentrepreneur Assistance Program

(RMAP). The purpose of the Program is

to support the development and ongoing

success of rural microentrepreneurs and

microenterprises. To accomplish this

purpose, the Program will make direct

loans and provide grants to selected

Microenterprise Development

Organizations. Selected Microenterprise

Development Organization will use the

funds to:

(1) Provide microloans to rural

microentrepreneurs and

microenterprises;

(2) Provide business-based training

and technical assistance to rural

microborrowers and potential

microborrowers as an essential part of

the microlending process;

(3) Perform other such activities as

deemed appropriate by the Secretary to

ensure the development and ongoing

success of rural microenterprises.

(b) The Agency will make direct loans

to microlenders for the purpose of

providing fixed interest rate microloans

to rural microentrepreneurs for business

startup and for growing

microenterprises in compliance with

§§ 4280.311 and 4280.312. Eligible

microlenders will also be eligible to

receive microlender technical assistance

grants to provide technical assistance

and training to microenterprises that

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26354

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

have received or are seeking a microloan

under this program in compliance with

§ 4280.313.

(c) To allow for extended

opportunities for technical assistance

and training, the Agency will make

technical assistance-only grants to

Microenterprise Development

Organizations that have sources of

funding other than program funds for

making or facilitating microloans.

§ 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 a Microenterprise

Development Organization for the

operation of services under this

program. Not more than 10 percent of

technical assistance grant funds may be

used for such expenses.

Agency. USDA Rural Development,

Rural Business-Cooperative Service or

its successor organization.

Agricultural production. The

cultivation, growing, or harvesting of

plants and crops (including farming),

breeding, raising, feeding, or housing of

livestock (including ranching).

Applicant. The legal entity, also

referred to as a Microenterprise

Development Organization, submitting

an application to participate in the

program.

Application. The required forms and

documentation submitted by a

Microenterprise Development

Organization 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 at

below market rates, technical assistance

in developing business or marketing

plans, technical services, use of

equipment, or other facilities or services

to rural microentrepreneurs and

microenterprises starting or growing a

business. The business incubator may

also provide access to capital through

direct loans or referrals to loan

programs.

Close relative. Individuals who live in

the same household or who are closely

related by blood, marriage, or adoption,

such as a spouse, domestic partner,

parent, child, sibling, aunt, uncle,

grandparent, grandchild, niece, nephew,

or first cousin.

Default. The condition that exists

when a borrower is not in compliance

with the promissory note, the loan

and/or grant agreement, or other related

documents evidencing the loan from the

Agency or the Microenterprise

Development Organization.

Delinquency. Failure by a

Microenterprise Development

Organization or microborrower to make

a scheduled loan payment by the due

date or within any grace period as

stipulated in the promissory note and

loan agreement.

Eligible project cost. The total cost of

a microborrower’s project for which a

microloan is being sought from a

microlender, less any costs identified as

ineligible in § 4280.323.

Facilitation of access to capital. For

purposes of this program, facilitation of

access to capital means assisting a client

of the technical assistance only grantee

in obtaining a microloan, whether or not

the microloan is wholly or partially

capitalized by funds provided under

this program.

Federal fiscal year (FY). 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 tribe. Means the term as

defined in 25 U.S.C. 5304(e).

Loan loss reserve fund (LLRF). A

deposit account that each microlender

must establish and maintain in an

amount equal to not less than 5 percent

of the total amount owed by the

microlender under this program to the

Agency. This account can be used to

pay any shortage in the rural microloan

revolving fund caused by delinquencies

or losses on microloans.

Microborrower. A microentrepreneur

or microenterprise that has received

loans or financial assistance from a

microlender under this program in an

amount of $50,000 or less.

Microenterprise. Microenterprise

means:

(i) A sole proprietorship located in a

rural area, as defined; or

(ii) A business entity located in a rural

area, as defined, with not more than 10

full-time-equivalent employees. Such

businesses may include any type of

legal business that meets local standards

of decency, though certain business

types may be ineligible as defined in

§ 4280.323 Business types may also

include agricultural producers provided

they meet the stipulations in this

definition.

Microenterprise development

organization (MDO). A domestic

organization that is a non-profit entity;

an Indian tribe; or a public institution

of higher education with loan or

assistance programs for the benefit of

rural microentrepreneurs and

microenterprises. An MDO will:

(i) Provide training and technical

assistance;

(ii) Make microloans or facilitate

access to capital or other related

services; and

(iii) Have a demonstrated record of

delivering services to rural

microentrepreneurs, or an effective plan

to develop a program to deliver services

to rural microentrepreneurs.

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. All

microentrepreneurs assisted under this

regulation must be located in rural

areas.

Microlender. An MDO that has been

approved by the Agency for

participation under this subpart to make

microloans and provide an integrated

program of training and technical

assistance to its microborrowers and

prospective microborrowers.

Microloan. A business loan of not

more than $50,000 for eligible purposes

to a microborrower with a fixed interest

rate and a term not to exceed 10 years.

Military personnel. Individuals,

regardless of rank or grade, currently in

active United States military service

with less than 6 months remaining in

their active duty service requirement.

Nonprofit entity. An entity chartered

as a nonprofit entity under State or

Tribal Law.

Program. The Rural

Microentrepreneur Assistance Program

(RMAP).

Rural Microloan Revolving Fund

(RMRF). An exclusive account on which

the Agency will hold a first lien and

from which microloans will be made by

the MDO. All payments from

microborrowers and reimbursements

from the LLRF will be deposited into

the RMRF account. Loan payments will

be made to the Agency by the

microlender from the RMRF.

Rural or rural area. Any area of a

State not in a city or town, that has a

population of more than 50,000

inhabitants, and which excludes certain

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26355

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

populations pursuant to 7 U.S.C.

1991(a)(13)(H), according to the latest

decennial census of the United States

and not in the urbanized area

contiguous and adjacent to a city or

town that has a population of more than

50,000 inhabitants. In making this

determination, the Agency will use the

latest decennial census of the United

States. The following exclusions apply:

(i) Any area in the urbanized area

contiguous and adjacent to a city or

town that has a population of more than

50,000 inhabitants that is attached to the

urbanized area of a city or town with

more than 50,000 inhabitants by a

contiguous area of urbanized census

blocks that is not more than two census

blocks wide. Applicants from such an

area should work with their Rural

Development State Office to request a

determination of whether their project is

located in a rural area under this

provision.

(ii) For the Commonwealth of Puerto

Rico, the island is considered Rural and

eligible except for the San Juan Census

Designated Place (CDP) and any other

CDP with greater than 50,000

inhabitants. Areas within CDPs with

greater than 50,000 inhabitants, other

than the San Juan CDP, may be

determined to be rural if they are ‘‘not

urban in character.’’

(iii) For the State of Hawaii, all areas

within the State are considered rural

and eligible except for the Honolulu

CDP within the County of Honolulu and

any other CDP with greater than 50,000

inhabitants. Areas within CDPs with

greater than 50,000 inhabitants, other

than the Honolulu CDP, may be

determined to be rural if they are ‘‘not

urban in character.’’

(iv) For the purpose of defining a rural

area in the Republic of Palau, the

Federated States of Micronesia, and the

Republic of the Marshall Islands, the

Agency shall determine what

constitutes rural and rural area based on

available population data.

State. Any of the 50 States of the

United States, the Commonwealth of

Puerto Rico, the District of Columbia,

the U.S. Virgin Islands, Guam,

American Samoa, the Commonwealth of

the Northern Mariana Islands, the

Republic of Palau, the Federated States

of Micronesia, and the Republic of the

Marshall Islands.

Technical assistance (TA) and

training. A function performed for the

benefit of a private business enterprise

or a community which is a problem-

solving activity such as market research,

product and/or service improvement,

feasibility study, worker training

programs, etc., to assist in the economic

development of a rural area.

Technical assistance grant. A grant

from the Agency, the funds of which are

used to provide TA and training.

(b) Abbreviations. The following

abbreviations apply to the terms used in

this subpart.

FTE—Full-time employee.

FY—Fiscal year.

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 and

may not conflict with applicable law.

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 eligibility criteria; or

(b) To fund an interested party or

applicant that has not successfully

competed for funding in accordance

with this subpart.

§ 4280.304 Review or appeal rights and

administrative concerns.

(a) Review or appeal rights. An

applicant MDO, a microlender, or

grantee MDO may seek a review of an

adverse Agency decision under this

subpart from the appropriate Agency

official that oversees the program in

question, and/or appeal the Agency

decision to the National Appeals

Division in accordance with 7 CFR part

11.

(b) Administrative concerns. Any

questions or concerns regarding the

administration of the program,

including any action of the microlender,

may be sent to: USDA Rural

Development, Rural Business-

Cooperative Service, Program

Management Division at 1400

Independence Avenue SW, Room 5160–

S, Mail Stop 3226, Washington, DC

20250–3226 or its successor agency, or

the local USDA Rural Development

office.

§ 4280.305 Nondiscrimination and

compliance with other Federal laws.

(a) Any entity receiving funds under

this subpart 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, subpart 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,

1400 Independence Avenue SW,

Washington, DC 20250–9410, or call

(866) 632–9992 (toll free) or (202) 401–

0216 (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

when the applicant completes or

provides the Agency with sufficient

demographic information to complete

Form RD 400–8, ‘‘Compliance Review’’.

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 Forms, regulations, and

instructions.

Copies of all forms, regulations, and

instructions referenced in this subpart

are available in any Agency office, the

Agency’s website at: https://

www.rd.usda.gov/page/regulations-and-

guidance/ and for grants on the internet

at www.grants.gov.

§ §4280.307–4280.309 [Reserved]

§ 4280.310 Program requirements for

MDOs.

(a) Eligibility requirements for

applicant MDOs. To be eligible for a

direct loan or grant award under this

subpart, an applicant must meet each of

the criteria set forth in paragraphs (a)(1)

through (4) of this section, as applicable.

VerDate Sep<11>2014 18:21 May 13, 2021 Jkt 253001 PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26356

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

(1) Type of applicant. The applicant

must meet the definition of an MDO as

provided in § 4280.302.

(2) Citizenship. Non-profit entities, to

be eligible to apply for status as an

MDO, 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 United States.

(3) Legal authority and responsibility.

The applicant must have the legal

authority necessary to carry out the

purpose of the award.

(4) Other eligibility requirements. The

applicant must also provide evidence

that it:

(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 so that the

applicant has the capacity to manage

such a revolving loan fund;

(iii) Is actively and successfully

participating as an intermediary lender

in good standing under similar loan

programs; and

(iv) Provides an attorney’s opinion

regarding the potential microlender’s

legal status and its ability to enter into

program transactions at the time of

initial entry into the program.

Subsequent to acceptance into the

program, an attorney’s opinion will not

be required unless the Agency

determines significant changes to the

microlender have occurred.

(b) System for Awards Management.

All applicants must be registered in the

System for Awards Management (SAM)

prior to submitting an application,

unless determined exempt under 2 CFR

25.110. Loan and grant recipients must

maintain an active SAM registration

with current information at all times

during which it has an active Federal

award or an application under

consideration by the Agency. The

applicant must ensure that the

information in the database is current,

accurate, and complete. Applicants

must ensure that they complete the

Financial Assistance General

Certifications and Representations in

SAM.

(c) Minimum score. Once deemed

eligible, an entity will be evaluated

based on the scoring criteria in

§ 4280.316 for adequate qualification to

participate in the program. Eligible

MDOs must score a minimum of sixty

(60) points in order to be considered to

receive an award under this subpart.

(d) Ineligible applicants. An applicant

will be considered ineligible if it:

(1) Does not meet the definition of an

MDO as provided in § 4280.302;

(2) Is debarred, suspended or

otherwise excluded from, or ineligible

for, participation in Federal assistance

programs; or

(3) Has an outstanding judgment

against it, obtained by the United States

in a Federal Court (other than U.S. Tax

Court).

(e) Delinquencies. No applicant will

be eligible to receive a loan if it is

delinquent on a Federal debt.

(f) Application eligibility and

qualification. An application will only

be considered eligible for funding if it

is submitted by an eligible MDO. The

applicant will qualify for funding based

on the results of review, scoring, and

other procedures as indicated in this

subpart, and the applicant will further:

(1) Establish an RMRF, or add capital

to an RMRF originally capitalized under

this program, and establish or continue

a training and TA program for its

microborrowers and prospective

microborrowers; or

(2) Fund a TA-only grant program to

provide services to rural

microentrepreneurs and

microenterprises.

(g) Business incubators. Because the

purpose of a business incubator is to

provide business-based TA and an

environment in which micro-level, very

small, and small businesses may thrive,

a microlender that meets all other

eligibility requirements and owns and

operates a small business incubator will

be considered eligible to apply. In

addition, a business incubator selected

to participate as a microlender may use

RMAP funds to lend to an eligible

microenterprise tenant, without creating

a conflict of interest under

§ 4280.323(c).

§ 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 that it

will administer by making and servicing

microloans in one or more rural areas.

(b) Eligible activities. Microlenders

may make microloans for qualified

business activities and use Agency loan

funds only as provided in § 4280.322.

(c) Ineligible activities. Microlenders

may not use RMRF funds for

administrative costs or expenses and

may not make microloans under this

program for ineligible businesses or

purposes as specified in § 4280.323.

(d) Cost share. The Federal share of

the eligible project cost of a

microborrower’s project funded under

this section shall not exceed 75 percent.

The cost share requirement shall be met

by the microlender using either of the

options identified in paragraphs (d)(1)

and (2) of this section in establishing an

RMRF. A microlender may establish

multiple RMRFs utilizing either option.

Whichever option is selected for an

RMRF, it must apply to the entire RMRF

and all microloans made with funds

from that RMRF.

(1) Microborrower project level option.

The loan covenants between the Agency

and the microlender and the

microlender’s lending policies and

procedures shall limit the microlender’s

loan to the microborrower to no more

than 75 percent of the eligible project

costs and require that the

microborrower obtain the remaining 25

percent of the eligible project cost from

non-Federal sources. The non-Federal

share of the eligible project cost of the

project may be provided in cash

(including through fees, grants, and

gifts) or in the form of in-kind

contributions.

(2) RMRF level option. The

microlender shall capitalize the RMRF

at no more than 75 percent Agency loan

funds and not less than 25 percent non-

Federal funds, thereby allowing the

microlender to finance 100 percent of

the microborrower’s eligible project

costs. All contributed funds shall be

maintained in the RMRF.

(e) Loan terms and conditions for

microlenders. Program loans will be

made to microlenders under the

following terms and conditions:

(1) Funds received from the Agency

and any non-Federal share will be

deposited into an account that will be

the RMRF account and shall not be

mingled with other MDO funds. The

Agency will hold first lien position on

the RMRF account, the LLRF account,

and all notes receivable from microloans

using Agency funds.

(2) The RMRF account will be used to

make fixed-rate microloans, accept

repayments from microborrowers and

reimbursements from the LLRF, to repay

the Agency loan and, with the advance

written approval of the Agency, to

supplement the LLRF with interest or

fee earnings from the RMRF.

(3) The term of an Agency loan made

to a microlender will be 20 years. If

requested by the applicant MDO, a

shorter term may be agreed upon by the

microlender and the Agency. If a

repayment workout is required after

loan closing, the term of the loan may

not exceed a 20-year period from the

loan origination date.

(4) Each RMAP loan made to a

microlender during its first five years of

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26357

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

participation in the program will bear

an interest rate of 2 percent for the life

of the loan. After the fifth year of an

MDO’s continuous and satisfactory

participation in the program, each new

loan made to the microlender will bear

interest at a rate of 1 percent. The

interest rate on previous loans will

remain unchanged. Satisfactory

participation requires a loan default rate

of 5 percent or less, a pattern of

delinquencies of 10 percent or less in

the MDO’s RMRF account(s), and timely

submission of reports to the Agency as

required by § 4280.311(h).

(5) Each loan made to a microlender

will automatically receive a 2-year

deferral during which time no

repayment to the Agency will be

required. The deferral period will begin

on the day the Agency’s loan to the

microlender is closed. During the initial

2-year deferral period, each loan to a

microlender will accrue interest only on

funds disbursed by the Agency. Interest

accrued during the 2-year deferral

period will be capitalized to the loan’s

principal balance during the 24th month

of the loan unless the microlender

chooses to make a voluntary payment of

the accrued interest. The required

monthly payments to amortize the loan

after the 2-year deferral period will be

based on the full loan amount plus

capitalized interest, not just the amount

disbursed to the microlender, even in

cases where the Agency’s loan has not

been fully advanced to the microlender.

(6) Except in the case of liquidation or

early repayment, loans to microlenders

must fully amortize over the life of the

loan. The first payment will be due to

the Agency on the last day of the 24th

month of the life of the loan.

(7) The microlender is responsible for

full repayment of its loan to the Agency

regardless of the performance of its

microloan portfolio. Partial or full

repayment of debt to the Agency under

the program may be made at any time,

including during the deferral period,

without any pre-payment penalties

being assessed.

(8) The Agency may call the entire

loan due and payable prior to the end

of the full term due to any non-

performance, delinquency, or default on

the loan.

(9) The loan closing between the

microlender and the Agency should take

place within 90 days from the execution

of Form RD 1940–1, ‘‘Request for

Obligation of Funds.’’ Microlenders that

are unable to close the loan within 90

days of obligation must provide

justification for the delay or loan funds

will be forfeited through a de-obligation

of funds.

(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. Funds disbursed at

loan closing exceeding 25 percent of the

loan amount will only be made if and

to the extent that the MDO has made a

funding commitment to an eligible

microborrower that will be closed

within 60 days from the Agency loan

date. Interest will accrue on all funds

disbursed to the microlender beginning

on the date of disbursement.

(11) Microlenders may request in

writing and receive additional loan

disbursements until the full amount of

the loan to the microlender is disbursed,

or until the end of the 36th month of the

loan, whichever occurs first. Letters of

request for disbursement should be

made not more often than quarterly and

must be accompanied by a description

of the microlender’s anticipated need.

Such description will indicate the

amount and number of microloans

anticipated to be made with the loan

disbursement.

(12) Funds not disbursed to the

microlender by the end of the 36th

month of the loan from the Agency will

be de-obligated and no longer available

for disbursement to the MDO. In such

cases where loan funds are deobligated,

the Agency will establish a revised

payment schedule to fully amortize the

loan balance by its maturity date.

(13) In the event a microlender fails

to meet its payment or reporting

obligations to the Agency, the Agency

may pursue any combination of the

following:

(i) Take possession of the RMRF

and/or any microloans outstanding,

and/or the LLRF;

(ii) Call the loan due and payable in

full; and/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 the

program) deemed acceptable to the

Agency.

(14) 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 take

actions including the restriction of

further access to withdrawals from the

account by the microlender or declaring

the loan in default due to improper use

of loan funds.

(f) Loan funding limitations—(1)

Minimum and maximum loan amounts.

The minimum loan amount that a

microlender may borrow under this

program will be $50,000. The maximum

amount any microlender may borrow on

a single loan under this program, or in

any given Federal FY, will be $500,000.

In no case will the aggregate outstanding

balance owed to the program by any

single microlender exceed $2,500,000.

(2) Use of funds. Agency loan funds

must be used only to establish or

recapitalize an existing Agency funded

RMRF account out of which microloans

will be made, into which microloan

payments will be deposited, and from

which repayments to the Agency will be

made.

(g) Loan loss reserve fund (LLRF).

Each microlender that receives one or

more loans under the program will be

required to establish an LLRF account.

(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

microborrowers to repay their loans on

a timely basis.

(2) Capitalization and maintenance.

The LLRF is subject to each of the

following conditions:

(i) The microlender must maintain the

LLRF at a minimum of 5 percent of the

total amount owed by the microlender

under the program to the Agency. If the

LLRF falls below the required amount,

the microlender will have 30 days to

replenish the LLRF. 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.

(ii) No Agency loan funds may be

used to capitalize the LLRF.

(iii) The LLRF must be held in a

Federally insured deposit account

separate and distinct from any other

fund owned by the microlender.

(iv) The LLRF must remain open,

appropriately capitalized, and active

until such time as any loans owed to the

Agency by the microlender under the

program related to such LLRF are paid

in full.

(3) Use of LLRF. The LLRF must be

used only to:

(i) Recapitalize the RMRF in the event

of the loss and write-off of a microloan;

(ii) Accept Non-Federal deposits as

required for maintenance of the fund at

a level equal to 5 percent or more of the

amount owed to the Agency by the

microlender under the program; and

(iii) Prepay or repay the Agency

program loan.

(4) LLRF funded at time of closing.

The LLRF account must be established

by the microlender prior to the closing

of the loan from the Agency. At the time

of initial loan closing, sources of

funding for the LLRF must be identified

by the microlender and funds equal to

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26358

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

5 percent of the initial loan

disbursement, if made at loan closing,

must be made to the LLRF by the

microlender. The amount in the LLRF

can be built over time and must be

maintained in an amount greater than or

equal to 5 percent of the amount owed

to the Agency by the microlender under

the program. After the first

disbursement is made to a microlender,

further disbursements will only be made

if the LLRF is funded at the appropriate

amount. After the initial loan is made to

a microlender, subsequent loan closings

may require a deposit of additional

funds to the LLRF to maintain an

amount equal to 5 percent of the total

loan balance owed to the Agency under

the program. Federal funds, except

where specifically permitted by other

laws, may not be used to fund the LLRF.

(5) Additional LLRF funding. In the

event of exhibited weaknesses, such as

losses that are greater than 5 percent of

the microloan portfolio or a

microborrower delinquency rate in

excess of 10 percent, the Agency may

require the microlender to deposit

additional funds into the LLRF;

however, the Agency may never require

an LLRF balance of more than 10

percent of the total amount owed to the

Agency by the microlender.

(h) Recordkeeping, reporting, and

oversight. Microlenders must maintain

all records applicable to the program

and make them available to the Agency

upon request. Microlenders must submit

quarterly reports as specified in

paragraphs (h)(1) through (4) of this

section. Portfolio reporting requirements

must be met via the electronic reporting

system. Other reports, such as narrative

information, may be submitted as hard

copy in the event the microlender or

grantee does not have the capability to

submit or accept such reports

electronically.

(1) Periodic reports. On a quarterly

basis, within 30 days of the end of each

Federal FY calendar quarter, each

microlender that has an outstanding

loan under this section must provide to

the Agency:

(i) An Agency-approved 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;

(ii) Listing of each microborrower

under this program, their loan balance

and payment status; and

(iii) A discussion reconciling the

microlender’s actual results for the

period against its goals, milestones, and

objectives as provided in the application

package.

(2) Minimum retention. Microlenders

must provide evidence in their quarterly

reports 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) Combining accounts and reports. If

a microlender has more than one loan

from the Agency, a separate report must

be made for each loan except when

RMRF accounts have been combined. A

microlender may combine RMRF

accounts only when the Agency

approves the combining of accounts and

reports in writing before such accounts

are combined and reports are submitted,

and:

(i) The underlying loans have the

same rates, terms and conditions,

including the method of determining

matching funds for a microborrower’s

project; and

(ii) 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 RMRF and

LLRF reports had been prepared.

(4) Delinquency. In the event that a

microlender has delinquent loans in its

RMAP portfolio, quarterly reports will

include narrative explanation of the

steps being taken to cure the

delinquency.

(5) Other reports. Other reports may

be required by the Agency 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 program

servicing.

(6) Access to microlender’s records.

Upon request by the Agency, the

microlender will permit representatives

of the Agency to inspect and make

copies of any records pertaining to

operation and administration of the

program. Such inspection and copying

may be made during regular office hours

of the microlender or at any other time

agreed upon between the microlender

and the Agency.

(7) Changes in key personnel. Before

any additions or changes are made to

key personnel, the microlender must

notify, and the Agency must approve,

such changes. Such approval shall not

be unreasonably withheld by the

Agency.

§ 4280.312 Loan approval and closing.

(a) 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,’’ is executed by the

Agency. Form RD 1940–1 authorizes

funds to be obligated and may be

executed by the Agency after the

microlender has signed the document,

provided that the microlender has the

legal authority to contract for a loan and

to enter into required agreements,

including an Agency-approved loan

agreement, and meets all program loan

requirements.

(b) Letter of conditions. 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,’’ to the

Agency; or if certain conditions cannot

be met, the applicant may propose

alternate conditions. The Agency will

review any requests for changes to the

letter of conditions and may approve

only minor changes that do not

materially affect the microlender and

remain within the program

requirements. Changes in legal entities

prior to loan closing will not be

approved.

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

closing, microlenders must provide

evidence that the RMRF and LLRF bank

accounts have been set up and the LLRF

has been or will be funded as described

in § 4280.311(g)(4). Such 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;

(iii) A statement from the depository

institution as to the amount of cash in

the LLRF account;

(iv) An Agency-approved promissory

note and a loan agreement for each loan

to the MDO must be executed at loan

closing. The loan agreement will be

prepared by the Agency using Form RD

4274–4, ‘‘Intermediary Relending

Program/Rural Microentrepreneur

Assistance Program Loan Agreement,’’

and reviewed by the MDO prior to loan

closing; and

(v) An appropriate security agreement

on the LLRF and RMRF accounts must

be executed at loan closing.

(2) At loan closing, the microlender

must certify that:

(i) All requirements of the letter of

conditions have been met; and

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26359

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

(ii) There has been no material

adverse change in the microlender, its

key personnel, 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 changes and the

Agency must determine that the

microlender remains eligible and

qualified to participate as an MDO.

(3) The microlender will provide

sufficient evidence that no lawsuits or

other legal issues are pending or

threatened that would adversely affect

the security of the microlender when

Agency security instruments are filed.

§ 4280.313 Grant provisions.

Grants offered under this program

will be made to eligible MDOs in such

amounts and requirements for

microlenders with a loan(s) from the

Agency, and for MDOs that seek only a

TA grant from the Agency. Competition

for these funds will occur as a part of

the application and qualification

process of becoming a microlender or

grant recipient. No entity will receive

grant funding as both a microlender and

a TA-only provider. RMAP

microlenders are not eligible for TA-

only grant funding and an MDO

receiving TA-only grant funding is not

eligible for microlender grant funding.

Failure to meet scoring benchmarks will

preclude an applicant from receiving

loan and/or grant dollars. Once an MDO

is participating as a microlender, TA

grant funds will be made available

annually based on the MDO’s lending

balances and the availability of funds.

(a) Microlender grants. The Agency

shall make microlender TA grants to

microlenders to assist them in providing

marketing, management, and other TA

to rural microentrepreneurs and

microenterprises that have received or

are seeking one or more microloans

from the microlender. The capacity of a

microlender to provide an integrated

program of microlending and TA will be

evaluated during the scoring process

with their loan application and then

annually in determining the amount of

annual grant funds. An eligible MDO

selected to be a microlender will be

eligible to receive a microlending TA

grant if it receives funding to provide

microloans under this program.

Microlender applicants for loan funding

to establish or replenish a revolving

loan fund originally capitalized under

this program, may simultaneously apply

for TA grant funds in an amount not to

exceed 25 percent of the requested loan

amount.

(1) Technical assistance grants to

microlenders will be awarded annually

on a non-competitive basis in an

amount based on the MDO’s

outstanding loan balance as of June 30,

subject to satisfactory program

performance of the microlender and the

availability of funds. Satisfactory

performance includes the timely

payment of program loan(s) and the

submission of periodic reports to the

Agency. Annual TA grants to a

microlender, subject to the availability

of funds, will be made in an amount to

replenish the microlender’s TA fund to

an amount equal to 20 percent of the

outstanding principal balance of loans

made by the microlender to ultimate

recipients unless otherwise published in

an annual program funding notice. If

available grant funds are not sufficient

to fully replenish each microlender’s TA

funds to 20 percent of their outstanding

loan balance, the available funds will be

distributed proportionately based on the

percentage of available funds to the total

amount of annual TA grant funds

requested.

(2) Any grant dollars obligated but not

spent by the microlender from their

initial or subsequent grants will be

subtracted from the subsequent year’s

grant eligibility calculation to ensure

that obligations cover only microloans

made and active and that the MDO’s

total grant funds available for TA do not

exceed the established 20 percent

threshold.

(3) The microlender will agree to use

TA grant funds exclusively for

providing TA assistance and training to

eligible microentrepreneurs and

microenterprises, with the exception

that up to 10 percent of the grant funds

may be used to cover the microlender’s

administrative expenses. Grant funds

may not be used to make loan payments.

(b) Technical assistance only grants.

Grants will be competitively made to

MDOs for the purpose of providing TA

and training to prospective

microborrowers. Technical assistance-

only grants will be provided to eligible

MDOs that seek to provide business-

based TA and training to eligible

microentrepreneurs and

microenterprises, but do not seek

funding as a microlender for an RMRF.

(1) The amount of a TA-only grant

under this program will not exceed 10

percent of the amount of authorized

appropriations available in any Federal

FY for TA-only grants.

(2) Technical assistance only grants

will have a grant term not to exceed 12

months from the date the grant

agreement is signed.

(3) Technical assistance only grantees

will be required to:

(i) Refer clients to internal or external

non-program funded lenders for loans of

$50,000 or less, and

(ii) Collect data regarding such

clients. Technical assistance-only

grantees will be considered successful if

a minimum of 1-in-5 TA clients are

referred for a microloan and are

operating a business within 18 months

of receiving TA from the MDO.

(c) Matching requirement. The MDO

is required to provide a match of not

less than 15 percent of the total amount

of the grant in the form of matching

funds, indirect costs, or in-kind goods or

services. Unless specifically permitted

by laws other than the statute

authorizing RMAP, matching

contributions must be made up of non-

Federal funds.

(d) Administrative expenses. Not

more than 10 percent of a grant received

by an MDO for a Federal FY may be

used to pay administrative expenses.

Microlenders must annually submit a

budget of proposed administrative

expenses for Agency approval. The

Agency has the right to deny the

requested amount, even if it is at 10

percent or less, and to fund

administrative expenses at a lower level.

(1) 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. Applicants

will be scored accordingly, with those

using less than 10 percent of the grant

funds for administrative purposes being

scored higher than those using 10

percent of the grant funds for

administrative purposes.

(2) While operating the program, the

selected grantee will be expected to

adhere to the estimates it provides in its

application and annual budget. If for

any reason the MDO cannot meet those

expectations, it must contact the Agency

in writing with justification to request a

budget adjustment. Budget adjustments

will be considered only if the

adjustment result for administrative

expenses is within the 10 percent

limitation.

(3) Microlenders that exceed 10

percent for administrative expenses will

be considered in performance default

and may be subject to Agency actions

including the forfeiting of funds.

(e) Ineligible grant purposes. Grant

funds, matching funds, indirect costs,

and in-kind goods and services may not

be used for:

(1) Grant application preparation

costs;

(2) Costs incurred prior to the

obligation date of the grant;

(3) Capital improvements;

(4) Political or lobbying activities;

(5) Assistance to any ineligible entity;

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26360

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

(6) Payment of any judgment or debt

owed; or

(7) Payment of any loan.

(f) Facilitation of access to capital.

Technical assistance-only grantees will

be expected to provide training and TA

services to the extent that access to

capital for eligible microentrepreneurs

and microenterprises is facilitated by

referral to either an internal or external

non-program loan fund so that these

clients may take advantage of available

financing programs.

(g) Grant agreement. For any grant to

an MDO or microlender, the Agency

will notify the approved applicant in

writing, using an Agency-approved

grant agreement, 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,

that grant funds are expended for

authorized purposes, and that the

applicable requirements prescribed in

the relevant Agency regulations are

complied with.

§ 4280.314 [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

Federal Register document. The

information required in §§ 4280.315 and

4280.316 is necessary for an application

to be considered complete. Only those

applicants that meet the basic eligibility

requirements in § 4280.310 will have

their applications fully scored and

considered for participation in the

program under this section. When

preparing applications, applicants are

strongly encouraged to review the

application requirements and scoring

criteria in § 4280.316 and provide

documentation that will support a

competitive score.

(b) Content and form of submission.

All applicants must provide the

information specified in paragraph (c) of

this section. Additional application

information is required in paragraph (d)

of this section depending on the type of

application being submitted.

(c) Application information for all

applicants. All applicants must provide

the following information and forms

fully completed and with all

attachments:

(1) Standard Form–424, ‘‘Application

for Federal Assistance’’ for grants.

(2) Standard Form–424A, ‘‘Budget

Information—Non-Construction

Programs.’’

(3) For entities applying for program

loan funds to become an RMAP

microlender only, Form RD 1910–11,

‘‘Certification of No Federal Debt.’’

(4) Form RD 400–8, ‘‘Compliance

Review’’ or sufficient demographic

information for Agency completion of

Form RD 400–8.

(5) Demonstration that the applicant

is eligible to apply to participate in the

program by submission of

documentation as follows:

(i) If a nonprofit entity, evidence that

the applicant organization meets the

citizenship requirements and a copy of

the applicant’s bylaws and articles of

incorporation, which include evidence

that the applicant is legally considered

a non-profit organization;

(ii) If an Indian tribe, evidence that

the applicant is a federally recognized

Indian tribe, and that the Indian tribe

neither operates nor is currently served

by an existing MDO;

(iii) If a public institution of higher

education, evidence that the applicant is

a public institution of higher education;

and

(iv) For nonprofit applicants only, a

Certificate of Good Standing, not more

than six (6) months old, from the Office

of the Secretary of State in the State, or

tribal equivalent, in which the applicant

is located. If the applicant has offices in

more than one state, then the state in

which the applicant is organized and

licensed will be considered the home

location.

(6) Certification by the applicant that

it cannot obtain sufficient credit

elsewhere to fund the activities called

for under the program with similar rates

and terms.

(d) Type of application specific

information. In addition to the

information required under paragraph

(c) of this section, the following

information is also required, as

applicable:

(1) An applicant with more than 3

years of experience as an MDO outside

of the program seeking to participate as

an RMAP microlender must provide

sufficient documentation to validate its

years of experience.

(2) An applicant with 3 years or less

experience as an MDO outside of the

program seeking to participate as an

RMAP microlender must provide the

additional information specified in

§ 4280.316(c).

(3) An applicant seeking status as a

microlender must identify in its

application which cost-share option(s)

the applicant will utilize, as described

in § 4280.311(d), to meet the Federal

cost-share requirement. If the applicant

will utilize the RMRF-level option, the

applicant shall identify the amount(s)

and source(s) of the non-Federal share.

(4) An applicant seeking TA-only

grant funds must provide the additional

information specified in § 4280.316(d).

(e) Application limits.

Microenterprise Development

Organizations may only submit and

have pending for consideration one

application at any given time, which is

for either microlender funds or TA-only

funds.

(f) Completed applications.

Applications that fulfill the

requirements specified in paragraphs (a)

through (e) of this section will be fully

reviewed, scored, and ranked by the

Agency in accordance with the

provisions of § 4280.316.

§ 4280.316 Application scoring.

Applications will be scored based on

the criteria specified in this section

using only the information submitted in

the application. The total available

points per application are 100 as shown

in paragraphs (a) through (e) of this

section. Awards will be based on the

points ranking, with the highest scoring

applications being funded first from the

available funding.

(a) Application requirements for all

applicants. All applicants must submit

the eligibility and application

information described in § 4280.315.

The maximum points available in this

part of the application are 45. In

addition to the eligibility information,

all applicants will 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 based on the

completeness of the organizational chart

and management experience.

(2) 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 the program. There should be a

corresponding resume for each of the

key individuals noted and named on the

organizational chart. 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.

(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) Information indicating an

understanding of microenterprise

development concepts. Provide those

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26361

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

parts of your policy and procedures

manual that deal with the provision of

loans, management of loan funds, and

provision of TA. Up to 5 points will be

awarded.

(5) The applicant’s most recent, and

two-year’s previous, financial

statements. Points will be awarded

based on the demonstrated ability of the

applicant to maintain or grow its fund

balance, its ability to manage one or

more federal programs, and its capacity

to manage multiple funding sources,

including 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 and 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,

which must be rural as defined, and

include the number of counties or other

jurisdictions to be served. Note that the

applicant will not be scored on the size

of the service area, but on its ability to

fully cover the service area as described.

Up to 10 points will be awarded.

(b) Program loan application

requirements for MDOs seeking to

participate as RMAP microlenders with

more than 3 years of experience. In

addition to the information required

under paragraph (a) of this section,

applicants with more than three (3)

years of experience as a microlender,

including non-RMAP microloans, must

also provide the information specified

in paragraphs (b)(1) through (5) of this

section. The total number of points

available under this section (in addition

to the up to 45 points available in

paragraph (a) of this section) is 55.

(1) History of provision of microloans.

The applicant must provide data

regarding its history of making

microloans for the three years previous

to this application by answering the

questions in paragraphs (b)(1)(i) through

(v) 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. Up to a maximum of 20 points

may be awarded under this criterion.

(i) Number and amount of microloans

made during each of the three previous

years.

(ii) Number and amount of microloans

made in rural areas, as defined, in each

of the three years prior to the year in

which the application is submitted. If

the history of providing microloans in

rural areas shows at least one loan made

in:

(A) Three or more consecutive years

immediately prior to the application, 5

points will be awarded;

(B) At least two of the years but not

more than the three consecutive years

immediately prior to this application, 3

points will be awarded;

(C) At least 6 months, but not more

than one year immediately prior to this

application, 1 point will be awarded.

(iii) Calculate and enter the total

number of microloans made in rural

areas as a percentage of the total number

of all microloans made for each of the

past three years. If the percentage of the

total number of microloans made in

rural areas is:

(A) 75 percent or more, 5 points will

be awarded;

(B) At least 50 percent but less than

75 percent, 3 points will be awarded;

(C) At least 25 percent but less than

50 percent, 1 point will be awarded.

(iv) Enter the dollar amount of

microloans made in rural areas as a

percentage of the dollar amount of the

total portfolio (rural and non-rural) of

microloans made for each of the

previous three years. If the percentage of

the dollar amount of the microloans

made in rural areas is:

(A) 75 percent or more of the total

amount, 5 points will be awarded;

(B) At least 50 percent but less than

75 percent, 3 points will be awarded;

(C) At least 25 percent but less than

50 percent, 1 point will be awarded.

(v) Each applicant shall compare the

diversity of its entire microloan

portfolio to the demographic makeup of

its service area (as determined by the

latest applicable decennial census for

the state) based on the number of

microloans made during the three years

preceding the subject application.

Demographic groups shall include

gender, racial and ethnic minority

status, and disability (as defined in the

Americans with Disabilities Act). 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 5 points

will be awarded.

(A) If at least one loan has been made

to each of the three demographic groups

and if the percentage of loans made to

each demographic group is 5 percent or

less of their demographic makeup, 5

points will be awarded.

(B) If at least one loan has been made

to each demographic group and if the

percentage of loans made to each

demographic group is each between 5 to

10 percent or less of the demographic

makeup, 3 points will be awarded.

(C) If at least one loan has been made

to each demographic group and if the

percentage of loans made to one or more

of the demographic groups is greater

than 10 percent of the demographic

makeup, 1 point will be awarded.

(D) If no loans have been made to two

or more demographic groups, no points

will be awarded.

(2) Portfolio management. The

applicant’s ability to manage its

portfolio will be determined based on

the data provided in response to

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

section and scored accordingly. The

maximum number of points under this

criterion is 10.

(i) Enter the total number of the

applicant’s microloans paying on time

for the three previous years. If the total

number of microloans paying on time at

the end of each year over the prior three

years is:

(A) 95 percent or more, 5 points will

be awarded;

(B) At least 85 percent but less than

95 percent, 3 points will be awarded;

(C) Less than 85 percent, 0 points will

be awarded.

(ii) Enter the total number of

microloans currently 30 to 90 days in

arrears, or that have been written off

over the three previous years. If the total

number of these microloans is:

(A) 5 percent or less of the total

portfolio, 5 points will be awarded;

(B) More than 5 percent, 0 points will

be awarded.

(3) History of provision of technical

assistance. The Applicant’s history of

provision of TA to microentrepreneurs

and microenterprises, and its ability to

reach diverse communities, will be

scored based on the data specified in

paragraphs (b)(3)(i) through (iii) of this

section. Applicants may use a chart to

provide this information as they deem

appropriate. The maximum number of

points under this criterion is 15.

(i) Provide the total number of rural

and non-rural microentrepreneurs and

microenterprises that received both

microloans and TA services for each of

the previous three years. Of this total

number, provide the percentage of rural

microentrepreneurs and rural

microenterprises that received both

microloans and TA services for each of

the previous three years. If the provision

of both microloans and TA services to

rural microentrepreneurs and rural

microenterprises is demonstrated at a

rate of:

(A) 75 percent or more, 5 points will

be awarded;

(B) At least 50 percent but less than

75 percent, 3 points will be awarded;

(C) At least 25 percent but less than

50 percent, 1 point will be awarded.

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26362

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

(ii) Provide the percentage of the total

number of rural microentrepreneurs and

rural microenterprises by racial and

ethnic minority, disabled, and/or gender

that received both microloans and TA

services for each of the previous three

years. If the demonstrated provision of

microloans and TA services to these

rural microentrepreneurs and rural

microenterprises is at a rate of:

(A) 75 percent or more, 5 points will

be awarded;

(B) At least 50 percent but less than

75 percent, 3 points will be awarded;

(C) At least 25 percent but less than

50 percent, 1 point will be awarded.

(iii) Provide the ratio of TA clients

that also received microloans, rounding

to the nearest whole number, during

each of the previous three years. If the

ratio of clients receiving TA services to

clients receiving microloans is:

(A) Between 1:1 and 1:5, 5 points will

be awarded.

(B) Between 1:6 and 1:8, 3 points will

be awarded.

(C) A ratio of either 1:9 or 1:10, 1

point will be awarded.

(4) Ability to provide technical

assistance. In addition to providing a

statistical history of their provision of

TA to microentrepreneurs,

microenterprises, and microborrowers,

applicants must provide a narrative of

not more than five pages describing the

teaching and training methods used by

the applicant organization to provide

such TA 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 (iii) of this section.

Points may be awarded for each of the

categories. The maximum number of

points under this criterion is 5.

(i) Applicants that have used more

than one method of training and TA

(e.g., 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 TA

on their clients will be awarded 2

points.

(iii) Applicants that provide evidence

that they require evaluations by the

clients of their training programs and

indicate that the average level of

evaluation scores is ‘‘good’’ or higher

will be awarded 1 point.

(5) Proposed administrative expenses

to be spent from TA grant funds. The

maximum number of points under this

criterion is 5. If the percentage of grant

funds to be used for administrative

purposes is:

(i) Less than 5 percent of the TA grant

funds, 5 points will be awarded;

(ii) Equal to 5 percent but less than 8

percent, 3 points will be awarded;

(iii) Equal to 8 percent or greater, 0

points will be awarded.

(c) Application requirements for

MDOs seeking to participate as RMAP

microlenders with 3 years or less

experience. In addition to the

information required under paragraph

(a) of this section, an applicant MDO

with 3 years or less experience that is

applying to be a microlender must

submit the information specified in

paragraphs (c)(1) through (8) of this

section. The total number of points

available under this paragraph, in

addition to the maximum of 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 loan

and grant funds. Provide goals and

milestones for planned microlending

and TA 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 five pages in

length. Up to a maximum of 10 points

will be awarded.

(2) The applicant will provide the

date that it began business as an MDO

or other provider of business education

and/or facilitator of capital. This date

will reflect when the applicant became

licensed to do business by the Secretary

of State, or tribal equivalent, in which

it is registered and engaged regularly

paid staff to conduct business on a daily

basis. If the applicant has been in

business for:

(i) More than 2 years but less than 3

years, 5 points will be awarded;

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

2 years, 3 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.

(If more than 3 full years, the applicant

must apply under the provisions for

MDOs with more than 3 years of

experience as specified in paragraph (b)

of this section.)

(3) The applicant must describe in

detail any microenterprise development

training received by it as a whole, or its

employees as individuals, to date. The

narrative may refer reviewers to already

submitted resumes to save space. The

training received will be rated on its

topical variety, the quality of the

description, and its relevance to the

organization’s strategic plan. The

applicant should not submit training

brochures or conference

announcements. Up to a maximum of 10

points will be awarded.

(4) The applicant must indicate its

current number of employees, those that

concentrate on rural

microentrepreneurial development, and

the current average caseload for each.

Indicate how the caseload ratio does or

does not optimize the applicant’s ability

to perform the services described in the

work plan. Discuss how Agency grant

funds will be used to assist with TA

program delivery and how funding of

the program loan application will affect

the portfolio. Up to 5 points will be

awarded.

(5) Applicants may submit a

maximum of five (5) letters of support

with one point awarded for each letter.

Support letters should be signed and

dated and come from potential

beneficiaries and other local

organizations. Letters received from

Congressional members and technical

assistance providers will not be

included in the count of support letters

received. Additionally, identical form

letters signed by multiple potential

beneficiaries and/or local organizations

will not be included in the count of

support letters received. The applicant

must indicate any training organizations

with which it has a working

relationship. Provide contact

information for references regarding the

applicant’s capacity to perform the work

in the plan provided. Up to a maximum

of five (5) 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 the same. Up

to 5 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 10 points will be awarded.

(8) The applicant will identify its

proposed administrative expenses to be

spent from TA grant funds. The

maximum total number of points under

this criterion is 5. If the percentage of

grant funds to be used for administrative

purposes is:

(i) Less than or equal to 5 percent of

the TA grant funds, 5 points will be

awarded;

(ii) More than 5 percent but less than

8 percent, 3 points will be awarded;

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26363

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

(iii) Equal to 8 percent or greater, 0

points will be awarded.

(d) Application requirements for

MDOs seeking TA-only grants.

Technical assistance-only grants may be

provided to MDOs that are not RMAP

microlenders seeking to provide training

and technical assistance to rural

microentrepreneurs and rural

microenterprises. An applicant seeking

a TA-only grant must submit the

information specified in paragraphs

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

total number of points available under

this section, in addition to the 45 points

available in paragraph (a) of this section,

is 55, for a total of 100 points.

(1) History of provision of TA. Each

applicant’s history of provision of TA to

microentrepreneurs and

microenterprises, and its ability to reach

diverse communities, will be scored

based on the data specified in

paragraphs (d)(1)(i) through (iii) of this

section. The maximum number of

points under this criterion is 20.

(i) Provide the total number of rural

and non-rural microentrepreneurs and

microenterprises that received both TA

services and resultant microloans for

each of the previous three years. Of this

total number, provide the percentage of

rural microentrepreneurs and rural

microenterprises that received both TA

services and resultant microloans for

each of the previous three years. If the

provision of both TA services and

resultant microloans to rural

microentrepreneurs and rural

microenterprises is demonstrated at a

rate of:

(A) 75 percent or more, 5 points will

be awarded;

(B) At least 50 percent but less than

75 percent, 3 points will be awarded;

(C) At least 25 percent but less than

50 percent, 1 point will be awarded.

(ii) Provide the percentage of the total

number of rural microentrepreneurs by

racial and ethnic minority, disabled,

and/or gender that received both

microloans and TA services for each of

the previous three years. If the

demonstrated provision of TA and

resultant microloans to these rural

microentrepreneurs when compared to

the total number of microentrepreneurs

assisted, is at a rate of:

(A) 75 percent or more, 10 points will

be awarded;

(B) At least 50 percent but less than

75 percent, 7 points will be awarded;

(C) At least 25 percent but less than

50 percent, 5 points will be awarded.

(iii) Provide the ratio of TA clients

that also received microloans during

each of the last three years, rounded to

the nearest whole number. If the ratio of

clients receiving TA to clients receiving

microloans is:

(A) Between 1:1 and 1:5, 5 points will

be awarded.

(B) Between 1:6 and 1:8, 3 points will

be awarded.

(C) Either 1:9 or 1:10, 1 point will be

awarded.

(2) Ability to provide TA. In addition

to providing a statistical history of their

provision of TA to microentrepreneurs,

microenterprises, 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 to provide

TA and discussing the outcomes of their

endeavors. The narrative will be scored

as specified in paragraphs (d)(2)(i)

through (iv) of this section. The

maximum number of points under this

criterion is 20.

(i) Applicants that have used more

than one method of training and TA

(e.g., classroom training, peer-to-peer

discussion groups, individual

assistance, and distance learning) will

be awarded 5 points.

(ii) Applicants that provide success

stories to demonstrate the effects of TA

on their clients will be awarded points

under either of the following

paragraphs, but not both:

(A) News stories that highlight

businesses made successful as a result

of the applicant’s TA; 5 points will be

awarded.

(B) Internal stories that highlight

businesses made successful as a result

of TA, 3 points.

(iii) Applicants that provide evidence

that they require evaluations by the

clients of their training programs will be

awarded 3 points. Applicants will

provide the total number of evaluations

received and the average score from the

evaluations received. An additional two

points will be awarded if the total

evaluation scores are above an average

of 3.0 on a five-point scale, with points

determined by the client ratings on a

declining scale as follows:

(A) Extremely Satisfied, 5 points.

(B) Satisfied, 4 points.

(C) Average, 3 points.

(D) Dissatisfied, 2 points.

(E) Very Unsatisfied, 1 point.

(iv) Applicants that present well-

written narrative information regarding

their programs and services to be

delivered and their outreach efforts

within the service area that is clearly

and concisely written and is five pages

or less will be awarded up to a

maximum of 5 points.

(3) Technical assistance plan. Submit

a concise plan for the provision of TA

explaining how the funds will benefit

the current program and how it will

allow the applicant to expand its non-

program microlending activities. Up to

10 points will be awarded.

(4) Proposed administrative expenses

to be spent from TA grant funds. The

maximum number of points under this

criterion is 5. If the percentage of grant

funds to be used for administrative

purposes is:

(i) Less than or equal to 5 percent of

the TA grant funds, 5 points will be

awarded;

(ii) More than 5 percent but less than

8 percent, 3 points will be awarded;

(iii) Equal to 8 percent or greater, 0

points will be awarded.

(e) Re-application requirements for

participating microlenders with more

than 5 years of experience as a

microlender under this program. (1)

Microlender applicants with more than

5 years of experience as an MDO under

this program may choose to submit a

shortened loan/grant application that

includes the following:

(i) A letter of request for funding

stating the amount of loan and/or grant

funds being requested;

(ii) An indication of the loan and/or

grant amounts being requested

accompanied by a completed Form SF

424 and any pertinent attachments;

(iii) An indication of the number and

percent of the MDO’s

microentrepreneurs and

microenterprises remaining in business

for two years or more after microloan

disbursement from program funds; 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 funding(s), will review

the overall program performance of the

applicant over the life of its

participation in the program to

determine its continued qualification for

subsequent funds. Requirements

include:

(i) A loan default rate of 5 percent or

less;

(ii) A pattern of delinquencies during

the period of participation in this

program of 10 percent or less;

(iii) A pattern of use of TA dollars that

indicates at least one in ten TA clients

receive a microloan;

(iv) A statement discussing the need

for more funding, accompanied by

account documentation showing the

amounts in each of the RMRF and LLRF

accounts established to date; and

(v) A pattern of compliance with

program reporting requirements.

(3) Shortened applications under this

section will be rated on a pass or fail

basis. Passing applications will be

assigned a score of 90 points and will

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26364

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

be ranked accordingly in the quarterly

competitions. Failing applications

under this section will be scored 0 and

experienced MDOs may be required to

complete the application requirements

of paragraph (b) of this section.

§ 4280.317 Selection of applications for

funding.

All eligible applications received will

be scored using the scoring criteria

specified in § 4280.316 and funded in

descending order from the highest total

score to applications receiving 60

points, subject to the authorization of

appropriations for the Federal FY. If two

or more applications have the same

score and available funds cannot fund

the individual projects, the

Administrator may prioritize such

applications to help the program

achieve overall geographic diversity.

(a) Timing and submission of

applications. (1) All applications must

be submitted as a complete application

in one package of materials. Packages

must be in the order of appearance in

§ 4280.315. Applications that are

disorganized or otherwise not ready for

evaluation will be returned to the

applicant and not considered for

funding.

(2) Applications will be accepted on

a continuing basis at any Rural

Development State Office and will

compete nationally for available funds

on a quarterly basis using Federal fiscal

quarters.

(3) Applications received will be

reviewed, scored, and ranked quarterly.

Unless withdrawn by the applicant, the

Agency will retain unsuccessful

applications that score 60 points or

more for consideration in subsequent

reviews, through a total of four quarterly

reviews. Applications unsuccessful after

competing for funds in four quarters

will be returned to the applicant.

(b) Availability of funds. If an

Application is received, scored, and

ranked, but insufficient funds remain to

fully fund the project, 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 project is

financially feasible at the lower amount.

(c) Applicant notification. The

Agency will notify applicants regarding

their selection or non-selection, provide

appeal rights of unsuccessful applicants,

and provide closing procedures for the

loan and/or grant awardees.

(d) Closing. Awardees unable to

complete closing for an approved

obligation within 90 days or an

extended date approved by the Agency

will forfeit their funding award in

accordance with § 4280.311(e)(9).

§ §4280.318–4280.319 [Reserved]

§ 4280.320 Grant administration.

(a) Oversight. Any MDO receiving a

grant under this program is subject to

Agency oversight, with site visits and

inspection of records occurring at the

discretion of the Agency. In addition,

MDOs receiving a grant under this

subpart must submit reports, as

specified in paragraphs (a)(1) through

(3) of this section.

(1) On a quarterly basis, within 30

days after the end of each Federal fiscal

quarter, the microlender 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:

(i) Narrative reporting information as

required by Office of Management and

Budget (OMB) circulars and successor

regulations. This narrative will include

information on the MDO’s TA, training,

and/or enhancement activity, and grant

expenses, milestones met, or unmet,

explanation of difficulties, observations

and other such information;

(ii) If requesting grant funds at the

time of reporting, an executed SF–270

form and a brief description of the

proposed activity-based expenditures

are required.

(2) If a microlender has more than one

grant from the Agency, a separate report

must be made for each grant.

(3) 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.

(b) Payments. The Agency will make

grant payments not more often than

quarterly. The first grant payment may

be made in advance and will equal no

more than one fourth of the grant award.

Other payment requests must be

submitted on Standard Form 270 and

will only be paid if the MDO’s reports

are up to date and approved.

§ 4280.321 Grant and loan servicing.

In addition to the ongoing oversight of

the participating MDOs, all grants will

be serviced in accordance with

applicable regulations, including 7 CFR

part 1951, subparts E and O, 7 CFR part

3, and the Office of Management and

Budget (OMB) regulations including,

but not limited to, 2 CFR parts 200, 215,

220, 230, and OMB Circulars A–110 and

A–133. Loans to microlenders will be

serviced in accordance with 7 CFR part

1951, subparts E, O, and R, and OMB

Circular A–129.

§ 4280.322 Loans from the microlenders to

microentrepreneurs.

The primary purpose of making a

program loan to a microlender is to

enable that microlender to make

microloans to rural microenterprises

and microentrepreneurs. It is the

responsibility of each microlender to

make microloans in such a fashion that

the terms and conditions of the

microloan will support microborrower

success while enabling the microlender

to repay its loan from the Agency. It is

the responsibility of each

microborrower to repay the microlender

in accordance with the terms and

conditions agreed to with the

microlender. The microlender is

responsible for full repayment to the

Agency of its loan regardless of the

performance of its microloan portfolio.

(a) Maximum microloan amount. The

maximum amount of a microloan made

under this program will be $50,000. The

total outstanding balance of microloans

to any microborrower may not exceed

$50,000.

(b) Microloan terms and conditions.

The terms and conditions for

microloans made by microlenders will

be negotiated between the prospective

microborrower and the microlender,

with the following limitations:

(1) No microloan may have a term of

more than 10 years;

(2) The interest rate charged to the

microborrower will be established at or

before the microloan closing and at such

a rate that the microloan is affordable to

the microborrower and provides a

reasonable margin of earnings to the

microlender.

(c) Microloan insurance requirements.

The microlender has full discretion to

require reasonable hazard, key person,

and other insurance coverage from the

microborrower as part of the loan

transaction.

(d) Credit elsewhere test.

Microborrowers will be subject to a

‘‘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

repayment terms. Each microborrower

file must contain evidence that the

microborrower has sought credit

elsewhere or that the rates and terms

available within the community at the

time were outside the range of the

microborrower’s affordability. Evidence

may include a comparison of rates, loan

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES

26365

Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Rules and Regulations

limitations, terms, or other requirements

from other funding sources. Denial

letters from other lenders are not

required.

(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 practices and Federal

nondiscrimination requirements as

stated in § 4280.305.

(f) Eligible microloan purposes.

Agency loan funds may be used to make

microloans as defined in § 4280.302 for

any legal business purpose not

identified in § 4280.323 as an ineligible

purpose. Microlenders may make

microloans for qualified business

activities and expenses including, but

not limited to:

(1) Working capital;

(2) The purchase of furniture, fixtures,

supplies, inventory or equipment;

(3) Debt refinancing;

(4) Business acquisitions; and

(5) 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 funds. Neither interior

decorating, nor the affixing of chattel to

walls, floors, or ceilings are considered

to be demolition or construction.

(g) Military personnel. Military

personnel who are or seek to be a

microentrepreneur and are on active

duty with six months or less remaining

in their active duty status may receive

a microloan and/or TA and training if

they are otherwise qualified to

participate in the program.

§ 4280.323 Ineligible microloan purposes

and uses.

Agency loan funds will not be used

for the payment of microlender

administrative costs or expenses and

microlenders may not make microloans

under the program for any of the

purposes and uses identified as

ineligible in paragraphs (a) through (n)

of this section.

(a) Construction costs including

property demolition, renovation,

elimination of walls, or property

additions.

(b) The financing of timeshares,

apartments, duplexes, or other

residential housing.

(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 close relatives, as

defined; or

(2) Financial assistance to any entity

which would appear to benefit the

microlender or its principals, directors,

or employees, or their close relatives, as

defined, in any way other than the

normal repayment of debt.

(d) Distribution or payment to a

microborrower when such will use any

portion of the microloan for other than

business purposes.

(e) Microloans to a charitable

institution not gaining sufficient

revenue from business sales or services

to support the operation and repay the

microloan.

(f) Microloans to a fraternal

organization.

(g) Any microloan to an applicant that

has an RMAP-funded microloan

application pending with another

microlender or that has an RMAP-

funded microloan outstanding with

another microlender that would cause

the applicant to owe a combined

amount of more than $50,000 to one or

more microlenders under the program.

(h) Assistance to USDA Rural

Development employees, or their close

relatives, as defined.

(i) Microloans for any illegal activity.

(j) 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.

(k) Loans supporting explicitly

religious activities, such as worship,

religious instruction or proselytization.

(l) Golf courses, race tracks, or

gambling facilities.

(m) Funding of any political or

lobbying activities.

(n) Lines of credit.

§ §4280.324–4280.399 [Reserved]

§ 4280.400 OMB control number.

The information collection

requirements contained in this subpart

have been approved by the Office of

Management and Budget (OMB) and

have been assigned OMB control

number 0570–0062. A person is not

required to respond to this collection of

information unless it displays a

currently valid OMB control number.

Mark Brodziski,

Acting Administrator, Rural Business-

Cooperative Service.

[FR Doc. 2021–10146 Filed 5–13–21; 8:45 am]

BILLING CODE 3410–XY–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA–2021–0127; Project

Identifier MCAI–2020–00829–R; Amendment

39–21557; AD 2021–10–24]

RIN 2120–AA64

Airworthiness Directives; Leonardo

S.p.a. (Type Certificate Previously Held

by Agusta S.p.A.) Helicopters

AGENCY

: Federal Aviation

Administration (FAA), DOT.

ACTION

: Final rule.

SUMMARY

: The FAA is superseding

Airworthiness Directive (AD) 2015–25–

04 for Agusta S.p.A (now Leonardo

S.p.a.) Model A109A and A109A II

helicopters. AD 2015–25–04 required

inspecting the slider assembly pitch

control (slider) for play and replacing

the slider if the play exceeds certain

limits. This AD was prompted by

further investigation that led to the

determination that the play was caused

by a manufacturing issue. This AD

retains certain requirements of AD

2015–25–04, requires replacing certain

part-numbered sliders as a terminating

action for the inspections, and prohibits

installing the affected part on any

helicopter. The FAA is issuing this AD

to address the unsafe condition on these

products.

DATES

: This AD is effective June 18,

2021.

ADDRESSES

: For service information

identified in this final rule, contact

Leonardo S.p.a. Helicopters, Emanuele

Bufano, Head of Airworthiness, Viale

G.Agusta 520, 21017 C.Costa di

Samarate (Va) Italy; telephone +39–

0331–225074; fax +39–0331–229046; or

at https://www.leonardocompany.com/

en/home. You may view this service

information at the FAA, Office of the

Regional Counsel, Southwest Region,

10101 Hillwood Pkwy., Room 6N–321,

Fort Worth, TX 76177. For information

on the availability of this material at the

FAA, call (817) 222–5110.

Examining the AD Docket

You may examine the AD docket at

https://www.regulations.gov by

searching for and locating Docket No.

FAA–2021–0127; or in person at Docket

Operations between 9 a.m. and 5 p.m.,

Monday through Friday, except Federal

holidays. The AD docket contains this

final rule, the European Union Aviation

Safety Agency (EASA) AD, any

comments received, and other

information. The address for Docket

VerDate Sep<11>2014 16:17 May 13, 2021 Jkt 253001 PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 E:\FR\FM\14MYR1.SGM 14MYR1

khammond on DSKJM1Z7X2PROD with RULES