CRSReport
Federal Credit Assistance and Grant Programs for Rural Businesses
- Congress
- Not available yet...
- Report Number
- R47438
- Report Type
- Reports
- Report Version
- 2
- Date
- Apr 15, 2026
- Update Date
- Apr 18, 2026
- Title
- Federal Credit Assistance and Grant Programs for Rural Businesses
- Summary
- More than 366,000 businesses are located in rural areas across the United States, employing more than 4.4 million workers according to the U.S. Census Bureau’s 2023 Economic Survey. Many rural entrepreneurs face challenges accessing capital to help start, expand, and modernize their businesses. Federal agencies administer credit assistance and grant programs to help fill the private market capital gap for rural businesses. The federal agencies administering these programs are the U.S. Department of Agriculture (USDA), U.S. Small Business Administration (SBA), and the U.S. Department of Commerce’s Economic Development Administration (EDA), as well as the Appalachian Regional Commission (ARC), a federal regional commission. USDA administers six programs that help rural businesses access capital through the Rural Business-Cooperative Service by supporting revolving loan funds, issuing loan guarantees, and providing grants to eligible rural businesses. Revolving loan funds are funds setup to issue loans to qualified entities. When the entities repay the loans, a portion of that payment is put back into the fund and further loans are made. The USDA programs that support revolving loan funds are the Intermediary Relending Program, Rural Economic Development Loan and Grant Program, and Rural Microentrepreneur Assistance Program. The Business and Industry Loan Guarantee Program provides loan guarantees for projects that develop rural businesses and rural industries in rural communities. USDA administers two programs that provide grants to rural businesses. The Value-Added Producer Grant Program provides grants to agricultural producers to help them generate new value-added agricultural products, expand their marketing for existing products, and improve the profitability of their businesses. The Healthy Food Financing Initiative provides loans, grants, and technical assistance to eligible retailers and enterprises of fresh, healthy foods to help them overcome the higher costs associated with entering into rural communities that are low-income and have limited access to healthy foods. The SBA administers three loan programs that help small businesses access capital to start, maintain, and expand operations. The 7(a) Program is the SBA’s primary loan guarantee program. Typically, a prospective borrower will work with a private lender to obtain a business loan. If the lender thinks that the business’s plan for the loan is sound but aspects of the application are lacking, the lender can ask the SBA to guarantee a portion of the loan (typically 50%-90%). The 504/Certified Development Company (CDC) Loan Program is another SBA loan guarantee program. To be eligible for this program, an individual project must have three sources of funding: up to 40% from a CDC that is fully guaranteed by the SBA, at least 50% from an unrelated private lender with no SBA guarantee, and at least 10% from the borrower’s own funds. The Microloan Program offers loans of up to $50,000 made by nonprofit intermediary lenders. EDA and ARC also administer programs that provide certain rural and non-rural eligible businesses with access to capital. EDA funding supports approximately 400 revolving loan fund programs across the 50 states, District of Columbia, Puerto Rico, tribal lands, and U.S. territories. Through its Economic Adjustment Assistance program, EDA makes grants to eligible recipients so that they may capitalize revolving loan funds. ARC grants support access to capital projects across the Appalachian Region. Three ARC grant programs are available for access to capital activities: the Area Development, Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) Initiative, and Appalachian Regional Initiative for Stronger Economies (ARISE) programs. The federal government’s role in providing credit assistance to rural businesses remains a topic of debate. Congress may consider whether to scale-back the federal role in providing credit assistance and instead use federal policy strategies to build the capacity of local banks to meet rural business needs. Congress may also consider a range of options related to USDA credit assistance programs through a farm bill, such as increasing or decreasing loan limits, adjusting eligibility criteria, or targeting financing for rural businesses in certain industries. In addition, Congress may decide whether to limit eliminate the USDA business programs.