Program 101

Program Status: Open
Program Fact Sheet:  PDF

What does this program do?

It helps private lenders provide affordable financing to qualified borrowers to improve access to clean, reliable water and waste disposal systems for households and businesses in rural areas.

Who may apply?

Private lenders may apply for a loan guarantee on loans they make to an eligible borrower who is otherwise unable to obtain commercial credit on reasonable terms.

Eligible borrowers include:

What is an eligible area?

Areas that may be served include:

How may borrowed funds be used?

Construct or improve facilities for:

  • Drinking water
  • Sanitary sewers
  • Solid waste disposal
  • Storm water disposal facilities

Depending on the circumstances, some funds may also be used for:

  • Legal and engineering fees
  • Land acquisition and equipment
  • Start-up operations and maintenance
  • Capitalized interest
  • Other costs determined to be necessary for completion of the project
  • For a complete list see Code of Federal Regulations 7 CFR, Part 1779.2

What are the terms of a loan guarantee?

  • Maximum guarantee is typically 90% of the loan amount
  • Interest rates may be fixed or variable as negotiated between the lender and the borrower, subject to USDA approval
  • Up to 40 year payback period, based on the useful life of the facilities financed
  • Balloon payments are prohibited

Are there additional requirements?

  • The borrower must have legal authority needed to construct, operate and maintain the proposed facilities and the services they provide.
  • All facilities financed with the aid of a loan guarantee must be used for public purposes.

Who will service the loan?

Loans guaranteed through this program are serviced through the private lender that makes the loan, just as they would be without a guarantee.

How do we get started?

  • Lenders: Contact a representative in your local RD office for details on how to become an approved lender
  • Borrowers: Ask your private lender if they participate in USDA Loan Guarantee Programs

Who can answer questions?

  • Contact your local RD representative who serves your area.
  • Participating non-profit associations also offer assistance and training.

What governs this program?

  • Code of Federal Regulation, 7 CFR, Part 1779
  • This program is authorized by 5 USC 301, 7 USC 1989 and 16 USC 1005

Why does USDA Rural Development do this?

This program helps extend access to clean, reliable water and waste disposal systems for households and businesses in eligible rural areas and towns. Affordable terms and good practices can save tax dollars, improve the natural environment and may be necessary for manufacturers and other types of businesses to locate or expand operations

NOTE: Program details may change over time. Before you begin an application, please confirm you have the most current information by contacting a specialist in your local office for assistance or consult the program Instructions listed in the section above titled "What Governs this Program?"

Forms & Resources

NOTE: If state specific forms are not shown above, please ensure that your state is selected in the dropdown menu above to find the State Office contact information and speak to a Specialist before attempting to fill out any forms or applications. This will save you valuable time in your application.

Engineering

Individual states may have particular requirements based on state and local regulations. Please contact the state office in the state where your project is located.

Environmental

Individual states may have particular requirements based on state and local regulations. Please contact the state office in the state where your project is located.

Architect

Individual states may have particular requirements based on state and local regulations. Please contact the state office in the state where your project is located.