ReConnect Loan and Grant Program

Department of Agriculture, Rural Utilities Service

Program Type:

Grant; Loan

Eligible Geography:

Nationwide

Summary:

ReConnect furnishes loans and grants to provide funds for the costs of construction, improvement, or acquisition of facilities and equipment needed to provide broadband service in eligible rural areas. Projects are eligible to receive up to $25 million in grant awards, $50 million in loans, and a maximum of $50 million in support according to the three following schedules.

-$200 million available for 100% grants- Rural Broadband Grant
-$25 million per grant
-Applicants must match equal to 25% of overall project cost
-The matching contribution must be expended first, followed by grant funds, except for approved pre-application expenses

-$200 million available for 50% loan / 50% grant - Grant + Loan Combo
-$25 million grant and $25 million loan max amount
-Interest rate for 50% loan component set by Treasury Rate for remaining amortization period at the time of each advance of funds.
-Cash provided in lieu of loan funds, followed by loan funds, followed by grant funds.

-$200 million for 100% loan - Low Interest Rural Broadband Loan
-$50 million max amount for loans
-Interest rate for a 100% loan set at a fixed 2%. Tangible equity to total assets must be at least 20% at the end of the calendar year.

Eligible Recipients:

For-Profit Business; Local Government; Non-Profit Organization; State Government; Internet Service Provider

Eligible Recipients Detail:

Cooperatives, non-profits, mutual associations; private corporations or LLCs; states, local governments or affiliates; US territory or possession; Indian Tribe;

Eligible Purpose:

Building Connectivity; Anchor Institution Connectivity; Last Mile Connectivity; Middle Mile Connectivity; Backbone Connectivity

Eligible Purpose Detail:

Eligible to fund the construction or improvement of buildings, land, and other facilities that are required to provide broadband service; reasonable pre-application expenses (Not more than 5% of award amount); the acquisition and improvement of an existing system that is currently providing insufficient broadband service (Eligible for 100% loan requests only, May not exceed 40% of the loan amount); and terrestrial based facilities that support the provision of satellite broadband service.

ReConnect offers three types of funding options for broadband infrastructure to connect rural families, businesses, farms, ranches, schools, libraries, and public safety facilities to modern, high-speed internet. A rural area is eligible if it currently does not have sufficient access to broadband (defined as 10/1 Mbps). The ReConnect grants, grant and loan combinations, and low-interest loans can be used to construct, improve, and acquire facilities that provide internet services to customers’ premises, with reliable technologies that are suitable for the type of rural community and the type of high-speed internet use.

Excluded Programs:

Areas are ineligible to receive support from the ReConnect program if they've already received support from RUS Broadband Loans (Telecommunications Infrastructure Loan; Farm Bill Broadband Loan; Broadband Initiatives Program); RUS Community Connect Grants; RUS BIP Grants; State-funded areas: CAF Auction 903 Winners; or ReConnect Program Awards.

Other Eligibility Criteria:

90% of households in the proposed funded service area must lack access to fixed, terrestrial broadband of 10 mbps download / 1 mbps upload. Rural Area that is not located in a city, town, or incorporated area that has a population of greater than 20,000 inhabitants or an urbanized area contiguous and adjacent to a city or town that has a population of greater than 50,000 inhabitants.

An eligible project must demonstrate a positive ending cash balance as reflected on the cash flow statement for each year of the forecast period and demonstrate positive cash flow from operations in year five of the forecast period. Eligible projects must also meet at least two of the following requirements in year five of the forecast period: a minimum Times Interest Earned Ratio (TIER) requirement of 1.20, a minimum Debt Service Coverage Ratio (DSCR) requirement of 1.20 and a minimum Current Ratio of 1.20.

Funding Match/Terms:

Grant Applicants must provide a matching contribution equal to 25% of the cost of the overall project.

If an applicant receives a 50% loan / 50% grant award, all cash provided in lieu of loan funds must be expended first, followed by loan funds, and then by grant funds, except for approved pre-application expenses.

Note/Additional Resources:

https://gcc01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.usda.gov%2Fsites%2Fdefault%2Ffiles%2Fdocuments%2Freconnect-program-fact-sheet-508c.pdf&data=02%7C01%7CGResendez%40ntia.gov%7C29447adf182c473901c608d7aa5727fd%7Cd6cff1bd67dd4ce8945dd07dc775672f%7C0%7C1%7C637165163630637178&sdata=yy%2FNtjRIpCxbSvUdytJfh67thm8M%2BIi44Es2NTefCZY%3D&reserved=0

https://www.usda.gov/reconnect

Source:

https://fas.org/sgp/crs/misc/RL33816.pdf