Rural Economic Development Loan & Grant Program

The Rural Economic Development Loan and Grant program provides funding for rural projects through local utility organizations. USDA provides zero-interest loans to local utilities which they, in turn, pass through to local businesses (ultimate recipients) for projects that will create and retain employment in rural areas. The ultimate recipients repay the lending utility directly. The utility then is responsible for repayment to USDA.

USDA provides grants to local utility organizations which use the funding to establish Revolving Loan Funds (RLF). Loans are made from the revolving loan funds to projects that will create or retain rural jobs. When the revolving loan fund is terminated, the grant is repaid to USDA.

The local utility passes the funding to ultimate recipients for such eligible projects as: 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 facilitate economic development, facilities and equipment for medical care for rural residents, start-up venture costs (including, but not limited to financing fixed assets such as real estate, buildings, equipment or working capital), business expansion, technical assistance.

Eligibility

To receive funding (which will be forwarded to selected eligible projects), an entity must be: A former Rural Utilities Service borrower who borrowed, repaid or pre-paid an insured, direct or guaranteed loan; Nonprofit utilities that are eligible to receive assistance from the Rural Development Electric or Telecommunication Programs; Current Rural Development Electric or Telecommunication Programs borrowers.

Intermediaries may use funds to lend for projects in rural areas or towns with a population of fewer than 50,000 residents.

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