guaranteed loans and 8 percent of direct loans went directly to

The other seven SBA economic development programs operate indirectly through various, often complex, state, local, and private sector arrangements. The largest such program, Bond Guarantees for Surety Companies, provided about $957 million in fiscal year 1987 to guarantee surety bonds for small contractors unable to obtain a performance-type bond in the absence of a guarantee. About 16 percent of this program's guarantees were provided directly to rural counties in fiscal year 1985.

of the two Certified Development Company Loans Programs, the larger section 504 program provided about $355 million in guaranteed loans to finance long-term fixed assets of small businesses via development companies certified by SBA. SBA obtains funds for this program through the sale of debentures to private investors. Under the 503 program, which provided about $2 million in direct and guaranteed loans in fiscal year 1987, SBA obtains its funds by selling SBA-guaranteed debentures to the Federal Financing Bank. A rural percentage is available for only the 503 program--about 11 percent; however, this percentage may reflect the location of the development companies rather than the small businesses served.

Small Business Investment Companies (SBIC) make equity and venture capital investments in small businesses. SBA provided direct loans of about $39 million and guaranteed loans of about $151 million to licensed SBICS in fiscal year 1987. The fiscal year 1985 rural percentage of less than 3 percent for direct loans (no percentage was available for guaranteed loans) also may reflect the location of the investment companies, not the small businesses served.

11.303

11.305

Economic Development--Technical Assistance (Grants)
Economic Development--State and Local Economic
Development Planning (Grants)

In fiscal year 1987, the five economic development programs administered by the Department of Commerce's Economic Development Administration (EDA) provided grants totaling about $201 million. The Grants for Public Works Program, which provided about

1we placed this program in the economic development category rather than in the infrastructure category because its purpose is to fund public works and development facilities that directly support economic development.

$144 million, had a rural share of about 36 percent in fiscal year 1985. The Special Economic Development and Adjustment Assistance Program, which provided grants of $26 million, had a rural share of about 52 percent in fiscal year 1985. The Support for Planning Organizations Program, which provided grants of about $19 million, had a 42-percent rural share in fiscal year 1985. Thus the rural shares of these three principal EDA programs, ranging from about 36 to 52 percent, reflect substantial rural participation.

The

USDA's Business and Industrial Loans Program, established by the Rural Development Act of 1972 (Public Law 92-419), provided about $96 million in guaranteed loans in fiscal year 1987 and had a rural share of about 35 percent in fiscal year 1985. The loan amount represents an expansion from about $61 million in 1985. Nonprofit National Corporations Program, established by the Food Security Act of 1985, provided grants and loans totaling about $33 million in 1987 to stimulate private investment to improve economic development and employment in rural areas. The Industrial Development Grants Program helps rural communities through grants for such projects as improving and developing industrial sites. These USDA programs are all administered by the Farmers Home Administration (FmHA). Rural shares for these programs were not

available.

The Department of Defense (DOD) Procurement Technical Assistance Program supports marketing and technical assistance to firms that sell to DOD (about $6 million in 1987). The Appalachian Regional Commission's grant program assists multicounty development districts in Appalachia (about $2 million in 1987). It had a rural share of about 32 percent in fiscal year 1985.

Programs providing assistance in agriculture and natural resources, highlighted in figure 4.2, are the second category of rural development-type programs. As explained previously, however, we excluded certain programs in this category when selecting rural development-type programs. For example, agricultural commodities programs--which provide considerable amounts of federal funds to rural areas--are not primarily oriented to rural development. Similarly, conservation programs are directed primarily at conserving soil and water resources rather than being oriented to rural development. Although such programs are not discussed as rural development-type programs, we have included them in the list of federal programs in appendixes II and III.

The agriculture/natural resources category contains three rural development-type programs, two dealing with forestry and one with mining. In fiscal year 1987, these programs provided about $84 million in grants and payments.

Forestry and mining programs support industries that provide direct benefits to rural counties. Two USDA forestry programs provided a total of about $39 million to participants in fiscal year 1987. The Cooperative Forestry Assistance Program, which is administered by the Forest Service and which provided about $27 million, is directed at nonfederal forest and other rural lands to assist, among other things, in advancing forest resources management, encouraging timber production, and efficiently utilizing wood and wood residues. No rural share was available for this program. The Forestry Incentives Program, administered by the Agricultural Stabilization and Conservation Service, provided direct payments of about $12 million in fiscal year 1987 for similar purposes. It had a rural share of about 72 percent in fiscal year 1985.

The Department of the Interior program for regulating surface mining provided about $45 million in fiscal year 1987; no rural share was available for this program. States, Indian tribal agencies, and small coal mine operators are eligible for this program. Program funds may be used for such purposes as preparing state legislative proposals and regulations and contracting with qualified laboratories to provide hydrologic and geologic data on behalf of eligible small coal operators.