Program 101

What does this program do?

Provides funding for clean and reliable drinking water systems, sanitary sewage disposal, sanitary solid waste disposal, and storm water drainage to households and businesses in eligible rural areas.

Who may apply?

This program assists qualified applicants that are not otherwise able to obtain commercial credit on reasonable terms. Eligible applicants include:

  • Most State and local governmental entities
  • Private non-profits
  • Federally recognized Tribes  i

What is an eligible area?

Areas that may be served include:

  • Rural areas and towns with fewer than 10,000 people (check eligible addresses)
  • Tribal lands in rural areas  i
  • Colonias  i

What kinds of funding are available?

  • Long-term, low-interest loans
  • If funds are available, grants may be combined with a loan if necessary to keep user costs reasonable

How may the funds be used?

Funds may be used to finance the acquisition, construction or improvement of:

  • Drinking water sourcing, treatment, storage and distribution
  • Sewer collection, transmission, treatment and disposal
  • Solid waste collection, disposal and closure
  • Storm water collection, transmission and disposal

In some cases, funding may also be available for related activities such as:

  • Legal and engineering fees
  • Land acquisition, water and land rights, permits and equipment
  • Start-up operations and maintenance
  • Interest incurred during construction
  • Purchase of existing facilities to improve service or prevent loss of service
  • Other costs determined to be necessary for completion of the project
  • For a complete list, see the Code of Federal Regulations (CFR) 1780.7 and (CFR) 1780.9

What is the loan term and rate?

  • Up to 40-year payback period, based on the useful life of the facilities financed
  • Fixed interest rate
  • The interest rate is based on the need for the project and the median household income of the area to be served
  • Contact us for details and current interest rates applicable for your project

Are there additional requirements?

  • Borrowers must have the legal authority to construct, operate and maintain the proposed services or facilities
  • All facilities receiving federal financing must be used for a public purpose
  • Partnerships with other federal, state, local, private and non-profit entities that offer financial assistance are encouraged
  • Projects must be financially sustainable

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 your local offices year round
  • Program Resources are available online (i.e. forms, guidance, certifications, etc.)

Who can answer questions?

  • Contact the local representative who serves your area
  • Participating non-profits also offer assistance and training

What governs this program?

  • Basic Program – Code of Federal Regulations, Title 7, Part 1780 - 7 CFR 1780
  • Loan Servicing – Code of Federal Regulations, Title 7, Part 1782 - 7 CFR 1782
  • This program is authorized by Section 306 of the Consolidated Farm and Rural Development Act (CONACT)

Why does USDA Rural Development do this?

This program helps very small, financially distressed rural communities extend and improve water and waste treatment facilities that serve local households and businesses. Good practices can save tax dollars, improve the natural environment, and help manufacturers and 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?"

Engineering

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