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Updated November 27, 2023
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. (“Disadvantaged
statutory authority over PRIME. Some Members also
entrepreneurs” are defined in statute—see “PRIME Award
argued that transferring statutory authority to the Small
Uses and Funding.”)
Business Act would consolidate all federal elements of
microenterprise assistance in one legislative vehicle and
SBA annually awards PRIME grants to nonprofit
allow for streamlined congressional oversight. The Small
microenterprise development organizations (MDOs) and
Business Lending Reauthorization and Improvements Act
other intermediaries that then use the funds for training and
of 2007 (S. 1256) and the SBA Reauthorization and
technical assistance to microenterprises and other related
Improvement Act of 2008 (S. 2920) also would have
purposes, including:
transferred PRIME’s statutory authority to the Small
Business Act.
• training and capacity building services for MDOs, as
well as programs helping MDOs develop
Some proposed legislation would have increased PRIME’s
microenterprise training and services;
reporting requirements. In 2005, the SBA Microenterprise
Improvements Act (S. 138) would have required PRIME
• development and sharing of best practices in the field of
awardees to submit an annual activities report to the SBA
microenterprise development; and
and collect data on individuals receiving counseling or
training and related information.
• other activities determined to be consistent with
PRIME’s goals.
In a final rule issued on October 6, 2020, the SBA repealed
19 regulations related to PRIME. The SBA determined that
Most recently, in FY2023, the SBA awarded $8 million in
these regulations duplicated guidance provided elsewhere,
PRIME grants to 32 intermediary organizations. In
including in statute, SBA’s annual notice of funding
FY2022, the most recent year for which data is available,
opportunity, and government-wide grant regulations.
PRIME intermediaries assisted 15,489 microenterprises.
Since FY2018, PRIME awards have generally ranged from
PRIME Award Uses and Funding
$50,000 to $400,000.
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
As shown, the SBA met its target each year from FY2018
other resources, or who is economically disadvantaged,
to FY2020, but missed its target in FY2021 and FY2022. In
as determined by the SBA Administrator.
its FY2023 Congressional Budget Justification, the SBA
attributed the missed target in these years to the challenge
At least 50% of PRIME awards made must be used to
of shifting from in-person to remote, virtual services in
benefit very low-income persons, including those living on
response to the COVID-19 pandemic.
Native American reservations. At least 75% of PRIME
grant funds must be used for technical assistance to
Congress has regularly debated whether PRIME duplicates
disadvantaged entrepreneurs, and at least 15% must be used
other SBA programs, specifically the technical assistance
for training and capacity building services. No single
provided through the SBA’s Microloan Program. As
grantee (meaning an MDO or intermediary) may receive
mentioned earlier, some Members of Congress noted the
more than 10% of the total funds made available for the
similarity between the two programs when PRIME was
program in one fiscal year. Grants require a 50% match for
authorized. Like PRIME, one of the goals of the Microloan
each dollar awarded. The match can be made in cash or in-
Program is capacity building. In its budget requests from
kind contributions.
FY2012 to FY2017, the Obama Administration requested
no funding for PRIME, arguing it duplicated the Microloan
For FY2024, H.R. 4664 recommended PRIME receive $7
technical assistance program. The Trump Administration
million in appropriations, while S. 2309 recommended
also requested no funding for PRIME in its budget requests
PRIME receive $8 million. (In FY2023, P.L. 117-328
for FY2018 to FY2021. PRIME continued to receive an
appropriated $8 million for PRIME.) Figure 1 presents the
annual appropriation during these periods.
number of PRIME grants and total dollars awarded for
FY2014 to FY2023.
Considerations for Congress
Congress may wish to consider whether PRIME could
Figure 1. PRIME Grant Awards, FY2014-FY2023
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
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
Source: SBA, PRIME Grantees.
determine if PRIME was duplicative of other programs.
When PRIME fell short of its targeted number of small
The SBA tracks the number of small businesses assisted
businesses assisted in FY2021 and FY2022, the SBA
through PRIME, and the target number it seeks to assist.
determined that the cause was the difficulty of providing
Figure 2 presents those numbers.
remote services necessitated by the COVID-19 pandemic.
Congress may wish to determine if the provision of remote
Figure 2. Small Businesses Assisted Through PRIME,
services is likely to be a long-term necessity, and if and
FY2018-FY2022
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
CRS Report R41352, Small Business Management and
Technical Assistance Training Programs.
Source: SBA, FY2024 Congressional Budget Justification FY2022 Annual
Performance Report.
Adam G. Levin, Analyst in Economic Development Policy
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The Small Business Administration’s Program for Investment in Microentrepreneurs
IF12176
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