• Provides grant funds to electric and telephone utilities financed by the Rural Utilities Service (RUS), an agency of the United States Department of Agriculture, to promote sustainable rural economic development and job creation projects through the operation of a revolving loan fund program.
• Reference: Section 313 of the Rural Electrification Act of 1936 and 7 CFR 1703, Subpart B.

• Grants can be made, at the discretion of the Administrator of the Rural Business-Cooperative Service (RBS), to any RUS electric or telephone utility that is not delinquent on any Federal debt or in bankruptcy proceedings.
• The RUS utility is required to operate and administer a revolving loan fund program using the grant proceeds. The fund will be operated by the RUS utility in accordance with an RBS-approved revolving loan fund plan.
• To establish the revolving loan fund, the RUS utility is required to contribute to the fund an amount equal to 20 percent of the grant. This contribution will be provided by the RUS utility from its own sources and will remain as part of the fund until the fund is terminated.

• Initial loans, at zero-interest, from the revolving loan fund may only be made to:
  • Non-profit entities or public bodies for community development projects and community facilities and services.
  • Non-profit entities, public bodies, or for-profit entities for educational facilities.
  • Non-profit entities, public bodies, or for-profit entities for medical facilities.
  • Non-profit entities and public bodies for business incubators to assist in developing emerging enterprises.
• Subsequent loans, at an interest rate not to exceed prime, may be made to for-profit entities, non-profit entities, or public bodies for any rural economic development purpose eligible under the program in accordance with the RUS utility's revolving loan fund plan. Subsequent loans are made using repayment funds from the initial loan.

• Projects related to the sponsoring RUS utility that would, in the judgment of RBS, create a conflict of interest, or present a potential for or the appearance of a conflict of interest.
• Project costs incurred by the third-party recipient prior to filing of the completed application with RBS.
• Refinancing or paying off any existing debt owed by the third-party recipient.
• Electric or telephone purposes related either to the RUS utility or the third-party recipient.
• Projects located in areas covered by the Coastal Barrier Resources Act or projects that would adversely impact the environment.
• Projects that will be used for residential purposes or entertainment purposes at the residential level.
• The purchase of an established business or operation or to primarily transfer property or real estate between owners without making substantial improvements or additions that will result in long-term job creation.
• Projects that will result in the transfer of existing employment or business activities from one area to another.

• The third-party recipient must provide supplemental financing for its project. The minimum requirement is 20 percent of the amount of the loan being provided from the revolving loan fund.
• No in-kind contributions are accepted as supplemental financing.

• Initial loans made from the revolving loan fund must carry a zero-interest rate and not exceed a maximum term of 10 years. Lesser term notes are acceptable.
• The RUS utility will determine repayment terms on loans made using the RUS utility's contribution and on subsequent loans made from repayment of the initial loan. The maximum interest rate for these loans is the prevailing prime rate.
• The third-party recipient will provide collateral to the RUS utility that is acceptable to the RUS utility.
• Reasonable loan servicing fees may be charged by the RUS utility to the third-party recipient, not to exceed 1 percent a year on the unpaid principal balance of the loan.

• Standard Form 424, "Application for Federal Assistance" signed by the RUS utility.
• RUS utility Board of Directors resolution requesting the grant for revolving loan fund purposes.
• Miscellaneous Federal forms and certifications as set forth in 7 CFR 1703.34.
• Narrative discussion of the initial third-party project consisting of the following:
  • "Selection Factors" as set forth in 7 CFR 1703.35
  • "Project Description" as set forth in 7 CFR 1703.36
  • Discussion regarding environmental impact of the third-party project.
• A revolving loan fund plan outlining, among other things, the specific objectives of the revolving loan fund program, its lending parameters, application process, and procedure for monitoring third-party projects.

• Applications may be filed on any official workday at the Rural Development State Office.
• A simultaneous filing must also be sent to the State single point of contact for State and local governments, if applicable.
• Application selection is competitive. Applications are awarded priority points by RBS based on the selection factors, and the highest-ranked applications are selected for funding.

• Nature of the project (medical or educational facilities, community infrastructure or services, etc.)
• Direct job creation resulting from the proposed project
• Long-term improvements in economic development resulting from the project
• County economic conditions -- unemployment rate and per capital personal income
• Physical location of project in rural area of less than 2500 people
• Loan repayment ability of the third-party recipient based on its business plan

It is recommended that you discuss the proposed project and process with the State office before completing the application.