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Loan/Loan Guarantee

Federal Funding Primer: Loan/Loan Guarantee

Loans and loan guarantees are funds provided by federal agencies to finance specific projects and similar loans provided by private lenders that are guaranteed by federal agencies to reduce risk.

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This page only includes one funding opportunity.

Community Facilities Direct Loan & Grant Program

Department: U.S. Department of Agriculture (USDA)
Agency: Rural Development

Please note that this program is also offered in the Discretionary category of federal funding.

Overview

The Community Facilities Direct Loan & Grant Program provides grants and low-interest direct loans to public entities, community-based nonprofit organizations, and federally recognized tribes in rural communities to develop essential community facilities. According to the USDA, an essential community facility is “a facility that provides an essential service to the local community for the orderly development of the community in a primarily rural area, and does not include private, commercial or business undertakings.” Grantees can use these funds to construct, expand, or improve a wide range of community facilities.

Eligible Services

Funds from the Community Facilities Direct Loan & Grant Program can be utilized to acquire, build, or upgrade essential community facilities, buy equipment, or cover related project costs. Examples of essential community facilities include:

  • Community support facilities, like childcare centers, community centers, and transitional housing
  • Public safety facilities, including fire stations, police stations, emergency response centers, and equipment to ensure community safety
  • Educational facilities, like libraries, museums, and private schools
  • Utility equipment, including telemedicine or distance learning equipment
  • Local food systems, like community gardens, food pantries, community kitchens, and food banks
  • Health care facilities, including hospitals, clinics, dental offices, nursing homes, and assisted living facilities

How Funds are Distributed

Funding is provided in the form of direct loans, grants, or a combination of loans and grants. All funding decisions are made through a competitive process. Eligible entities include public bodies, nonprofit community-based organizations, and federally recognized tribes located in rural areas with populations of 20,000 or fewer.

Loans are available with a fixed interest rate set by USDA and are available for up to the lesser of the useful life of the essential community facility or 40 years.

Grants are provided on a graduated scale, with eligible grantees able to receive a maximum of 15-75% of their proposed project costs based on the size of the community served and the median household income. For instance:

  • A project in a rural community with under 20,000 residents and a median household income below the higher of the poverty line or 90% of the state’s nonmetropolitan median household income would be able to receive a maximum of 15% of proposed project costs.
  • A project in a rural community with under 5,000 residents and a median household income below the higher of the poverty line or 60% of the state’s nonmetropolitan median household income would be able to receive a maximum of 75% of proposed project costs.

The application for the Community Facilities Direct Loan & Grant Program is open year-round, pending fund availability. Applicants should begin the process by contacting their local Rural Development office to discuss the particulars of the proposed project.

Where to Find More Information

For more information about the Community Facilities Direct Loan & Grant Program, interested individuals and entities should look to:

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