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WHERE TO TURN?
Guide to USDA Rural Development programs

prepared by Jesse Quillen
USM Economic Development Masters Program

CONTENTS

Summary of Programs

RURAL BUSINESS ENTERPRISE GRANTS

WATER AND WASTEWATER GRANTS

COMMUNITY FACILITIES GRANTS

HIGH ENERGY COST GRANTS

RURAL BUSINESS OPPORTUNITY GRANT

RURAL DEVELOPMENT COMMUNITY CONNECT GRANT

SOLID WASTE MANAGEMENT GRANT

HOUSING PRESERVATION GRANT

RURAL ECONOMIC DEVELOPMENT GRANT

RURAL COOPERATIVE DEVELOPMENT GRANT

ENERGY EFFICIENCY IMPROVEMENT GRANT

BUSINESS AND INDUSTRY GUARANTEED LOANS

FOR FURTHER INFORMATION

 

Summary of Programs

USDA, a federally funded, behemoth government agency, offers a wide variety of grant programs to assist communities throughout the United States.  USDA utilizes its Rural Development (RD) agency to administer rural business, cooperative, housing, utilities and community development programs.  USDA RD has an $86 billion dollar portfolio of loans and they administer nearly $16 billion in program loans, loan guarantees, and grants through their various programs.  These programs are designed to address a number of quality of life and economic opportunity issues including Leadership and Community Planning, shelter and infrastructure, health and safety, education, business ventures, environment, and community life.
USDA/RD programs are funded on a competitive basis.  Median household income in relation to state and national averages plays an important role in determining eligibility.  In addition, some programs may be limited based on current funding.  USDA/RD grant programs are usually competitive in nature.  However, in some instances certain communities are given high funding priority including those suffering from natural disasters, fundamental economic structural change, persistent poverty, and long term population decline or job deterioration.  Although several programs do not list maximum grant amounts, as you might expect, research indicates that smaller grant applications are more likely to be funded than larger ones.

Contact Information: USDA/RD is a national agency that functions throughout the United States.  Specific program data should be obtained through the individual state and area USDA/RD offices.  Contact information is listed at the bottom of each page.

               rural_development_logo                  

 

 

 

 

rural_development_logo PROGRAM PROFILE: 
RURAL BUSINESS ENTERPRISE GRANTS

If you’re a public entity, non-profit corporation, or federally recognized tribal group looking to convert, enlarge, repair or modernize your building, plant, machinery, equipment, access streets and roads, parking areas, utilities and pollution control and abatement facilities the RURAL BUSINESS ENTERPRISE GRANT (RBEG) may be for you.  Typically, RBEG grants do not have a maximum limit, however, awards usually are less than $100,000.  RBEG grants also require varying commitment of funds from the applicant from non-federal sources.

OTHER ELIGIBLE USES FOR GRANT PROCEEDS:

  1. Acquisition and development of land, easements and rights-of-way
  2. loans for start-up operating costs and working capital
  3. technical assistance for proposed grantee projects
  4. reasonable fees and charges for professional services necessary for the planning and development of the project including packaging
  5. refinancing of debts subject to some restrictions
  6. providing financial assistance to third parties through a loan
  7. training, when necessary, in connection with technical assistance; and
  8. production of television programs to provide information on issues of importance to farmers and rural residents

SPECIAL AREAS OF FOCUS:

  1. Small and emerging private business enterprises located in rural areas outside the boundary of a city of 50,000 or more
  2. Small and emerging private busisness enterprise is defined as : any private business which will employ 50 or fewer new employees;  has less than $1 million in projected gross revenues; has, or will utilize, technological innovations and commercialization of new products that can be produced/manufactured in rural areas; and new processes that can be used in such production
  3. Project must have a firm commitment from a business to locate or expand to the community, thereby creating jobs
  4. Priority is given to projects in communities where the unemployment rate exceeds the state rate
  5. Priority is given to projects in communities that has a median household income that is less than the state’s local median household income, as determined by the 2000 census

LIMITATIONS:

  1. Areas with low unemployment rates may be difficult to fund
  2. Areas with high median household incomes could be difficult to fund

 

 

 

rural_development_logo PROGAM PROFILE:
WATER AND WASTEWATER GRANTS

USDA/RD Water and Wastewater grants are targeted towards public bodies, nonprofit corporations, and federally recognized Indian tribes.  The grant proceeds may be used for construction, replacement, expansion, or other improvements to water and wastewater systems.  Entities qualifying for these grants usually have to provide matching funds of at least 25% of the eligible project cost.  Although USDA/RD does not have a maximum grant amount for Water and Wastewater grants limitations may be encountered because of prevailing median household income and need.

SPECIAL AREAS OF FOCUS:

  1. Rural areas with populations of 10,000 or less
  2. Project should be consistent with comprehensive community development plans

LIMITATIONS:

  1. USDA/RD may dictate consumer rates as a condition of the grant
  2. Communities may not be able to provide the required matching funds
  3. Communities may not have or may be unable to afford a comprehensive community development plan

Wastewater facility under construction
funded by USDA/RD Water and Wastewater Grant

 

 

 

 

PROGRAM PROFILE: 
COMMUNITY FACILITIES GRANTS

USDA/RD Community Facility grants are intended to assist public entities, special-purpose districts, non-profit corporations, and federally recognized tribal governments with public health facilities, public safety facilities/equipment, community buildings, education facilities as well as fire and rescue facilities and equipment.  These entities may usually apply for grant assistance up to 75% of eligible project costs.

SPECIAL AREAS OF FOCUS:

  1. To build or improve essential public facilities in areas or towns of not more than 20,000 population.  Priority given projects in communities with a population of 5,000 or less
  2. Highest priority goes to projects serving communities with median household incomes below the higher of the poverty line or 60% of the State non-metropolitan median household income

LIMITATIONS:
Grant funds may not be used to:

  1. Pay any annual recurring costs, including purchases or rentals that are generally considered to be operating and maintenance expenses
  2. Construct or repair electric generating plants, electric transmission lines, or gas distribution lines to provide services for commercial sale
  3. Pay costs to construct facilities to be used for commercial rental where the applicant has no control over tenants and services offered
  4. Construct facilities primarily for the purpose of housing State, Federal or quasi-Federal agencies
  5. Finance recreational facilities or community antenna television services or facilities


“Jaws of Life” Rescue Truck
funded by a Communit Facilities Grant

 

 

 

 

PROGRAM PROFILE:
HIGH ENERGY COST GRANTS

High Energy Cost Grants are available for improving and providing energy generation, transmission and distribution facilities serving communities with average home energy costs exceeding 275% of the national average.  Grant funds may be used for on-grid and off-grid renewable energy projects, energy efficiency and energy conservation projects serving eligible communities.  In addition, administrative costs must not exceed 4 percent of grant funds.

ELIGIBLE APPLICANTS:

  1. A legally organized for-profit or nonprofit organization such as, but not limited to, a corporation, association, partnership (including a limited liability partnership)
  2. A sole proprietorship
  3. A State or local government, or any agency or instrumentality of a State or local government, including a municipality or public power authority
  4. An Indian tribe, a tribal-owned entity, an Alaskan Native Corporation
  5. An individual or group of individuals or
  6. Any of the above entities located in a U.S. territory or other area authorized by law to participate in programs of the Rural Utilities Service or under the Rural Electrification Ac

SPECIAL FOCUS:

Projects awarded since 2003 have been located throughout the U.S. and its territories.  These projects have ranged in size from just about $200,000 to almost $3,000,000.


Wind Turbines Purchased with the High Energy Cost Grant

 

 

 

 

PROGRAM PROFILE:
RURAL BUSINESS OPPORTUNITY GRANT

The Rural Business Opportunity Grant (RBOG) program promotes sustainable economic development in rural communities with exceptional needs through provision of training and technical assistance for business development officials and to assist with economic development planning.  Those eligible for the RBOG include rural public bodies, rural nonprofit corporations, rural Indian tribes, and corporations with primarily rural members that conduct activities for the mutual benefit of the membership.  These corporations must demonstrate that they have sufficient financial strength and expertise to carry out the activity to be funded.

MAXIMUM GRANT AMOUNTS:
For projects serving a single state the maximum grant amount is $50,000.  The maximum grant amount for projects serving two or more states is $150,000.

SPECIAL FOCUS:
For the purpose of the RBOG “rural” is defined as any area other than a city or town with a population of greater than 50,000 and the urbanized area contiguous and adjacent to such a city or town according to the latest decennial census.  In addition, certain communities are given high funding priority including those suffering from natural disasters, fundamental economic structural change, persistent poverty, and long term population decline or job deterioration.

RBOG projects funded are primarily training and technical assistance in nature.  Funds have been provided for development of export markets, development of long term trade strategies, community economic development planning, and establishment of rural business incubators.

 

 

 

 

PROGRAM PROFILE:
RURAL DEVELOPMENT COMMUNITY CONNECT GRANT

The community connect program serves rural communities where broadband service is least likely to be available, but where it can make a tremendous difference in the quality of life for citizens.  The projects funded by these grants will help rural residents tap into the enormous potential of the internet.  The minimum grant amount for the community connect program is $50,000 and the maximum grant amount is $1,000,000.  All operating expenses must not exceed $250,000 for the first two years of the project.

ELIGIBLE APPLICANTS:

  1. Must be legally organized as an incorporated organization
  2. Indian tribe or tribal organization
  3. State or local unit of government
  4. Other legal entity, including cooperatives or private corporations or limited liability companies organized on a for profit or not-for-profit basis
  5. Must have the legal capacity and authority to own and operate the broadband facilities as proposed in its application
  6. Must be able to enter into contracts and to otherwise comply with applicable federal statutes and regulations

SPECIAL FOCUS:
The USDA/RD Community Connect Grant must serve a rural area throughout which Broadband Transmission Service does not currently exist.  The grant must serve one and only one Community recognized in the latest decennial census as published by the Bureau of the Census.  The applicant must agree to deploy basic broadband transmission service free of all charges for at least 2 years, to all critical community facilities located within the proposed service area.

                                      
USDA/RD helps to provide Broadband Internet in Rural Communities
with the Rural Development Community Connect Grant

 

 

 

 


PROGRAM PROFILE:
SOLID WASTE MANAGEMENT GRANT

The Solid Waste Management Grant program provides technical assistance and or training to help rural communities reduce or eliminate pollution of water resources and improve planning for and management of solid waste sites.  Although there are no stated minimum and maximum grant amounts the typical amount of assistance under this program is about $50,000.  Funding is limited so these grants tend to go to only the neediest areas.  Only rural areas of 10,000 or fewer in population as defined by the latest decennial census of the U.S. Census Bureau are eligible.

ELIGIBLE APPLICANTS:

  1. Private nonprofit organizations with tax exempt status designated by the Internal Revenue Service
  2. Public bodies
  3. Federally acknowledged or State recognized Native American tribes
  4. Academic institution

LIMITATIONS:
Grant funds may not be used to:

  • Duplicate current services
  • Fund political activities
  • Pay for capital assets, the purchase of real estate or vehicles
  • Pay for construction or operation and maintenance costs
  • Pay for costs incurred prior to the effective date of the grant

                                   

Solid Waste Management Grants provide training to protect our streams!

 

 

 

 

 

PROGRAM PROFILE:
HOUSING PRESERVATION GRANT

The Housing Preservation Grant (HPG) program provides grants to sponsoring organizations for the repair or rehabilitation of low and very low-income housing.  Those assisted must own very low or low-income housing, either as homeowners, landlords, or members of a cooperative.  Very low-income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI.  The HPG program is limited to towns with a population of 20,000 or less.  Typical amount of assistance under the HPG is usually less than $100,000.

ELIGIBLE APPLICANTS:

  1. State agencies and units of local government
  2. Native American tribes
  3. Nonprofit organization

LIMITATIONS:

  1. HPG funds received by the sponsors are combined with other programs or funds and used as loans, grants, or subsidies for recipient households based on a plan contained in the sponsor’s application.
  2. Funds must be used within a two-year period

The Housing Preservation Grant program provides funds for repair or rehabilitation of low income housing.

 

 

 

 

PROGRAM PROFILE:
RURAL ECONOMIC DEVELOPMENT GRANT

The Rural Economic Development Grant (REDG) passes funds on to third party borrowers as zero-interest loans for projects that create jobs in rural areas, or that provide infrastructure on community facilities in rural areas that will lead to economic stability.  A maximum of $300,000 per grant application may be requested to establish a revolving loan fund.

ELIGIBLE APPLICANTS:

  • Rural Utilities Service Electric and Telephone borrowers with outstanding loans, and not delinquent on loans, are eligible.

ELIGIBLE PROJECTS:

  • Capitalization of revolving loan funds
  • Technical Assistance in conjunction with projects funded under a zero-interest RED Loan
  • Business Incubators
  • Telecommunications/Computer Networks for distance learning or long distance medical care

LIMITATIONS

Applications are scored on job creation potential, sustainability of projects, suitability of project to the area, diversification of employment in the area, amount of supplemental funds, relative income, and employment levels.

                                   

Business Incubators and Distance Learning are eligible for funding under the Rural Economic Development Grant program.

 

 

 

 

 

PROGRAM PROFILE:
RURAL COOPERATIVE DEVELOPMENT GRANT

The Rural Cooperative Development Grant (RCDG) program helps facilitate the creation or retention of jobs in rural areas through the development of new rural cooperatives, value-added processing and rural businesses.

ELIGIBLE APPLICANTS:

  1. Grants may be made to nonprofit corporations and institutions of higher educations.
  2. Must be less than 50,000 population and have a density of not more than 100 persons per square mile

ELIGIBLE USES OF FUNDS:

Grant funds may be used to pay up to 75% (95% where the grantee is a 1994 Institution) of the cost of establishing and operating centers for rural cooperative development, such as:

    1. Applied research, feasibility, environmental and other studies that may be useful for the purpose of cooperative development
    2. Providing loans & grants for the purpose of cooperative development
    3. Providing technical assistance, research services and advisory services for the purpose of cooperative development

LIMITATIONS:

  • Public bodies are not eligible applicants
  • Cities and states are not eligible applicants
  • Grant funds cannot be used for basic or academic research or for research and development
  • Other federal grants cannot be used as matching funds

The development of new rural cooperatives and value added processes may be eligible for funding with the Rural Cooperative Development Grant.

 

 

 

 

 

PROGRAM PROFILE:
ENERGY EFFICIENCY IMPROVEMENT GRANT

The Energy Efficiency Improvement Grant program helps farmers, ranchers, and rural small businesses to purchase renewable energy systems.  Additionally, this program intends to help stimulate rural economic development by helping agricultural producers and rural small businesses create new sources of income, to create new jobs, and to create new uses for agricultural products and wastes.  The Energy Efficiency Improvement Grant program defines “rural” as any area other than a city or town that has a population of greater than 50,000 inhabitants and the urbanized area contiguous and adjacent to such a city or town according to the latest decennial census of the United States.

ELIGIBLE APPLICANTS:

  1. Eligible applicants include agricultural producers and rural small businesses. 

ELIGIBLE PROJECTS:

  1. Projects must be for the purchase of a renewable energy system or to make energy efficiency improvements.
  2. Eligible projects include systems that generate energy from wind, solar, biomass, or geothermal source or that produce hydrogen derived from biomass or water using a renewable energy source. 
  3. Energy efficiency projects typically involve installing or upgrading equipment that results in a significant reduction in energy use from current operations.

LIMITATIONS:

  • Applicants must demonstrate financial need.
  • Grant request must not exceed 25% of the eligible project cost

 

 

 

 


PROGRAM PROFILE:
BUSINESS AND INDUSTRY GUARANTEED LOANS

Business and Industry Loans are loan guarantees where the cost is a one-time, up front fee of 2% of the amount guaranteed.  A reduced fee may be obtained for a high impact business in a persistently poor community.

ELIGIBLE APPLICANTS:
Loans are made to businesses which save or create jobs in rural areas (under 50,000 in population). Borrowers may be an individual, partnership, cooperative, for-profit or non-profit corporation, Indian Tribe, or public body.
ELIGIBLE PROJECTS:
Purchase and Expansion of the following:

  • Land, equipment, buildings, working capital
  • Aquaculture, commercial nurseries, tourist and recreation facilities
  • Hotels, motels, community facility projects
  • Housing development sites
  • Apartment Buildings
  • Stock in a cooperative where commodities are being produced by the members for processing by the cooperative

LIMITATIONS:
Loan funds cannot be used for lines of credit, gambling, golf courses and agricultural production over $1 million or more than 50% of a project and when not part of an integrated agricultural processing business.
FUNDING:
The maximum guarantee is generally 80% for loans up to $5 million, 70% for $5-$10 million, 60% for $10-$25 million.
TERMS:
Typical terms are 20 years for real estate, 7-10 years for machinery and equipment, 5-7 years for working capital.  The interest is negotiated between the lender and borrower, the rate may be fixed or variable.
COLLATERAL:
All collateral must secure the entire loan, and personal and corporate guarantees are required.

 

 

FOR FURTHER INFORMATION

For further information contact State and Area USDA/RD offices at: 1-800-670-6553

Online Information may be obtained at http://www.rurdev.usda.gov/recd_map.html