Purpose
- 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.
Eligibility and Use of Grant Proceeds
- 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.
Third-Party Recipients and Uses of Loans from the Fund:
- 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.
Ineligible Purposes
Grant funds will not be used by the RUS utility or the third-party
recipient for:
- 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.
Availability of Funds and Grant Award Size
For information concerning the amount of funds available for revolving
loan fund grants under the Rural Economic Development Grant program,
as well as the maximum and minimum grant award size, please contact
Brian Wiles, USDA Rural Development, 100 USDA, Suite 108 Stillwater,
OK 74074.
Supplemental Financing Requirement for the Third-Party Project
- 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.
Loan Repayment Terms between RUS Utility and Third-Party Recipient
- 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.
A "Complete Application" must consist of: (Refer to 7 CFR
1703.34)
- 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.
Application Filing, Review, and Selection
- 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.
Selection factors considered in the award process:
Some of the factors considered by RBS when making awards include:
- 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
Please refer to the regulation
for details concerning the selection factors and priority points.
It is recommended that
you discuss the proposed project and process with the State office
before completing the application.
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