With the recent enactment of the Agricultural Act of 2014 (Farm Bill), changes to the Rural Broadband Access Loans and Loan Guarantees Program (Broadband Program) will have to be implemented and 7 CFR Part 1738 that governs the program will have to be modified.
Until a new regulation is published in the Federal Register detailing the new requirements that must be followed, the Rural Utilities Service is not accepting loan applications for federal assistance under the Broadband Program.
What does this program do?
It provides financing to telecommunications providers in rural areas where traditional financing is not otherwise available for the construction, improvement, and acquisition of facilities and equipment to provide broadband service to eligible rural communities.
Who may apply?
Most entities that provide telecommunications in qualified rural areas including:
- State and local governmental entities
- Federally-Recognized Tribes
- Non-profits, including Cooperatives, and limited dividend or mutual associations
- For-profit businesses (corporations and limited liability companies)
To locate borrowers under USDA Programs related to the Farm Bill and Recovery Act Broadband Initiatives Program (BIP) click here.
Corporations that have been convicted of a felony (or had an officer or agent acting on behalf of the corporation convicted of a felony) within the past 24 months are not eligible. Any Corporation that has any unpaid federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability, is not eligible for financial assistance provided with funds appropriated by the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012, P.L. No. 112-55.
What is an eligible area?
Areas that may be served include
- Rural areas and towns with 20,000 or fewer people
- The proposed service area may not be within, nor include an urbanized area contiguous to a city or town with a population greater than 50,000
The Broadband Mapping Tool provides guidance on what counts as rural areas under the program and can also identify where existing RUS borrowers and grantees are.
Communities where USDA Rural Utilities Service has previously provided funding for construction of broadband infrastructure may not be eligible. See map
Are there limitations on the service area within an eligible area?
A service area may be eligible for a broadband loan if:
- The service area is completely contained within an eligible rural area
- And, at least 25% of the households in the service area are underserved
- And, no part of the proposed service area has three or more incumbent service providers
- And, no part of the proposed service area overlaps with the service area of current USDA Rural Utilities Service borrowers and grantees
- And, no part of the funded service area is included in a pending application before the USDA Rural Utilities Service seeking funding to provide broadband service
How may the funds be used?
Broadband loans and Loan Guarantees provide funding on a technology-neutral basis for
- The construction, improvement, and acquisition of facilities required to provide service at the broadband lending speed including facilities required for providing other services through the same facilities
- The cost of leasing facilities required to provide service at the broadband Lending speed if such lease qualifies as a capital lease under Generally Accepted Accounting Principles (GAAP)
- An acquisition, under certain circumstances and with restrictions
- For additional detail see 7 CFR 1735
What kind of funding is available?
- Cost-of-Money Loans are direct loans from USDA Rural Utility Service
- Loan Guarantees of up to 80% allow private lenders, to extend credit to qualified borrowers in rural areas
- Hardship Loans may be used, at the sole discretion of USDA Rural Utility Service, to assist applicants in meeting financial feasibility requirements for applications to serve underserved areas
What are the loan terms?
- Generally, the term of the loan will be equal to or less than the expected economic life of the asset to be financed. USDA Rural Utility Service, in its discretion, may extend the repayment term up to 35 years for loans providing service to underserved areas
- Cost-of-money loans – fixed rate at current U.S. Treasury rates depending on loan maturity at time of each advance
- Loan Guarantees – fixed rate primarily from the Federal Financing Bank (FFB). Interest rates (Treasury rate plus 1/8%) vary depending on call options and the interim maturity rate selected at each advance, which may be as short as 90 days, with auto-rollover. Current rates available online, scroll down to “Treasury Constant Maturities” Add 0.125% for FFB rate
- Hardship loans – fixed rate of 5 percent interest up to 20 years
Are there additional requirements?
- Borrowers must have legal authority to provide, construct, operate and maintain the proposed facilities or services
- All facilities financed with the aid of federal dollars must be used for a public purpose
- Partnerships with other federal, state, local, private and non-profit entities are encouraged
Who currently participates in this program?
See our Borrower Directory for a list of current participants.
How do we get started?
- Applications for this program are accepted through a General Field Representative year-round
- Program Resources are available under the "Forms and Resources" Tab
Who can answer questions about this program?
- Contact our Loan Origination and Approval Division at (202) 720-0800
- Contact the General Field Representative who serves your area
What governs this program?
- This program is authorized by the Agricultural Act of 2014, Title VI, Sub. Title A Sec. 6001 (2014 Farm Bill)
- 7CFR chapter 1738
- Federal Register Final Rule February 6, 2013
- Federal Register Interim Rule March 14, 2011
- Federal Register NOSA March 14, 2011
Why does USDA Rural Development do this?
The Telecommunications Program increases economic opportunities and improves the quality of life for families and businesses in rural America by providing investment capital in the form of loans and loan-guarantees for the deployment, maintenance and improvement of telecommunications infrastructure in areas where commercial capital is not available. The program helps maintain a seamless nationwide telecommunications network that also provides access to broadband for education, healthcare, public safety and jobs for all Americans regardless of where they live. Expansion of modern broadband service is essential for rural America to be able to access Web-based information and services that will allow rural communities to compete in the global economy and offer the quality of life necessary to attract and retain residents and businesses.
NOTE: Program details may change over time. Before you begin an application, please confirm you have the most current information by contacting a General Field Representative who serves your area for assistance or consult the program Instructions listed in the section above titled "What Governs this Program?"