Small Business Administration’s Program for Investment in Microentrepreneurs — IF12176 (October 15, 2024)

Summary

A Congressional Research Service product, IF12176, updated October 15, 2024, titled "The Small Business Administration's Program for Investment in Microentrepreneurs," by Adam G. Levin. It explains that PRIME grants go to microenterprise development organizations and other intermediaries for technical assistance to disadvantaged microentrepreneurs, and that the Gramm-Leach-Bliley Act (P.L. 106-102) authorized PRIME in 1999. It reports that in FY2024 the SBA awarded $7 million in PRIME grants to 28 intermediary organizations and that in FY2023 intermediaries assisted 15,462 microenterprises. It notes the SBA missed its assistance target in FY2021, FY2022, and FY2023, citing the shift to remote services during the COVID-19 pandemic, and discusses duplication with the Microloan Program.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Cite this document

“Small Business Administration’s Program for Investment in Microentrepreneurs — IF12176 (October 15, 2024).” Original at www.congress.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/if12176-26-656430703c/, SHA-256 9fb2896a903083173f8ac8db2653b797af8d3be8f4e1768ce13eb01cfd46694b.

Full text

Updated October 15, 2024
The Small Business Administration’s Program for Investment in
Microentrepreneurs
To help address the needs of America’s smallest businesses, PRIME’s authorization is not in the Small Business Act of
the Small Business Administration (SBA) operates the 1953 (Small Business Act, P.L. 83-163, as amended),
Program for Investment in Microentrepreneurs (PRIME). although a number of legislative proposals have sought to
While 97% of all American employer firms meet the SBA’s change that. For example, the House-passed Microloan
definition of a small business, some may have hundreds of Amendments and Modernization Act, introduced in 2007 as
employees or generate tens of millions of dollars in H.R. 3020, would have transferred PRIME’s statutory
receipts. Services and support tailored for those businesses authority to the Small Business Act. Some Members of
may not be effective for very small businesses. PRIME Congress stated that the move would have no direct impact
grant awards facilitate technical assistance and other efforts on PRIME’s operation, noting that the program was already
in support of microenterprises, or businesses with fewer run by the SBA, but would give the agency explicit
than five employees and that generally lack access to statutory authority over PRIME. Some Members also
conventional loans, equity, or other banking services. A argued that transferring statutory authority to the Small
majority of PRIME awards are statutorily required to target Business Act would consolidate all federal elements of
disadvantaged entrepreneurs. (“Disadvantaged microenterprise assistance in one legislative vehicle and
entrepreneurs” are defined in statute—see “PRIME Award allow for streamlined congressional oversight. The Small
Uses and Funding.”) Business Lending Reauthorization and Improvements Act
of 2007 (S. 1256) and the SBA Reauthorization and
SBA annually awards PRIME grants to nonprofit Improvement Act of 2008 (S. 2920) also would have
microenterprise development organizations (MDOs) and transferred PRIME’s statutory authority to the Small
other intermediaries that then use the funds for training and Business Act.
technical assistance to microenterprises and other related
purposes, including Some proposed legislation would have increased PRIME’s
reporting requirements. In 2005, the SBA Microenterprise
• training and capacity building services for MDOs, as Improvements Act (S. 138 and H.R. 2640) would have
well as programs helping MDOs develop required PRIME awardees to submit an annual activities
microenterprise training and services; report to the SBA and collect data on individuals receiving
counseling or training and related information.
• development and sharing of best practices in the field of
microenterprise development; and In a final rule issued on October 6, 2020, the SBA repealed
19 regulations related to PRIME. The SBA determined that
• other activities determined to be consistent with these regulations duplicated guidance provided elsewhere,
PRIME’s goals. including in statute, SBA’s annual notice of funding
opportunity, and government-wide grant regulations.
Most recently, in FY2024, the SBA awarded $7 million in
PRIME grants to 28 intermediary organizations. In FY2023 PRIME Award Uses and Funding
PRIME intermediaries assisted 15,462 microenterprises. SBA awards PRIME grants to MDOs and other
Since FY2018, PRIME awards have generally ranged from intermediaries primarily to provide technical assistance to
$50,000 to $400,000. disadvantaged microentrepreneurs. Disadvantaged
microentrepreneurs are statutorily defined as either
History
The Gramm-Leach-Bliley Act (P.L. 106-102) authorized • a low-income person, which for a metropolitan area is
PRIME in 1999 when it amended the Riegle Community someone with a maximum income of 80% of the area
Development and Regulatory Improvement Act of 1994 median income; and for a nonmetropolitan area is
(P.L. 103-325) and directed the SBA to “establish a someone with a maximum income the greater of either
microenterprise technical assistance and capacity building 80% of the area median income or 80% of the statewide
grant program.” In debate on the bill, some Members of nonmetropolitan area median income;
Congress argued that technical assistance for
microenterprises was critical to small business development • a very low-income person, which is someone with a
and that microenterprise development had helped lift some maximum income of 150% of the poverty line; or
individuals out of poverty. Other Members noted that
PRIME’s goals seemed similar to the SBA’s existing • an entrepreneur lacking adequate access to capital or
Microloan technical assistance program, and that the two other resources, or who is economically disadvantaged,
programs might compete for funding. as determined by the SBA Administrator.
https://crsreports.congress.gov
The Small Business Administration’s Program for Investment in Microentrepreneurs

At least 50% of PRIME awards made must be used to the SBA attributed the missed target in these years to “the
benefit very low-income persons, including those living on difficulty of grantees changing their delivery, which
Native American reservations. At least 75% of PRIME previously relied on face-to-face and group training, to a
grant funds must be used for technical assistance to remote model” in response to the COVID-19 pandemic.
disadvantaged entrepreneurs, and at least 15% must be used
for training and capacity building services. No single Congress has regularly debated whether PRIME duplicates
grantee (meaning an MDO or intermediary) may receive other SBA programs, specifically the technical assistance
more than 10% of the total funds made available for the provided through the SBA’s Microloan Program. As
program in one fiscal year. Grants require a 50% match for mentioned earlier, some Members of Congress noted the
each dollar awarded. The match can be made in cash or in- similarity between the two programs when PRIME was
kind contributions. authorized. Like PRIME, one of the goals of the Microloan
Program is capacity building. In its budget requests from
For FY2024, P.L. 118-47 recommended PRIME receive $7 FY2012 to FY2017, the Obama Administration requested
million in appropriations. (In FY2023, P.L. 117-328 no funding for PRIME, arguing it duplicated the Microloan
recommended $8 million for PRIME.) Figure 1 presents technical assistance program. The Trump Administration
the number of PRIME grants and total dollars awarded for also requested no funding for PRIME in its budget requests
FY2015 to FY2024. for FY2018 to FY2021. PRIME continued to receive an
annual appropriation during these periods.
Figure 1. PRIME Grant Awards, FY2015-FY2024
Considerations for Congress
Congress may wish to consider whether PRIME could
benefit from additional reporting requirements or
evaluation. There do not appear to have been any publicly
available evaluations of PRIME, either by the federal
government or third parties. Additionally, the number of
small businesses assisted through PRIME is the only metric
publicly reported by the SBA. Congress has previously
considered requiring additional metrics, as in the SBA
Microenterprise Improvements Act.

Additional metrics for PRIME could also help Congress
consider the question of possible duplication, particularly
with SBA’s Microloan technical assistance program. For
Source: SBA, PRIME Grantees. example, PRIME could be required to track and report how
often each specific type of assistance was provided. This
level of granularity could help SBA and Congress
The SBA tracks the number of small businesses assisted determine if PRIME was duplicative of other programs.
through PRIME, and the target number it seeks to assist.
Figure 2 presents those numbers. When PRIME fell short of its targeted number of small
businesses assisted in FY2021, FY2022, and FY2023, the
Figure 2. Small Businesses Assisted Through PRIME, SBA determined that the cause was the difficulty of
FY2018-FY2023 providing remote services necessitated by the COVID-19
pandemic. Congress may wish to determine how large of a
benefit may be derived from the long-term provision of
remote services, and if and how PRIME can be adjusted to
accommodate that. For example, one of the allowable uses
of PRIME awards is for developing best practices for
microenterprise technical assistance. These awards could be
put toward research into developing remote technical
assistance support. However, at most 10% of PRIME
awards may be put toward this type of use. If Congress
determines there is a need for additional research into best
practices, the percentage of allowable funding for that use
could be increased, either permanently or temporarily.

Additional Reading
Source: SBA, FY2025 Congressional Budget Justification FY2023 Annual CRS Report R41352, Small Business Management and
Performance Report. Technical Assistance Training Programs.

As shown, the SBA met its target each year from FY2018 Adam G. Levin, Analyst in Economic Development Policy
to FY2020, but missed its target in FY2021, FY2022, and IF12176
FY2023. In its FY2025 Congressional Budget Justification,

https://crsreports.congress.gov
The Small Business Administration’s Program for Investment in Microentrepreneurs

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF12176 · VERSION 26 · UPDATED

File and source

File: IF12176.26.pdf
Size: 539,764 bytes
SHA-256: 9fb2896a903083173f8ac8db2653b797af8d3be8f4e1768ce13eb01cfd46694b
Our copy: IF12176.26.pdf
Original: www.congress.gov