July 21, 2022
The Small Business Administration’s Program for Investment in
Microentrepreneurs
To help address the needs of America’s smallest businesses,
Microloan technical assistance program, and that the two
the Small Business Administration (SBA) operates the
programs might compete for funding.
Program for Investment in Microentrepreneurs (PRIME).
While 97% of all American employer firms meet the SBA’s
PRIME’s authorization is not in the Small Business Act of
definition of a small business, some may have hundreds of
1953 (Small Business Act, P.L 83-163, as amended)
employees or generate tens of millions of dollars in
although a number of legislative proposals have sought to
receipts. Services and support tailored for those businesses
change that. For example, the House-passed Microloan
may not be effective for very small businesses. PRIME
Amendments and Modernization Act, introduced in 2007 as
grant awards facilitate technical assistance and other efforts
H.R. 3020, would have transferred PRIME’s statutory
in support of microenterprises, or businesses with fewer
authority to the Small Business Act. Some Members of
than five employees and that generally lack access to
Congress stated that the move would have no direct impact
conventional loans, equity, or other banking services. A
on PRIME’s operation, noting that the program was already
majority of PRIME awards are statutorily required to target
run by the SBA, but would give the agency explicit
disadvantaged entrepreneurs.
statutory authority over PRIME. Some Members also
argued that transferring statutory authority to the Small
SBA annually awards PRIME grants to nonprofit
Business Act would consolidate all federal elements of
microenterprise development organizations (MDOs) and
microenterprise assistance in one legislative vehicle and
other intermediaries that then use the funds for technical
allow for streamlined congressional oversight. The Small
assistance to microenterprises and other related purposes,
Business Lending Reauthorization and Improvements Act
including:
of 2007 (S. 1256) and the SBA Reauthorization and
Improvement Act of 2008 (S. 2920) also would have
training and technical assistance for disadvantaged
transferred PRIME’s statutory authority to the Small
microentrepreneurs;
Business Act.
training and capacity building services for MDOs, as
Some proposed legislation would have increased PRIME’s
well as programs helping MDOs develop
reporting requirements. In 2005, the SBA Microenterprise
microenterprise training and services;
Improvements Act (S. 138) would have required PRIME
awardees to submit an annual activities report to the SBA
development and sharing of best practices in the field of
and collect data on individuals receiving counseling or
microenterprise development, and technical assistance
training and related information.
programs for disadvantaged microentrepreneurs; and
In a final rule issued on October 6, 2020, the SBA repealed
other activities determined to be consistent with
19 regulations related to PRIME. The SBA determined that
PRIME’s goals.
these regulations duplicated guidance provided elsewhere,
including in statute, SBA’s annual notice of funding
Most recently, in FY2021, the SBA awarded $5.2 million in
opportunity, and government-wide grant regulations.
PRIME grants to 27 intermediary organizations which then
assisted 12,700 microenterprises. Since FY2018, PRIME
PRIME Award Uses
awards have ranged from $75,000 to $250,000.
SBA awards PRIME grants to MDOs and other
intermediaries primarily to provide technical assistance to
History
disadvantaged microentrepreneurs. Disadvantaged
The Gramm-Leach-Bliley Act (P.L. 106-102) authorized
microentrepreneurs are statutorily defined as either:
PRIME in 1999 when it amended the Riegle Community
Development and Regulatory Improvement Act of 1994
a low-income person, which for a metropolitan area is
(P.L. 103-325) and directed the SBA to “establish a
someone with a maximum income of 80% of the area
microenterprise technical assistance and capacity building
median income; and for a nonmetropolitan area is
grant program.” In debate on the bill, some Members of
someone with a maximum income the greater of either
Congress argued that technical assistance for
80% of the area median income or 80% of the statewide
microenterprises was critical to small business development
nonmetropolitan area median income;
and that microenterprise development had helped lift some
individuals out of poverty. Other Members noted that
a very low-income person, which is someone with a
PRIME’s goals seemed similar to the SBA’s existing
maximum income of 150% of the poverty line; or
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The Small Business Administration’s Program for Investment in Microentrepreneurs
an entrepreneur lacking adequate access to capital or
that year to the challenge of shifting from in-person to
other resources, or who is economically disadvantaged,
remote, virtual services in response to the COVID-19
as determined by the SBA Administrator.
pandemic.
At least 50% of PRIME awards made must be used to
Congress has regularly debated whether PRIME duplicates
benefit very low-income persons, including those living on
other SBA programs, specifically the technical assistance
Native American reservations. At least 75% of PRIME
provided through its Microloan Program. As mentioned
grant funds must be used for technical assistance to
earlier, some Members of Congress noted the similarity
disadvantaged entrepreneurs, and at least 15% must be used
between the two programs when PRIME was authorized.
for training and capacity building services. No single
Like PRIME, one of the goals of the Microloan Program is
grantee (meaning an MDO or intermediary) may receive
capacity building. In its budget requests from FY2012 to
more than $250,000 or 10% of the total funds made
FY2017, the Obama Administration requested no funding
available for the program in one fiscal year, whichever is
for PRIME, arguing it duplicated the Microloan technical
less. For F2023, House-passed H.R. 8294 recommends that
assistance program. The Trump Administration also
PRIME receive $10 million in funding, and the SBA
requested no funding for PRIME in its budget requests for
estimated it would award $7 million in grants for FY2022.
FY2018 to FY2021. PRIME did continue to receive an
Grants require a 50% match for each dollar awarded. The
annual appropriation during these periods.
match can be made in cash or in-kind contributions. Figure
1 presents the number of PRIME grants and total dollars
Considerations for Congress
awarded for FY2014 to FY2021.
Congress may wish to consider whether PRIME could
benefit from additional reporting requirements or
Figure 1.PRIME Grant Awards, FY2014-F2021
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
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
determine if PRIME was duplicative of other programs.
Source: U.S. Smal Business Administration, PRIME Grantees.
When PRIME fell short of its targeted number of small
businesses assisted in FY2021, the SBA determined that the
The SBA tracks the number of small businesses assisted
cause was the difficulty of providing remote services
through PRIME, and the target number it seeks to assist.
necessitated by the COVID-19 pandemic. Congress may
Those numbers are presented in Figure 2.
wish to determine if the provision of remote services is
likely to be a long-term necessity, and if and how PRIME
Figure 2.Small Businesses Assisted Through 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
CRS Report R41352, Small Business Management and
Technical Assistance Training Programs.
Source: U.S. Smal Business Administration, FY2023 Congressional
CRS Report R43846, Small Business Administration (SBA)
Budget Justification FY2021 Annual Performance Report.
Funding: Overview and Recent Trends.
As shown, the SBA met its target each year since FY2018
Adam G. Levin, Analyst in Economic Development Policy
except for FY2021. The SBA attributed the missed target
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The Small Business Administration’s Program for Investment in Microentrepreneurs
IF12176
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