Rural Economic Development Loan and Grant Program

Department of Agriculture, Rural Business Service

Program Type:

Grant; Loan

Eligible Geography:



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 is responsible for repayment to USDA.

Up to $300,000 in grants may be requested to establish the Revolving Loan Funds. Up to 10 percent of grant funds may be applied toward operating expenses over the life of the Revolving Loan Fund. Up to $1 million in loans may be requested.

An ultimate recipient may request up to 80 percent of project costs using these funds, with the remainder provided by the ultimate recipient or the local utility.

Eligible Recipients:

Internet Service Provider; For-Profit Business; Non-Profit Organization

Eligible Recipients Detail:

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.

Eligible Purpose:

Related Industry Support; Building Infrastructure; Anchor Institution Infrastructure; Digital Skills Training; Last Mile Infrastructure

Eligible Purpose Detail:

The Rural Economic Development Loan and Grant program provides funding for rural projects through local utility organizations.

Funds can be used for: Business incubators; Community development assistance to non-profits and public bodies (particularly for job creation and 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

Other Eligibility Criteria:

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

Funding Match/Terms:

For Utility: Loans are available for up to 10 years at 0 percent interest. Grants require a 20 percent match from the local utility. Grants must be repaid to USDA upon termination of the Revolving Loan Fund.

For Ultimate Borrower: The interest rate is 0 percent. Up to 80 percent of project costs; 20 percent must be provided by the ultimate recipient or the local utility. The local utility may incorporate interest rates or administrative loan fees after the funds have been loaned out and revolved once. First-time loans are at 0 percent interest. Repayment may be deferred up to two years for projects including a start-up venture or Community Facilities project.

Note/Additional Resources: