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Rural Economic Development Loans And Grants

Program Descriptions

Program Number



Rural Economic Development Loans And Grants


Federal Agency




Rural Electrification Act of 1936, as amended, Title III, 7 U.S.C. 930-940c.






To promote rural economic development and job creation projects, including funding for project feasibility studies, start-up costs, incubator projects, and other reasonable expenses for the purpose of fostering rural development.


Types of Assistance

Direct Loans; Project Grants.


Uses and Use Restrictions

Projects which promote rural economic development and job creation. For fiscal year 2007, maximum amount of grant is $300,000; maximum amount of loan is $740,000. Maximum term of loan is ten years at zero interest rate.


Eligibility Requirements

Applicant Eligibility

Electric and telephone utilities that have current loans with the Rural Utilities Service (RUS) or Rural Telephone Bank loans or guarantees outstanding and are not delinquent on any Federal debt or in bankruptcy proceedings.

Beneficiary Eligibility

Rural/General Public.


This program is excluded from coverage under OMB Circular No. A-87.


Application and Award Process

Preapplication Coordination

Application Form: OMB Standard Form 424. This program except for feasibility studies is eligible for coverage under E.O. 12372 "Intergovernmental Review of Federal Programs." The RUS utility should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review. This program is excluded from coverage under OMB Circular No. A-102. An environmental review is conducted by the agency for the projects. An environmental assessment without scooping is occasionally required.

Application Procedure

Submit application as described in 7 CFR 4280.39, no State plan required.

Award Procedure

RBS selects projects to be funded. The funds pass through the RUS utility to rural economic development projects.


Applications may be filed on any working day during the month.

Range of Approval/Disapproval Time

Open ended.





Assistance Considerations

Formula and Matching Requirements

This program requires supplemental funds in the amount of 20 percent of the RBS application amounts.

Length and Time Phasing of Assistance



Post Assistance Requirements


Reporting need established in 7 CFR 4280, Subpart A.


Financial audit of the RUS utility is required.


Record retention requirements established in 7 CFR 4280, Subpart A.


Financial Information

Account Identification

12-4230-0-3-271; 12-3108-0-1-452; 12-3105-0-1-452.


(Loans) FY 07 $26,167,000; FY 08 $33,120,656; and FY 09 est $ot reported. (Grants) FY 07 $9,963,000: FY 08 $10,000,000; and FY 09 est not reported. (Note: Grants to establish Revolving Loan Fund Programs.)

Range and Average of Financial Assistance

The maximum amount of loan is $740,000. The maximum amount of Grant is $300,000.


Program Accomplishments

In fiscal year 2007, 81 projects were funded. In fiscal year 2008, the level of activity was 92. At this time, the estimated funding level for fiscal year 2009, has not been reported.


Regulations, Guidelines and Literature

7 CFR 4280, Subpart A and the Rural Electrification Act of 1936.


Information Contacts

Regional or Local Office

Consult your local telephone directory for RD District Office number. If no listing, get in touch with appropriate Rural Development State Office listed in Appendix IV of the catalog.

Headquarters Office

Director, Specialty Lenders Division, Rural Business-Cooperative Service, Department of Agriculture, Washington, DC 20250. Telephone: (202) 720- 1400.

Web Site Address


Related Programs



Examples of Funded Projects

(1) a $740,000 loan to construct an addition to a hospital to house a Rural Health Clinic. (2) a $450,000 loan to purchase equipment to be used in a business expansion. (3) a $300,000 grant to establish a revolving loan fund to provide business loans to businesses in 10 counties.


Criteria for Selecting Proposals

See 7 CFR 4280.42.


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