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

This section of the FEDERAL REGISTER
contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.

DEPARTMENT OF AGRICULTURE
Rural Business-Cooperative Service 7 CFR Part 4280
Docket Number: RBS20BUSINESS0044
RIN 0570AB02

Rural Microentrepreneur Assistance Program Rural Business-Cooperative Service, Department of Agriculture USDA.
ACTION: Final rule; confirmation.
AGENCY:

The Rural BusinessCooperative Service, a Rural Development agency of USDA, hereinafter referred to as RBCS or the Agency, published in the Federal Register on May 14, 2021, a final rule with request for comments. This document presents the opportunity for the Agency to provide its responses to the public comments received on the final rule and to confirm the final rule as published.
DATES: October 4, 2021.
FOR FURTHER INFORMATION CONTACT:
David Chestnut, Program Management Division, U.S. Department of Agriculture, 1400 Independence Avenue SW, Washington, DC 202503201;
telephone: 202 6925233; email:
david.chestnut@usda.gov.
SUPPLEMENTARY INFORMATION: RBCS
published a final rule with request for comments in the Federal Register on May 14, 2021, at 86 FR 26348. The final rule modified the interim rule with comment published in the Federal Register on May 28, 2010 75 FR 30114, as amended by the correcting amendments published in the Federal Register on July 19, 2010 75 FR 41695, and incorporated amendments to the Consolidated Farm and Rural Development Act ConAct made by the Agriculture Improvement Act of 2018
2018 Farm Bill. The Agency implemented other changes to make the SUMMARY:

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Rural Microentrepreneur Assistance Program RMAP run more efficiently, be more user-friendly and be more consistent with other RBCS programs.
Within the preamble to the final rule, the Agency addressed each of the 29
public comments that were received on the interim rule. RBCS carefully reviewed each of the comments and modified the regulation based on analysis of the responsive comments received as well as program delivery experience. The final rule allowed the Agency to: a Implement changes required by the 2018 Farm Bill, b address comments received after publication of the interim rule, and c implement the final regulation.
Due to the length of time that transpired between the publication of the interim rule and the final rule, the Agency invited comments from the public on the provisions outlined in the final rule. The comment period on the final rule closed July 13, 2021.
Comments were received from four respondents. The comments provided and Agency responses are as follows:
Comment: All the mandatory grants should be funded at the authorized 25
percent of the loan balances. We support this change. It can be difficult for financial intermediaries to secure adequate funding for technical assistance programs. This is a concern for any potential MDO that may consider utilizing the RMAP program for the first time. The adjustment recorded here will help minimize a clear disincentive by making it easier for a new entrant to manage necessary costs.
Agency Response: The Agency agrees and the regulation at 4280.313a was modified to allow for microlenders to receive up to 25 percent of their new loan amount as a technical assistance grant. Previously, this was limited to 25
percent of the first $400,000, then 5
percent of any amount above $400,000.
The 2018 Farm Bill amended Section 379E of the Consolidated Farm and Rural Development Act Contact to require that annual grant amounts to Microenterprise Development Organizations MDOs be in an amount equal to not less than 20 percent and not more than 25 percent of the total outstanding balance of microloans made by MDOs. The Agency clarified the annual grant process at 4280.313a1
to enact this change. The previous
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regulation did not have a minimum threshold percentage for the replenishment of an MDOs technical assistance funds.
Comment: USDA should relinquish its first lien position on all funds in the Rural Microentrepreneur revolving fund except those derived from the Rural Microenterprise loan itself. We recommend that USDA implement a process by which MDOs can request a drawdown of accumulated interest earnings within the Rural Microentrepreneur Revolving Fund RMRF. The collateral provided to USDA by the cash in the RMRF, the loans outstanding, and the cash in the Loan Loss Reserve Fund LLRF, should be adequate to protect USDA from losses. MDOs typically use the interest earnings from microloans to help cover costs of operating programs. Because USDA maintains a first lien position on all assets in the RMRF and does not provide a process by which MDOs can request a drawdown of accumulated earnings, MDOs are unable to use earnings from RMAP loans to help cover operating costs. This may dissuade some MDOs from utilizing the RMAP
program, and we have heard at least one MDO identify this as the reason they left the program.
Agency Response: The Agency disagrees with the release of its lien position in the revolving loan funds.
The accounts serve as collateral for the Agency loan to the MDO, which is a debt obligation of the MDO and protects the Agency in cases of default by the MDO. The Agency disagrees with the commenter that MDOs are unable to use earnings from RMAP loans to help cover costs of operating programs. MDOs may use interest and fee earnings to make principal and interest payments to the Agency loan and to help cover operating costs in accordance with their annual operating budget. In addition, the Agency does permit the use of up to 10
percent of their technical assistance grant funds for administrative expenses from which they can operate their RMAP and other programs.
Comment: The current methodology of calculating the annual MDO grant based on the amount of outstanding loan balances is inadequate. We recommend an adjustment to the methodology used to calculate the annual technical assistance grants to MDOs. At current, USDA calculates the
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