| Foreward
| Introduction | Publications
| Regulatory Activity| Regional
Activities| Adovocacy Intiatives|
Future effors| |Future
research needs| Conclusion | PDF
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Foreword
Independence, dependability,
self-reliance — these ideals of the American character are
rooted in rural America. The Office of Advocacy recognizes
that viable small businesses are the core of sustainable
rural communities. And today, rural small businesses face
special challenges — limited access to capital and technological
infrastructure, an eroding employment base, and the need
for agriculture to compete globally — to name a few.
In recent years, the office
has devoted greater resources to studying and identifying
rural issues and making information available to help address
them. For instance, the office’s studies on lending let
rural business owners know which banks have a track record
of lending to small rural businesses and small farms. The
studies may also prod banks into improving their lending
practices. Advocacy started ACE-Net (the Access to Capital
Electronic Network) to expand access to early-stage equity
capital for all small businesses. ACE-Net is a tool that
is especially relevant to rural small businesses. Rural
small businesses’ access to capital has historically been
limited and may be constrained further as bank mergers replace
community banks with larger entities that are less interested
in non-credit card small-sized loans. And Advocacy’s regulatory
review has helped assuage some of the burdens that new federal
regulations would have imposed on rural small businesses.
The Office of Advocacy has
also teamed with the National Rural Development Partnership
(NRDP), an initiative of the U.S. Department of Agriculture,
to raise institutional awareness of rural issues. Advocacy
hosted one of the NRDP’s Harry S. Truman Fellows for 2000-2001,
Shawn Vogt Sween, who is the author of this report. In this
report, Sween catalogues Advocacy’s recent efforts to address
issues that affect rural small businesses and, with the
input of NRDP members, identifies areas of much needed future
research.
Visit the Office of Advocacy’s
Web site at www.sba.gov/advo for additional information
about small businesses.
Introduction
One-quarter of all Americans
live in rural areas and benefit from the resources that
the Office of Advocacy offers to small business. For many
reasons, local firms serving rural communities often have
more difficulty accessing needed technology, transportation,
and services, which leads to difficulty in accessing resources
results in high fixed costs for rural small businesses.
Those costs effectively create barriers of entry for rural
small businesses making it more difficult for rural small
businesses to compete with urban small and large businesses.
The Office of Advocacy’s mission,
simply stated, is to encourage policies that support the
development and growth of American small business in all
areas of the country. The Office of Advocacy works to ensure
that government policies not increase the barriers to entry
for new small firms and to reduce the burdens that federal
policies impose on small firms, without compromising the
intent of policies or regulations. Most "one-size-fits-all"
regulations and the required paperwork have a high component
of fixed costs and result in a higher cost per unit of output
for small firms relative to large firms. For rural small
firms, the fixed costs are likely to be even higher.
Given these challenges, the
Office of Advocacy has taken a leadership position in recognizing
the unique needs of rural small businesses. This study outlines
the work that the Office has already completed that affects
rural small businesses. There is, however, additional work
to be done — work that is consistently constrained by staff
and budget limitations. Because Advocacy has played a leading
role in calling attention to the unique needs of rural and
urban small businesses, this study suggests possible directions
for future work that would positively impact influence rural
small businesses.
Office of Economic Research:
Publications
Within the Office of Advocacy,
the Office of Economic Research (OER) is responsible for
compiling and disseminating research and statistics on small
businesses. OER assists rural areas businesses primarily
by conducting or sponsoring research reports that discusson
rural small businesses thatand are of value to institutions
serving rural areas. Developing data on rural areas is a
fundamental part of this research. OER’s development of
the Business Information Tracking Series, a joint effort
with the U.S. Census Bureau, has provided researchers with
a powerful tool to track businesses by metropolitan or nonmetropolitan
location, among many other variables.
Many of OER’s studies can be
found on the Office of Advocacy website at www.sba.gov/advo/stats.
Small Business Finance
in Rural and Urban Regions. October 1998
This is the text of a presentation
given by Chief Counsel for Advocacy Jere W. Glover to the
Federal Reserve Bank of Kansas City. The presentation made
three major points regarding rural small businesses. First,
research shows that the number of gazelles (firms that have
doubled in size over the past four years) are effective
at creating new jobs in rural areas. But rural gazelles
have a hard time finding both equity and debt financing
and are not growing as rapidly as they could.
Second, evidence exists that
bank mergers may be hurting rural communities. Currently,
the very smallest banks are loaning the greatest percentage
of their funds to small firms and farms. These small community
banks are also more likely to be active in community affairs
and make smaller, low-return loans. When banks merge, small
communities may lose the resources that a smaller bank offers.
Finally, the small size of
rural businesses and the lack of competition from other
banks increase the costs to borrowers. The Office of Advocacy’s
ACE-Net program could make it possible for rural companies
to obtain the equity capital they need and for rural investors
to reach a nation-wide market of entrepreneurial firms.
Small Business Lending
in Rural America June 2000
This directory provides data
on business lending in rural America by commercial banks
filing Community Reinvestment Act reports. The goal of the
report strives is to help small firms in rural areas locate
likely lending sources and to stimulate bank competition
for small firm customers. The study shows that, although
80 percent of all small business lending occurs in urban
areas, loans to rural businesses are increasing at a higher
rate larger than loans to urban businesses. Average loan
sizes to small firms in rural areas have also increased.
The report does outline one major problem: 20 percent %of
small businesses are located in rural areas and have less
, but access to other forms of credit in these areas is
less available than small businesses located access in urban
areas. and may be insufficient.
Small Farm Lending
in the United States Published Yearly Since 1998
This study ranks all banks
in every state and is published individually for each state.
It was originally published in 1998 as Small-Farm-Friendly
Banks in the United States. This study provides the data
to help family farm owners find the bank most likely to
meet their needs. It raises concerns about the supply of
credit to small farms, given the decline in the number and
value of small farm loans and the number of community banks
in the United States.
Small Farm Lending
by Bank Holding Companies Published Yearly Since 1999
This study identifies the multi-billion
dollar bank holding companies (BHCs) that are "small-farm-friendly"
— those from which small farms have been successful in obtaining
loans. In addition, it allows bank holding companies to
compare how they are doing relative to their competitors.
The 2000 study found that although the largest 57 BHCs held
69.2 percent of all domestic bank assets in June 1999, they
accounted for just 12.5 percent of the $48.9 billion in
small farm loans (loans under $250,000). In addition, the
small farm loan portion of the BHC portfolio shrank over
the 1998-1999 period, even though 15 BHCs reported increases
in the share of assets in small farm loans.
Small Business Lending
in the United States Published Yearly Since 1994
The Small Business Lending
in the United States studies rank commercial banks’ lending
performance to small businesses by state. While these studies
do not specifically identify rural data, the main offices
of banks are listed. This information could be used by rural
small businesses to identify banks located near their area.
In general, banks that are located in rural areas could
be assumed to be likely to lend to rural small businesses.
Small Business and
the Changing Structure of the Draft February 2000
Livestock and Agricultural
Industries
This draft study summarizes
previous literature on the structure of agricultural markets,
studying the livestock industry in particular. In addition,
it analyzes agricultural statistics from the Office of Advocacy
databases. The study concludes that small firms are being
squeezed out of the meat products industry and that processors
are getting larger and gaining a monopoly position in large
sections of agriculture.
Rural and Urban Areas
by Firm Size, 1990-1995 March 1999
This report provides an analysis
of the growth of employer firms, measured by the number
of business locations and employment, in urban and rural
areas. It contains the latest available data on urban and
rural business locations and employment by major industry
and state. The report also details the changing importance
or share of the economy that small firms have in rural and
urban areas. From 1990 to 1995, the number of urban establishments
and the level of employment increased, while rural employment
increased only slightly and the number of establishments
declined.
Office of Interagency Affairs:
Regulatory Activity
The Office of Interagency Affairs
includes employs advocates who pursue regulatory, legislative,
and other policy initiatives that support small business
growth. The office prepares comment letters and testimony
on federal proposals that may affect small firms. The hallmark
of Advocacy’s efforts is addressing concerns shared by small
businesses of all types. These include access to capital,
burdens of regulatory compliance, costs associated with
telecommunications reform, and tax policies that place undue
burdens on small firm operations. In addition, the Office
of Interagency Affairs tackles regulatory issues that affect
specific industries.
In pursuing good public policy,
the Office of Interagency Affairs also monitors federal
agencies’ compliance with the Regulatory Flexibility Act
of 1980 (RFA), as amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA). The RFA requires
federal agencies to analyze the impact of proposed regulations
if they are likely to have a "significant impact on
a substantial number of small entities." The Office
of Advocacy reports on agencies’ compliance to Congress
each year.
The Office of Advocacy
has commented on a number of rules that affect rural small
businesses.
Additional information on advocate
actions can be found at www.sba.gov/advo/laws.
Access Charge Reform
Universal service requirements
help keep the cost for basic telephone service low for customers
and businesses in rural areas by requiring customers in
lower-cost, high-density urban areas to subsidize the higher
cost of rural access. In the Telecommunications Act of 1996,
Congress mandated that the subsidy be funded by an explicit
charge. Congress did so, because an explicit charge billed
to customers would allow new competitive carriers to collect
and receive universal service support and, encourage ing
competition.
The Office of Advocacy supports
the goal of universal service to keep telecommunications
service affordable in rural areas. In addition, Advocacy
supports the efforts of Congress and the Federal Communications
Commission (FCC) CC to make universal service subsidies
explicit and based on actual measurable costs of providing
service to high-cost (rural) areas.
FCC implementation of the explicit
universal service subsidy has created costs and difficulties
for all small businesses. For example, the long distance
costs and business line costs were originally inflated to
provide universal service fund support. As explicit fees
have begun to be added to customers’ bills, long distance
and business line fees have not been reduced proportionally,
and the cost of telephone service to small businesses has
risen. Advocacy has encouraged the FCC to alter its implementation
of the explicit universal service charges so that these
unintended inequities for all small businesses (both rural
and urban) are reduced.
Radon and Arsenic Rules
These rules affect small rural
governments and small rural water supply owners that are
regulated by the safe drinking water rules. The Office of
Advocacy advised the Environmental PProtection AAgency on
methods to make the rules less expensive, potentially saving
rural small businesses hundreds of millions of dollars annually.
These recommendations included less stringent regulatory
standards or, in the case of radon, an alternative compliance
mechanism to address the same hazard. This work was done
as part of the SBREFA panel process over the last two years
and may help rural areas.
Extending Wireless
Services to Tribal Lands
The FCC has begun a series
of initiatives designed to spur provision of wireless services
to tribal and rural areas. One rule change designed to accomplish
this goal would grant incentives to companies, particularly
larger ones, that agree to provide service to low-penetration
areas. In fact, the FCC appears to take the view that the
larger telecommunications companies are the ones best situated
to fill this need. The Office of Advocacy believes the FCC
should encourage smaller local businesses to meet this need,
since these companies often have strong ties to the communities
they serve and are more motivated than nonlocal firms to
gauge and fill the needs of rural and tribal residents.
Licensing Spectrum
Bbased upon Geographic Area
The Office of Advocacy has
been involved in a number of FCC proceedings that have proposed
licensing spectrum in various bandwidths on a geographic
basis. The FCC has chosen to create "Economic Areas"
as the geographic licensing unit in several services. Economic
Areas tend to be large areas covering urban and rural jurisdictions.
Advocacy believes smaller areas based on specific urban,
suburban, or rural jurisdictions would be more appropriate
since companies could better target the market they wish
to serve. This would result in greater participation by
small businesses, which would likely have difficulty competing
with large businesses in the much larger economic areas.
Advocacy’s position would allow small rural businesses the
opportunity to compete for licenses.
Medicare Participation
Requirements for Rural Health Clinics
Pursuant to the Balanced Budget
Act of 1997, the Health Care Financing Administration (HCFA)
proposed a rule to revise certification and payment requirements
for rural health clinics (RHCs). This rule redefined qualifying
rural shortage areas in which RHCs must be located, established
criteria for identifying RHCs that can continue to be approved
as Medicare RHCs in areas no longer designated as medically
underserved. The rule also limited waivers of certain non-physician
practitioner staffing requirements. It also imposed payment
limits on provider-based RHCs and prohibited commingling
or the use of the space, equipment and other resources of
an RHC with another entity. Advocacy commented that the
agency did not have a factual basis for its certification,
that RHCs may lose their designation, that the prohibition
against commingling did not take into account legitimate
office-sharing relationships (particularly in rural areas),
and that HCFA should have prepared an initial regulatory
flexibility analysis (IRFA).
Patient Restraint One1-Hour
Rule
HCFA proposed a rule requiring
a doctor or other licensed independent practitioner to assess
the need to continue restraining patients within one hour
after restraints were first used. This rule is especially
burdensome for rural facilities because physicians may have
to travel great distances in order to assess a patient.
Rep. Saxby Chambliss (R-Ga.) requested information from
Advocacy on whether orn not HCFA complied with the Regulatory
Flexibility Act (RFA) in promulgating the one1-hour rule,
and what possible remedial action might be taken. Advocacy
concluded that no study of impact on rural facilities had
been conducted and that less burdensome regulatory alternatives
had not been considered; hence, the agency was in violation
of the RFA. The agency should be required to reconsider
the rule and prepare a proper analysis.
Ambulance Fee Schedule
Rule
HCFA proposed a rule designed
to alter Medicare reimbursement for ambulance services,
which would have had a significant impact on rural ambulance
services. Specifically, HCFA proposed to base reimbursement
on the beneficiary’s medical condition rather than the type
of vehicle used (e.gfor example, advanced life support/ALS
and basic life support/BLS). Ambulance services would have
to document and submit to HCFA records of the level of medical
care needed by a beneficiary based on certain pre-determined
diagnosis codes. The rule also attempted to narrow the definition
of an ambulance by requiring a certain number of personnel
to operate each vehicle as well as requiring certain minimum
equipment and supply levels. Such rules would be difficult
for rural providers, which who often face higher costs because
of lengthy trips. Among other things, the Office of Advocacy
challenged the agency’s failure to prepare an adequate analysis
of the rule’s impact and whether rural ambulance services
were receiving adequate reimbursement levels. In the final
rule, equipment requirements were reduced, staff requirements
were modified to comport with state laws, and physician
certification requirements were modified to give ambulance
services additional time to obtain them. Congress ordered
HCFA to initiate a negotiated rulemaking process to resolve
the ALS-BLS reimbursement issue. The overall result was
more categories of ambulance services and a greater cost
shifting to rural services that will receive higher payments
due to the higher costs they incur for lengthier trips.
Hospital Outpatient
Prospective Payment System (PPS)
HCFA proposed the Outpatient
PPS rule in order to replace the old cost-based Medicare
reimbursement system with a new system based on pre-determined
rates for individual services. Such a system would fail
to account for cost differences faced by rural hospitals,
which have fewer economies of scale and scope. Advocacy
commented that certain hospitals (for instance, cancer,
rural and rehabilitation hospitals) should not be included
in the Outpatient PPS rule because of their low volume and/or
high costs. Because of the impact this rule would have had
on hospital outpatient facilities, Congress later mandated
that payments to hospitals be increased by 10 percent and
that some hospitals be exempt.
Roadless Initiative
The Forest Service plans to
set aside 45 million acres of forestland as roadless (i.e.,
barring any further construction in those areas). Although
it is a nationwide initiative, it mostly affects activities
in national Forest Service lands in rural Montana, Oregon,
Nevada, Arizona, Wyoming, Utah, Idaho, and Washington. This
rule will impact rural small businesses, including timber
harvesters and miners, which may not be able to get to their
principal source of income. It will also have a an impact
on local school districts, which rely on timber payments
to fund schools. The Forest Service invited Advocacy and
other agencies to become involved in the regulatory process
before the rule was announced, increasing the opportunity
for comment on small business needs. While the original
initiative included 54 million acres, the new proposal covers
45 million acres. In addition, the new proposal will not
go into effect in Alaska for five years, at which time it
will affect 9 million acres in Alaska. Finally, because
of Advocacy’s work, exemptions may be included for certain
rural industries.
Fishing Industry
Many rural areas rely on the
fishing industry as a principal source of income. In the
George’s Bank area off the New England coast, the National
Marine Fisheries Service (NMFS) refused to allow scallop
fishing because NMFS asserted that the stock was depleted.
The industry produced its own research indicating that the
scallops were so abundant in George’s Bank that they were
dying from overcrowding. NMFS promulgated the regulation
without considering the industry’s research. Advocacy stated
that the agency failed to consider the industry data and
suggested that ignoring the alternative of reopening George’s
Bank not only violated the RFA, but may also have been arbitrary
and capricious. Based upon Advocacy’s comments, the Secretary
of Commerce ordered the agency to re-evaluate the scallop
industry’s research. NMFS subsequently reopened George’s
Bank for scallop fishing.
Mining
The Bureau of Land Management
(BLM) issued a rule intended to prevent mining businesses,
which are located in rural areas, from mining area without
reclaiming it. The rule required miners to obtain a reclamation
bond, assuring that they would clean up the area once mining
had finished. The Office of Advocacy notified BLM that they
had not properly analyzed the impact on small businesses
nor had they used a proper size standard. BLM refused to
change its analysis.
The mining industry filed suit
against BLM in Northwest Mining v.. Babbitt. The court found
that BLM had not used the proper size standard in doing
the RFA certification, rescinded the rule, and ordered the
agency to do a proper analysis.
BLM then re-proposed the rule.
Meanwhile, Congress ordered a study by the National Research
Council to determine whether the regulation was really needed.
Since BLM’s deadline for comments fell before study had
been completed, Advocacy argued that BLM keep the comment
period open until the study was concluded. Advocacy also
argued that BLM’s economic analysis was flawed and had not
considered true alternatives to the rule. BLM is in the
process of making the rule final.
Commercial Mail Receiving
Agencies (CMRA)
A new rule from the U.S. Postal
Service (USPS) requires that all businesses using commercial
mail receiving agencies (CMRAs) indicate so by putting "PMB"
or "#" in their address. This rule could have
a significant impact on rural small businesses, which may
use the CMRAs as safe places to receive mail for small or
home-based businesses. There may be a stigma attached to
a business with such an address, and small businesses could
potentially lose business because customers may not be aware
of the new address requirements. Moreover, the address change
would require a costly change in letterhead, business cards,
and other company materials.
The Office of Advocacy stated
that it does not support the rule. Advocacy became involved
by hosting roundtables, attending meetings with the U. S.
Postal Service, and writing comment letters challenging
the legality of the action and the costs of the rule on
small businesses. While the original rule was to go into
effect in April 1999, it has now been postponed for all
businesses until August 2001, allowing for the use of old
materials and the printing of new business supplies.
Glacier Bay Fishing
Area
In 1997, the National Park
Service (NPS) proposed a regulation prohibiting commercial
fishing in nonwilderness waters of Alaska’s Glacier Bay
proper, an area which includes many rural small businesses.
The proposal provided a 15-year seasonal exemption from
the prohibition for commercial fishers who could demonstrate
a reasonable history of participation in a specific Glacier
Bay fishery. However, the proposal did not include an analysis
of the potential impact on the fishing industry, even though
the proposal would have effectively put several operations
out of business and would likely have had a substantial
economic impact on small fishing villages. In February 1999,
Advocacy questioned the certification and urged NPS to perform
an IRFA. With Advocacy’s assistance, NPS prepared an IRFA
and finalized the rule, which contains less stringent eligibility
criteria for determining which businesses are able to fish
under the exemption provisions of the rule, thereby avoiding
undue impact on rural small businesses.
Activities of Advocacy’s Regional
Advocates
Regional advocates are the
chief counsel’s direct link to local business owners, state
and local government agencies, state legislatures and small
business organizations. Covering the 10 federal regions
of the nation, regional advocates help identify new issues
and problems of small businesses by monitoring the impact
of federal and state regulations and policies on the local
business communities within their regions. In addition,
the Office of Advocacy employs one advocate specifically
to focus specifically on rural issues. Additional information
can be found at www.sba.gov/advo/region.html.
Telecommunications
Act
When the Federal Communications
Commission implemented the Telecommunications Act, it changed
universal service coverage for rural areas. The FCC chose
to recognize only one phone line as essential in rural areas.
Consequently, all rural small businesses would have been
charged excessive fees for additional lines (for example,
for computers and , fax machines or other technologies,
etc.). Bringing together members of the National Rural Development
Partnership’s state rural development councils, the rural
regional advocate garnered support for Advocacy’s position
that this change was improper. Due to Advocacy’s role in
this issue, the FCC chose to leave universal service coverage
unchanged for rural areas.
Distribution of Excess
Government Computers to Rural Communities
Advocacy and the rural regional
advocate discovered that the Department of Health and Human
Services (HHS) had a warehouse of used computers that were
no longer in use by the agency. Citing a need for at least
one computer in each rural community, Advocacy arranged
for the transport of these machines to a storehouse where
they could be distributed to rural communities. In partnership
with the Rural Conservation and Development Office of the
U.S. Department of Agriculture, Advocacy distributed the
computers to needy rural communities. In some cases, the
donation allowed the community, for the first time, to computerize
its 911 service.
South Carolina Rural
Disaster Loan
The Rural rural regional advocate
worked with farmers in South Carolina who had received rural
disaster loans. These farmers planned to upgrade their equipment
but couldn’t because it had been used as collateral. The
advocate worked with the farmers to have the collateral
released.
Small Business Incubator
In Ohio, the rural regional
advocate worked with the State Rural Development Council
to create a small business incubator that would allow farmers
to process their own commodities.
First Rural Small Business
Investment Corporation
In Oklahoma, state law prohibited
the banking community from becoming involved in Small Business
Investment Corporation (SBIC) activities. The rural regional
advocate worked with the state legislature to change this
law, thereby allowing small rural banks to form SBICs. Because
of this work, the first rural SBIC was formed in Durant,
Oklahoma.
Cotton Brokers Eligible
for Disaster Loans
Cotton brokers, who make contracts
with cotton producers to sell the product, have traditionally
been not been eligible for disaster loans if something happens
to the cotton crop. During a recent growing season, cotton
brokers made contracts for long staple cotton. Growing conditions
were such, however, that only one-half½ inch cotton
could be harvested. The cotton brokers ultimately sold the
cotton for a loss because of the contract. The Office of
Advocacy worked with cotton brokers to change their eligibility
status for disaster loans.
Rural Co-ops
The rural regional advocate
is currently working with the states of Nebraska, Kansas,
Oklahoma, Texas, North Dakota, and South Dakota to explore
the possibility of creating small rural co-ops that are
eligible for small business loans.
Community Reinvestment
Act (CRA) Credit for Small Rural Communities
The rural regional advocate
is working with the Federal Reserve Bank of Salt Lake City
to explore how to better structure lending programs to assist
small rural communities and small rural businesses. The
Federal Reserve is currently considering a different form
of Community Reinvestment Act (CRA) CRA (Community Reinvestment
Act) credit for these communities.
Other Advocacy Initiatives
that Impact Affecting Rural Areas
The Office of Advocacy has
also been involved in several other initiatives that have
had an impact ons for rural Americasmall businesses.
Ace-Net: Access to
Capital Electronic Network Developed in 1997
ACEce-Net is an Internet-based
listing service for securities offerings of small, growing
companies located throughout the nation, which can be viewed
anonymously by accredited investors. ACE-Net was developed
by the U.S. Small Business Administration’s Office of Advocacy,
working in consultation with the U.S. Securities and Exchange
Commission, the North American Securities Administrators
Association, and the University of New Hampshire’s Whittemore
School of Business and Economics. ACEce-Net is an initiative
to help small businesses outside Silicon Valley (and other
areas with an abundance of angel capital) to gain access
to capital. It has the potential to help many rural businesses.
ACE-Net is in the process of being privatized. Additional
information can be found at https://ace-net.sr.unh.edu/pub.
Rural Roundtable Discussions
1999-2000
The rural regional advocate,
in coordination with the Small Business Administration,
state rural development councils, and other partners, has
conducted six rural roundtables throughout the country.
These roundtables bring together local rural leaders to
discuss access to capital in rural areas. Participants have
included bankers, business owners, rural development leaders,
organizational representatives, investors, as well as representatives
of local, state, and federal agencies. Due in part to these
roundtables, SBA will implementing a Rural Initiative and
is in the process of determining next steps from suggestions
made by participants.
Models of Excellence
Awards 1998 and 1999
As part of the Vision 2000
conferences of 1998 and 1999, the Office of Advocacy recognized
hundreds of organizations for their contributions in creating
and aiding viable small businesses. Fifteen of those organizations
were recognized for their work in "rural development."
For more information on award winners, visit www.sba.gov/advo/vision.html.
National Rural Development
Partnership Truman Fellow
The Office of Advocacy has
recently formed a partnership with the National Rural Development
Partnership (NRDP) by accepting the placement of a Truman
Fellow for the 2000-2001 year. The Truman Fellow, a recent
college graduate who has received the Truman Scholarship,
is hired by NRDP and will work in the Office of Advocacy
to increase institutional awareness of rural issues. NRDP
brings together partners from local, state, tribal, and
federal governments and from the for-profit and nonprofit
private sectors to help rural communities improve their
quality of life. If the placement of the Truman Fellow proceeds
well, there will likely be many opportunities for collaboration
in the future. For more information on NRDP, visit www.rurdev.usda.gov/nrdp.
Future Efforts to Work that
Could Impact Improve Small Businesses in Rural Areas
The Office of Advocacy has
undertaken many projects that have had a positive impact
on rural small businesses. Because of Advocacy’s past leadership,
it is possible for the office to continue to play a strong
role in advocating for both rural and urban small businesses.
Toward this end, the following are suggestions for future
work that the Office of Advocacy could undertake.
White House Conference
on Small Business
In 1995, the White House Conference
on Small Business took place. No recommendations or actions
that specifically addressed unique rural small business
needs came out of this conference, however. Future discussion
is necessary to ensure that these unique needs are not overlooked.
Ideally, a similar conference would be convened and would
include representatives from both rural and urban areas,
recognizing that business needs differ based on geographic
location and infrastructure availability.
Differentiate Research
into Rural and Urban Regions
Whenever possible, the Office
of Economic Research should give breakdowns of urban and
rural data in its reports. For example, in banking studies,
locations should be used to divide the data into urban and
rural areas (or some other more appropriate geographical
distinction: urban, rural-near-urban, and rural). This new
interpretation of the data will be extremely useful to rural
development professionals. To facilitate this process, the
Office of Advocacy has recently obtained USDA data that
identifies metro, near metro, and truly rural counties.
Now researchers must determine how to incorporate this breakdown
into research to make the results useful to both urban and
rural practitioners.
Create and Disseminate
Request-for-Proposal (RFP) Topics that Address Rural Research
Needs
The Office of Advocacy routinely
requests proposals for outside research from qualified researchers.
Advocacy encourages outside researchers to study topics
of importance to those interested in small businesses. Although
Advocacy requested rural proposals, none of those submitted
were technically acceptable. This may be due to the fact
that there was a short time period in which proposals could
be submitted, or because the RFPs were not sent to appropriate
researchers.
Once a rural research topic
has been proposed, a reliable method needs to be used to
disseminate the proposal topics to researchers qualified
to study rural needs. The NRDP Listserv provides access
to hundreds of rural professionals and agency representatives
who could aid in disseminating research proposal topics.
The NRDP Truman Fellow at SBA has access to this listserv.
Create and Disseminate
Economic Research that Addresses Rural Needs
State Rural Development Councils
of the NRDP have identified several areas in which rural
research could be conducted. Those research needs are included
with this document. As these rural data needs are met through
economic research, the Office of Advocacy must actively
distribute the information to rural practitioners. Once
again, the NRDP Listserv provides an easy, existing method
to contact rural professionals throughout the country.
Explore Further Collaboration
with the NRDP
NRDP and the Office of Advocacy
have much to offer one another. The Office of Advocacy should
continue to explore possible collaboration with NRDP in
as many ways as possible. This could include, but is not
limited to: attendance at national conferences, use of NRDP
dissemination channels to share information with rural areas,
participation in the National Rural Development Council
(a network of government agency and organizational representatives),
continued support of an NRDP Truman Fellow, presentations
at NRDP events, and /or financial support of the partnership.
Additional Areas of Research
The Office of Advocacy has
conducted a number of research projects that contain useful
data for rural areas. However, rural practitioners need
even more data. To determine the topic areas of greatest
importance to rural development practitioners, members of
the NRDP Listserv were contacted. Members of the partnership
and Advocacy staff identified the following as topics for
further research.
General
Characteristics and demographics
of the owners of rural small businesses.
The number of rural small businesses.
The number of employees working for rural small businesses.
The growth rate of rural small businesses compared to the
growth rate of urban small businesses.
The types of businesses that exist in rural communities
and their structures compared to the types of businesses
that exist in urban communities.
The success/failure rates of rural small businesses.
A comparison of success/failure rates of rural and urban
small businesses.
The reasons behind failure rates of rural small businesses.
The correlation between the number of small businesses in
a community, the unemployment rate, various types of government
assistance, and commuting patterns for rural small businesses.
How those patters differ from urban businesses.
The impact of the global market place (Internet and e-commerce)
on rural businesses.
How rural communities have addressed/overcome challenges
to assist small businesses in participating and succeeding
in the global economy.
The types of businesses that can succeed away from population
centers.
Rural Small Business Financing
The sources of financing
rural small businesses’ new or existing ventures.
The average loan size to rural small businesses.
The type of rural businesses that have been financed by
small business leans.
The share of SBA loans to rural areas other than for "Disaster
Declarations."
The type of banks that exist in rural areas and the types
of loans they make.
The success rate of rural small businesses in accessing
capital — equity investment and borrowing — compared to
their urban and suburban peers.
Entrepreneurship in
Rural Areas
The most important factors
for successful rural entrepreneurs. How these factors compare
to those of successful urban entrepreneurs.
Entrepreneurship as an effective rural development strategy.
Demographics and characteristics of rural entrepreneurs.
Ways to train rural entrepreneurs.
Family history of rural entrepreneurs.
How rural communities have addressed/overcome challenges
to encourage the development of entrepreneurship in rural
areas.
Economic Development
and Small Business Development
The economic development groups
that exist in rural areas; their activities regarding industry
recruitment, job creation, incentives, and small business
recruitment and incentives (including tax and related incentives).
The effectiveness of strategies attempting to encourage
community development through cultural history or significant
natural wonders.
The success of towns located near remote rural cultural,
historical, or recreational amenities in building viable
economic strategies around these amenities.
The availability of training for entrepreneurs, employees,
or potential employees of rural small businesses.
The role community colleges play in providing entrepreneurship
training to potential small business owners.
The responsiveness of the Job Training Partnership Act (JTPA).
Improvements in responsiveness since the Workforce Investment
Boards (WIBs) have been in place.
Whether Small Business Development Centers are providing
services to help small business owners with initial start-up
difficulties.
Rural Health Care
The type of access rural small
businesses have to employee health care benefits.
The cost of benefits to employers and employees.
The barriers small businesses face or incentives they are
offered when they pool together as a group for competitive
insurance rates.
How rural communities have addressed and/or overcome healthcare
challenges to assist small businesses to participate in
the global economy and succeed.
Rural Transportation
Ways to help small businesses
that provide transportation to rural areas succeed.
Rural Telecommunications
Qualify and quantify the "digital
divide" as it affects rural small businesses.
How the "digital divide" effectively differs by
business ownership between socioeconomic groups in rural
communities.
How the availability of wide bandwidth communications infrastructure
affects rural businesses.
How rural communities have addressed and/or overcome telecommunication
challenges to assist small businesses to participate in
the global economy and succeed.
Conclusion
Through its research and data
development, review of federal regulations, partnerships
with state and regional agencies, and other initiatives,
the Office of Advocacy has positively impacted influenced
rural small businesses. This work has made Advocacy a leader
in advocating for the needs of rural businesses. It is also
apparent, however, that additional work remains to be done
for rural small businesses. This future work will depend
upon time, budgets, and staffing levels of the office.
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