[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR119]
[Page 207-215]
TITLE 13--BUSINESS CREDIT AND ASSISTANCE
CHAPTER I--SMALL BUSINESS ADMINISTRATION
PART 119_PROGRAM FOR INVESTMENT IN MICROENTREPRENEURS (``PRIME'' OR
``THE ACT'')--Table of Contents
Sec.
119.1 What is the Program for Investment in Microentreprenuers
(``PRIME'' or ``the Act'')?
119.2 Definitions.
119.3 What types of organizations are eligible for PRIME grants?
119.4 What services or activities must PRIME grant funds be used for?
119.5 How are PRIME grant awards allocated?
119.6 What are the minimum and maximum amounts for an award?
119.7 How long and for what amounts will grant funding be available to a
single grantee?
119.8 Are there matching requirements for grantees?
119.9 How will a qualified organization apply for PRIME grant awards?
119.10 Will SBA give preferential consideration to other SBA program
participants?
119.11 What information will be requested in an application under the
PRIME program?
119.12 What criteria will SBA use to evaluate applications for funding
under the PRIME program?
119.13 How will an applicant make a subgrant?
119.14 Are there limitations regarding the use of program income?
119.15 If a grantee is unable to spend the entire amount allotted for a
single fiscal year, can the funds be carried over to the next
year?
119.16 What are the reporting, record keeping, and related requirements
for grantees?
119.17 What types of oversight will SBA provide to grantees?
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119.18 What are the restrictions against lobbying?
119.19 Is fundraising an allowable expense under the PRIME program?
119.20 Should grantees and subgrantees raise conflict of interest
matters with SBA?
Authority: 15 U.S.C. 634(b)(6) and Pub. L. 106-102.
Source: 66 FR 29013, May 29, 2001, unless otherwise noted.
Sec. 119.1 What is the Program for Investment in Microentrepreneurs
(``PRIME'' or ``the Act'')?
PRIME authorizes SBA to make grants to ``qualified organizations''
to fund training and technical assistance for disadvantaged
entrepreneurs, build these organizations' own capacity to give training
and technical assistance, fund research and development of ``best
practices'' in microenterprise development and technical assistance
programs for disadvantaged microentrepreneurs, and to fund other
undertakings the Administrator or designee deems consistent with these
purposes.
Sec. 119.2 Definitions.
For the purposes of this part, the following definitions apply:
Capacity Building Grant means a grant made under the Act identified
under Sec. 119.4(b).
Capacity building services means services provided to an
organization or program that is currently, or is developing as, a
microenterprise development organization or program, for the purpose of
enhancing its ability to provide training and technical assistance to
disadvantaged microentrepreneurs.
Collaborative means two or more nonprofit entities that agree to act
jointly as a qualified organization under this part.
Developer means a person interested in starting or acquiring a
microenterprise.
Disadvantaged entrepreneur, or disadvantaged microentrepreneur,
means the owner, majority owner, or developer, of a microenterprise who
is also--
(1) A low-income person;
(2) A very low-income person; or
(3) An entrepreneur who lacks adequate access to capital or other
resources essential for business success, or is economically
disadvantaged, as defined in this part.
Discretionary Grant means a grant made under the Act identified
under Sec. 119.4(d).
Economically disadvantaged entrepreneur, or economically
disadvantaged microentrepreneur, means an owner, majority owner, or
developer of a microenterprise whose ability to compete in the free
enterprise system has been impaired due to diminished capital and credit
opportunities as compared to others in the industry such that his or her
ownership of a small business would help to qualify the small business
for assistance under section 7(j) or section 8(a) programs of the Small
Business Act.
Grantee means a recipient of a grant under the Act.
Group has the same meaning as ``collaborative'' as defined in this
section.
Indian tribe means any Indian tribe, band, pueblo, nation, or other
organized group or community, including any Alaska Native village or
regional or village corporation, as defined in or established pursuant
to the Alaska Native Claims Settlement Act, which is recognized as
eligible for the special programs and services the United States
provides to Indians because of their status as Indians.
Indian tribe jurisdiction means Indian country, as defined in 18
U.S.C. 1151, and any other lands, title to which is either held by the
United States in trust for the benefit of any Indian tribe or individual
or held by any tribe or individual subject to a restriction by the
United States against alienation, and any land held by Alaska Native
groups, regional corporations, and village corporations, as defined in
or established under the Alaska Native Claims Settlement Act, public
domain Indian allotments, and former Indian reservations in the State of
Oklahoma.
Intermediary means a private, nonprofit entity serving or seeking to
serve microenterprise development organizations or programs identified
under Sec. 119.3.
Large microenterprise development organization or program means a
microenterprise development organization or program with 10 or more full
time employees or equivalents, including its
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executive director, as of the date it files its application with SBA for
a PRIME grant.
Local community means an identifiable area and population
constituting a political subdivision of a state.
Low-income person means a person having an income, adjusted for
family size, of not more than--
(1) For metropolitan areas, 80 percent of the median income; and
(2) For non-metropolitan areas, the greater of--
(i) 80 percent of the area median income; or
(ii) 80 percent of the statewide non-metropolitan area median
income.
Microenterprise means a sole proprietorship, partnership or
corporation that--
(1) Has fewer than 5 employees, including the owner; and
(2) Generally lacks access to conventional loans, equity, or other
banking services.
Microenterprise development organization or program means a
nonprofit entity, or a program administered by such an entity, including
community development corporations or other nonprofit development
organizations and social service organizations, that provides services
to disadvantaged microentrepreneurs.
Qualified organization means an organization eligible for a PRIME
grant identified under Sec. 119.3.
Research and Development Grant means a grant made under the Act
identified under Sec. 119.4(c).
Severe constraints on available sources of matching funds means the
documented inability of a qualified organization applying for a PRIME
grant to raise matching funds or in-kind resources from non-Federal
sources during the 2 years immediately prior to the date of its
application because of a lack of or increased scarcity of monetary or
in-kind resources from potential non-Federal sources.
Small microenterprise development organization or program means a
microenterprise development organization or program with less than 10
full time employees or equivalents, including its executive director, as
of the date it files its application with SBA for a PRIME grant.
Technical Assistance Grant means a grant made under the Act
identified under Sec. 119.4(a).
Training and technical assistance means services and support
provided to disadvantaged entrepreneurs, such as, but not limited to,
assistance intended to enhance business planning, marketing, management,
financial management skills, business operations, or assistance for the
purpose of increasing access to loans and other financial services.
Very low-income person means having an income adjusted for family
size of not more than 150 percent of the poverty line, as defined in
section 673(2) of the Community Services Block Grant Act, 42 U.S.C.
9902(2), including any revision required by that section.
Sec. 119.3 What types of organizations are eligible for PRIME grants?
An organization eligible for a PRIME grant (``qualified
organization'') is one that is:
(a) A microenterprise development organization or program as defined
in Sec. 119.2(q) (or a group or collaborative thereof) that has a
demonstrated record of delivering microenterprise services to
disadvantaged microentrepreneurs;
(b) An intermediary, as defined in Sec. 119.2(l);
(c) A microenterprise development organization or program as defined
in Sec. 119.2(q) that is accountable to a local community, working with
a State or local government or Indian tribe; or
(d) An Indian tribe acting on its own, if the Indian tribe can
certify that no private organization or program referred to in
paragraphs (a), (b) and (c) of this section exists within its
jurisdiction.
Sec. 119.4 What services or activities must PRIME grant funds be used
for?
A recipient of a PRIME grant (``grantee'') must use PRIME grants
to--
(a) Provide training and technical assistance to disadvantaged
microentrepreneurs (``Technical Assistance Grant'');
(b) Provide training and capacity building services to
microenterprise
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development organizations and programs to assist them to develop
microenterprise training and services (``Capacity Building Grant'');
(c) Aid in researching and developing the best practices in the
field of microenterprise development and technical assistance programs
for disadvantaged microentrepreneurs (``Research and Development
Grant''); or
(d) Conduct such other activities as the Administrator or designee
determines to be consistent with the purposes of the Act
(``Discretionary Grant'').
Sec. 119.5 How are PRIME grant awards allocated?
(a) At least 50 percent of the number of grant awards made under
this part will be awarded to qualified organizations that benefit very
low-income persons, including those residing on Indian reservations. In
general, SBA will make grant award decisions to serve diverse
populations by including as recipients both large and small
microenterprise development organizations, and organizations serving
urban, rural, and Indian tribal communities.
(b) SBA will allocate the funding available for awards as follows:
(1) A minimum of 75 percent for Technical Assistance Grants;
(2) A minimum of 15 percent for Capacity Building Grants; and
(3) The remaining 10 percent or less may be allocated by SBA, in its
sole discretion to be used for:
(i) Research and Development Grants; or
(ii) Discretionary Grants.
Sec. 119.6 What are the minimum and maximum amounts for an award?
(a) The minimum grant award for Technical Assistance and Capacity
Building Grants will be $50,000 during the first year of the award,
subject to the availability of funds.
(b) There is no minimum grant award for Research and Development or
Discretionary Grants.
(c) The maximum amount that an individual grant recipient may
receive in any fiscal year from a single award or multiple awards, under
any of the purposes of the program, may not exceed $250,000 or 10
percent of the total grant funds available for award in that fiscal
year, whichever is less.
Sec. 119.7 How long and in what amounts will grant funding be
available to a single grantee?
(a) Generally, the funding period for a PRIME grant will be one
year. Subject to availability of funds and continuing authorization,
funding may be available on an annual basis allowing for the initial
grant plus up to four option years, for a project period of up to five
years. Decisions regarding option year awards and the funding levels of
these awards will depend upon availability of funding and the grantee's
performance as measured against project objectives and milestones. A
grantee that enters into a cooperative agreement must submit a separate
application to have the support continued for each subsequent year. In
all cases, continuation awards require a determination by SBA that
continued funding is in the best interest of the Federal government.
Neither the approval of any application nor the entering into of any
cooperative agreement commits or obligates the Federal Government in any
way to make any additional, supplemental, continuation or other award
with respect to any grantee.
(b) For Technical Assistance and Capacity Building Grants, after a
grantee receives an initial grant, funding for any option year(s) must
be no more than 67 percent of the initial grant amount.
(c) For Research and Development and Discretionary Grants, after a
grantee receives an initial grant, funding for any option year(s) will
be approved at the discretion of the SBA.
(d) In the final year of a project, grantees may apply to extend the
expiration date of a grant if additional time beyond the established
expiration date is required to assure adequate completion of the
original scope of work within the funds already made available. For this
purpose, the grantee may make an extension request for a one-time, no-
cost extension, not to exceed 12 months, prior to the established
expiration date. Written notification of such an extension, with the
supporting reasons, must be received by the SBA
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Grant Officer at least 60 days prior to the expiration of the award. SBA
reserves the right to disapprove the extension if the requirements set
forth in OMB Circular A-110, paragraph .25(e)(2) are not met or if the
extension is not in the best interests of SBA.
Sec. 119.8 Are there matching requirements for grantees?
Applicants and grantees must match SBA funding as follows:
(a) Except as provided in paragraph (c) of this section, applicants
and grantees must match Federal assistance with funds from sources other
than the Federal Government in an amount not less than 50 percent of the
grant amount awarded each year. Sources such as fees, grants, gifts,
income from loan sources, and in-kind resources of a grant recipient
from non-Federal public or private sources may be used to comply with
the matching funds requirement;
(b) Grantees receiving funds in option years as described in Sec.
119.7(b) through (c) are subject to the matching requirements of this
section.
(c) Applicants or grantees with severe constraints on available
sources of matching funds may request that the Administrator or designee
reduce or eliminate the matching requirements. Any reductions or
eliminations must not exceed 10 percent of the aggregate of all PRIME
grant funds made available by SBA in any fiscal year. By requesting a
waiver, the applicant is implying that, but for the waiver, the proposed
programming will not be possible at the levels requested.
(d) An applicant may request a waiver of the matching fund
requirement by submitting a written request with its application for
funding. The request must justify, and evidence, the need for a waiver.
As evidence, the request must include, but is not limited to:
(1) The cause and extent of the constraints on the historical and
projected ability to raise matching funds as demonstrated by financial
statements and letters of rejection from previous funders and potential
new funding sources;
(2) Evidence of efforts to raise match specific to the subject
application, including negative responses, and
(3) Based on those efforts, a list of any matching funds expected
for the PRIME grant.
(e) Subject to Sec. 119.12 (a) through (d), applications will be
evaluated on merit before being matched with cost proposals. Any
organization requesting a waiver of matching funds, therefore, will not
be rejected solely on the basis of such a request.
(f) Applications will be ranked, within their respective categories,
from the most to least qualified. The best qualified applicants in each
category will be selected whether or not a waiver is requested until the
availability of waivers is exhausted.
Sec. 119.9 How will a qualified organization apply for PRIME grant
awards?
(a) SBA will issue Program Announcements specifying the terms,
conditions, and evaluation criteria for each potential set of awards.
Program Announcements will summarize the purpose of the available funds;
will advise potential applicants regarding how to obtain an application
packet; and will provide summary information regarding deadlines and
other requirements. Program Announcements may specify any limitations,
special rules, procedures, and restrictions for available funding.
(b) Applicants may submit applications in response to the Program
Announcements. Each applicant shall submit an application for a grant in
accordance with this part and the applicable Program Announcement.
(c) SBA reserves the right to consider at the same time multiple
applications from a single applicant when appropriate.
Sec. 119.10 Will SBA give preferential consideration to other SBA
program participants?
In making grants under this part, SBA will not give preferential
consideration to an applicant that is a participant in programs
established under section 7(m) of the Small Business Act.
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Sec. 119.11 What information will be requested in an application under
the PRIME program?
Each application must contain the information and documentation
specified in the applicable Program Announcement including, but not
limited to, the following items.
(a) For applications seeking Technical Assistance Grants:
(1) Identifying information and core documentation for the applicant
including such items as the applicant's articles of incorporation, by-
laws, proof of IRS tax-exempt status, financial statements, and
reference contacts.
(2) A description of past and present activities and technical
qualifications of the applicant, including workshops, programs and other
technical assistance services, with specific descriptions of the extent
to which such services have reached low and very low-income individuals,
and the success rates of clients.
(3) A list of applicant's community partnerships and collaborations
with state and local entities, and a description of how such
partnerships and collaborations are serving microentrepreneurs.
(4) A description of the proposed activity for which the applicant
will use PRIME grant funds, including training programming plans; a plan
for outreach and delivery; applicant's capacity to provide thorough and
detailed reports; and a description of the applicant's current data
collection and management system, such as computer hardware, software
and internet capabilities.
(5) In the event the applicant is a collaborative, a plan for
maintaining internal controls, accountability, and program quality
control among the participants of the collaborative.
(6) Resumes of the personnel that will be administering and managing
the proposed activities under the PRIME grant, showing knowledge in such
areas as business development, business structures, financial
management, and business training and counseling.
(7) A list of grants received, and/or contracts entered into, that
are similar in scope to the subject grant, including name of Federal or
other agency providing funding, grant or contract number, and a summary
of services provided.
(b) For applicants seeking Capacity Building Grants:
(1) See paragraphs (a)(1), (5), (6) and (7) of this section.
(2) A description of past and present activities and technical
qualifications of the applicant, including workshops, programs,
operational services, and other technical assistance services, or
program development services with specific descriptions of the extent to
which such services have improved the operations of client MDOs,
assisted client MDOs with operational issues, and assisted client MDOs
in reaching low and very low-income individuals.
(3) A description of the proposed activity for which the applicant
will use PRIME grant funds, including training programming plans, a plan
for outreach and delivery, applicant's capacity to provide thorough and
detailed reports; a description of the applicant's current data
collection and management system, such as computer hardware, software,
and internet capabilities and a description of how these capabilities
will or will not be integrated into the training of MDOs.
(c) For applicants seeking Research and Development Grants:
(1) See paragraphs (a)(1), (6), and (7) of this section.
(2) A research proposal indicating the thesis, method(s), scope,
duration, and implementation plans (if any).
(3) A description of the expected effect of the research on services
to disadvantaged microentrepreneurs.
(d) For applicants seeking Discretionary Grants:
(1) See paragraph (a)(1) of this section.
(2) A description of the proposed activity for which the applicant
will use PRIME grant funds, including applicant's capacity to provide
thorough and detailed reports, and a description of the applicant's
current data collection and management system, such as computer
hardware, software and internet capabilities.
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Sec. 119.12 What criteria will SBA use to evaluate applications for
funding under the PRIME program?
During the first year for which funding is available for the PRIME
program, SBA will give special consideration to organizations located in
and serving areas of, or with a history of successful outreach to, low-
income and very low-income persons, to enable the PRIME program to
assist those with the greatest need first. SBA will evaluate
applications for funding in accordance with the specific goals of the
Act, and as more fully described in the Program Announcements.
Evaluation criteria include, but are not limited to, the following:
(a) Applications for Technical Assistance Grants:
(1) Applicants will compete based on expertise and ability to
fulfill the purposes of the Act.
(2) SBA will evaluate organizational structure, financial stability,
financial management systems, personnel capacity, and electronic
communication capabilities (or potential for same). SBA will also
evaluate data collection capabilities, reporting capacities, and ability
to account for performance and outcome.
(3) SBA will evaluate the applicant's history of providing technical
assistance to low-income and very low-income microentrepreneurs. This
factor includes patterns of program growth, client success, outcomes of
training, success in establishing new businesses, and success in
arranging micro-level financing when the client indicates financing as a
goal.
(4) SBA will evaluate the applicant's ability to use community
partnerships and collaborations with state and local entities to better
serve low-income and very low-income microentrepreneurs.
(b) Applications for Capacity Building Grants:
(1) SBA will evaluate the criteria set forth in paragraph (a)(2) of
this section.
(2) SBA will evaluate the applicant's history of providing capacity
building services to MDOs, as an indication of the organization's
understanding of the goals and purposes of capacity building, its
historical effectiveness with the microenterprise development industry,
and its ability to provide quality programming to the targeted market.
SBA will evaluate patterns of program growth, outcomes of training,
types of services provided, delivery systems used, the number and types
of clients served, and the successes realized within the client's
organizational goals.
(3) SBA will evaluate expected impact on client MDOs; expected
impact on services to low-and very-low income microentrepreneurs; and a
plan for service and delivery.
(c) Applications for Research and Development Grants:
(1) SBA will evaluate the criteria set forth in paragraph (a)(2) of
this section.
(2) SBA will evaluate how the research potentially will enhance
microenterprise-oriented technical assistance services to disadvantaged
entrepreneurs. Applicants must show the method(s), scope, duration, and
implementation plans of the proposed research.
(3) SBA will evaluate applicant's plan of action incorporating
original and secondary research. Applicants must show impact on improved
access to microenterprise development services for disadvantaged
microentrepreneurs, and the expected replicability/transferability of
the finished product to the field.
(d) Applications for Discretionary Grants will be evaluated based on
the goals and the viability of the project.
Sec. 119.13 How will an applicant make a subgrant?
(a) An applicant that wants to make subgrants using PRIME grant
funds must receive written approval from SBA prior to making subgrants.
The applicant must identify the subgrantee(s) and describe in detail
what the subgrantee(s) will do to help the grantee implement its
proposal. An applicant must submit information to SBA demonstrating
that, through the subgrantee(s), the grantee's program will:
(1) Provide expanded services to the community,
(2) Provide a method by which one or more previously unserved
communities will gain access to the program, or
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(3) Provide other specific benefits to the clients, such as
specialized training, expanded schedules of operation, or other
benefits.
(b) If an applicant has identified potential subgrantee(s) at the
time it submits an application for a PRIME grant, the applicant must
include the information requested in paragraph (a) of this section in
the application. Otherwise, the applicant or grantee may submit the
requested information at such time that approvals for subgrantee(s) are
requested.
(c) A grantee may not use more than 7.5 percent of the assistance
received under its PRIME grant for administrative expenses in connection
with the making of subgrants.
Sec. 119.14 Are there limitations regarding the use of program income?
Program income, as defined in OMB Circular A-110, may only be used
to further PRIME program objectives. As such, fees collected from
clients, and other program income as defined, may be used to help fund
the matching requirement. All program income, as defined, shall be
reported on financial reports submitted to SBA and added to funds
committed to the project by SBA and the recipient organization. However,
any interest earned in excess of the maximum allowable amount as
specified in the OMB circular incorporated into the grant must be
returned to the Federal Government by the grantee.
Sec. 119.15 If a grantee is unable to spend the entire amount allotted
for a single fiscal year, can the funds be carried over to the
next year?
(a) The grantee may request approval to use unexpended funds in the
next budget period. This is permissible if funds are to be used for a
non-severable, non-recurring project or activity within the scope of the
PRIME program. Non-severable means a project in its entirety that cannot
be subdivided. The request for using unexpended funds in the next budget
period must include the following:
(1) SF 424, budget pages, and justification;
(2) Explanation of why the funds were not expended during the period
in which they were awarded; and
(3) Evidence of match. The match requirement for funds carried over
to the next budget period can be met by using any excess of matching
funds from the current budget period, new matching funds, or a
combination of both.
(b) The request must be made no later than 60 days before the end of
the budget/project period or the de-obligation process will begin.
Approved requests will require the issuance of a revised Notice of
Award. Expenditures for funds carried over to the next budget period
must be tracked separately.
Sec. 119.16 What are the reporting, record keeping, and related
requirements for grantees?
A grantee must keep records and meet the other requirements of
section 115 of the Riegle Community Development and Regulatory
Improvement Act of 1994 (Riegle Act), as if it were a community
development financial institution. (See 12 U.S.C. 4714). In addition to
meeting requirements of the Riegle Act, a grantee must also maintain
data allowing it to measure the impact of services provided by it and
any subgrantees, and, if specifically required by the terms of the PRIME
grant, measure the success rate of individual clients whom the grantees
assist. SBA will detail such requirements in its Program Announcements.
Sec. 119.17 What types of oversight will SBA provide to grantees?
(a) In addition to reports required under the Riegle Act, SBA will
require reports in accordance with applicable OMB circulars. Such
reports will include the following information:
(1) For recipients of Technical Assistance and Capacity Building
Grants, for the first two years of receiving grant funding, narrative
performance reports and financial status reports will be required
quarterly within 15 calendar days of the end of each quarter.
Thereafter, grantees may request that SBA reduce the frequency of
reports from quarterly to semi-annually. The frequency of reporting then
will be determined at the discretion of SBA. In addition, details of
expenditures will be
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required with each request for payment. Grantees will be required to
submit audited financial statements on an annual basis, if available, or
annual financial statements prepared by a licensed, independent public
accountant, within 120 calendar days of the end of the grantee's fiscal
year.
(2) For recipients of Research and Development Grants, reports will
be required in accordance with agreed upon milestones and as part of the
disbursement process.
(3) For recipients of Discretionary Grants, reports will be required
as appropriate for the project, or on a schedule as described in
paragraph(a)(1) of this section, whichever is more frequent.
(b) In addition, SBA may, from time to time, make site visits to the
grantee, and review all applicable books and records.
Sec. 119.18 What are the restrictions against lobbying?
No assistance made available under the PRIME program may be expended
by a grantee or subgrantee to pay any person to influence, or attempt to
influence, any agency, elected official, officer, or employee of a
Federal, State, or local government in connection with its participation
in the program.
Sec. 119.19 Is fundraising an allowable expense under the PRIME
program?
Expenditures of grant funds for fundraising activities are not
allowable costs under this program. Applicants must be able to raise
matching funds without the assistance of grant funds. Unless the full
requirement for matching funds is waived, the applicant must demonstrate
that it has adequate fundraising resources to obtain the required non-
Federal matching funds to perform the project.
Sec. 119.20 Should grantees and subgrantees raise conflict of interest
matters with SBA?
Each grantee or subgrantee must provide SBA with a copy of its
conflicts of interest policies prior to receipt of funding under the
program. Such policies must clearly describe the grantee's or
subgrantee's protections from conflicts of interest or the appearance
thereof in the handling of grant funding and program provision under
this program.