Fifty or more Midcoast small businesses will receive an economic boost next spring. The Midcoast Council of Governments will distribute $500,000 in the Rural Micro-entrepreneur Assistance Program (RMAP) loans to provide capital for new and current businesses.

The MCOG received a $105,000 grant this year to administer $500,000 in loans to businesses with 10 or fewer employees.

The RMAP is a federal program administered through the United States Department of Agriculture.

The federal program is designed to provide additional capital to micro-entrepreneurs. The capital is used for expanding their operations and markets, as well as hiring more workers.

MCOG expects to receive the funds by the year’s end. The council will begin taking applications from businesses in its membership communities early next year, according Economic Development Director Scott Benson.

The federal program will benefit businesses in  Lincoln, Knox and Sagadahoc counties, as well as the towns of Brunswick and Harpswell in Cumberland County, and Belmont, Lincolnville, Northport and Searsport in Waldo County.

Applicants can receive loans of up to $10,000.

Benson expects micro-entrepreneurs to start receiving loans next spring.

Recipients can use the loans for working capital, purchase of furniture, fixtures and equipment, debt refinancing, business acquisition, and purchasing or leasing real estate. The loans can’t be used for new construction.

This is the first time MCOG has applied for the RMAP.

MCOG officials estimate that the program will create 30 jobs and save another 120 in the Midcoast region. Benson said MCOG  will guide local micro-entrepreneurs during the pre- and post-application process.

“It’s not simply about taking an application,” Benson said. “We are going to guide them throughout the entire process. The grant helps us provide them with educational resources and support in capitalizing their operations.”

MCOG will pay back the $500,000 loan on an annual basis over a 20-year period. Local businesses will pay the loans back on a monthly basis. Both loans are at low interest rates, according to MCOG officials.

Benson believes the federal assistance comes at an important time for micro-entrepreneurs.

Many of the businesses have struggled to find capital due to the lingering effects of the 2007 recession; and the economic downturn has made banks leery about lending money to small, under-capitalized ventures in recent years, according to Benson.

“Banks have taken a very conservative approach to lending, as they should have. The economic times have hit everyone very hard,” he said. “In recent years, micro-entrepreneurs have struggled. And a lack of access to capital is a main reason. This helps businesses who haven’t been able to access capital through conventional means.”

This is the first micro-entrepreneur loan program managed by the council. But it has managed other loan programs designed for small business development and economic growth. Other MCOG managed programs lend money at rates between 5.25 to 7.25 percent, according to the MCOG.

Benson expects some subtle differences in how the RMAP program is managed compared to the larger ones the council handles.

“I expect the policies and procedures to be similar, but they’re will be some differences,” Benson said. “Our board of directors are currently working on the new program’s policies and procedures. Our goal is to help micro-entrepreneurs achieve a level of preparedness, which will enable them to obtain loans independently in the future.”

MCOG received one of two RMAP grants awarded in the state. The Northern Maine Development Commission in Caribou received a $500,000 loan.

These funds are expected to assist 18 businesses and create 45 jobs in Aroostook, Washington and northern Penobscot counties.