USDA Rural Economic Development Loan and Grant Program

Purpose

To promote rural economic development and job creation projects.

Applicant Eligibility

• Rural Utility Service (RUS) Electric and Telephone utility borrowers only.
• Financially sound organization.
• Current on all Federal debts.

Use of Loan Funds

• Business expansions and start-up venture costs, including, but not limited to, fixed assets, real estate, buildings, equipment, or working capital
• Business incubators
• Community development assistance to nonprofits and public bodies (particularly for job creation or enhancement)
• Facilities and equipment to educate and train rural residents to help economic development
• Facilities and equipment for medical care for rural residents
• Technical assistance

Maximum and Minimum Loan Amounts

• Maximum $2,000,000 ($300,000 grant maximum, requires 20% match from cooperative).
• Minimum $10,000.

Loan Terms and Repayment

• Zero-interest loan provided to the RUS borrower on a pass-through basis to the ultimate recipient (project owner).
• Maximum 10 year repayment period.
• Payments may be deferred up to two years.
• Repayment by the ultimate recipient may not be more restrictive than the repayment schedule of the RUS borrower.
• Minimum 20% supplemental financing required of ultimate recipient.

Application Process

• Meet with your local cooperation and fill out a pre-application form.
• Applications are submitted to the cooperative board for approval before being sent to the local USDA field representative.
• Applications are forwarded to the USDA Rural Development National Office for selection on a national competitive basis.
• Applications are reviewed quarterly.

Selection Factors

• Nature of the project.
• Job creation projections.
• Long-term improvements in economic development.
• Diversifying the rural economy or alleviating underemployment.
• Supplemental funds.
• Economic conditions and job creation.
• Unemployment rates.
• Per capita personal income.
• Change in population.
• Number of long-term jobs.
• Community-based economic development program.
• Plan for improving the marketable skills of people in rural areas.
• Location (rural).
• Support for program - cushion of credit payments.
• Demonstration project.
• Probability of success.
• Ownership and management of the project.
• Ultimate recipient’s business plan.
• Completeness of application.