Revolving Funds for Financing Water and Wastewater Projects

FY 2021 Funding Opportunity Announcement

What does this program do?

This program helps qualified nonprofits create revolving loan funds that can provide financing to extend and improve water and waste disposal systems in rural areas.

Who may apply for these grants?

Nonprofits that have:

• Legal authority to operate a revolving loan fund.
• Financial, technical and managerial capacity to comply with relevant state/federal laws and regulations.

How may the grant funds be used?

To create a revolving loan fund for eligible utility districts operated by:

• State and local governmental entities
• Nonprofits

What may the revolving loan fund be used for?

• Pre-development costs for water and wastewater treatment projects.
• Short-term small capital improvement projects that are not part of the regular operations and maintenance.

What are the revolving loan fund terms?

• Maximum loan per borrower is $200,000.
• Maximum term is 10 years
• The interest rate is determined by utility district borrower and nonprofit that manages the revolving loan fund.

What is an eligible area?

• Rural areas and towns with populations of 10,000 or less. Check eligible addresses.
• Tribal lands in rural areas
• Colonias

Are matching funds required?

Yes, the applicant must contribute at least 20 percent. 
•    Matching funds may be from the applicant or a third party. 
•    Matching funds may not be in-kind. 

Are there any Environmental requirements associated with this grant?

RUS will notify a successful applicant by an award letter accompanied by a grant agreement and multi-tier action environmental compliance agreement.  The grant agreement will contain the terms and conditions for the grant; the multi-tier action environmental compliance agreement will detail the Recipient’s responsibilities in meeting the Agency’s Environmental Policies and Procedures, 7 CFR part 1970, in particular §1970.55 which applies to multi-tier actions or relending actions.  The multi-tier action environmental compliance agreement acknowledges that further “tiered” environmental review may be required and coordinated by the Recipient prior to approving Subrecipient applications for re-lending purposes.  The applicant must execute and return the agreements, accompanied by any additional items required by the award letter or grant agreement.

How do we get started?

First, contact a Rural Development program specialist in the state or territory where the revolving loan fund would be available. The program specialist will help you begin the application process.

Who can answer questions?

• Lois East - 660-492-4268
• Staff in your local RD office.

What governs this program?

• Code of Federal Regulations, 7 CFR Part 1783
• Section 306 of the Consolidated Farm and Rural Development Act and section 6002 of the Agricultural Act of 2014

Why does USDA Rural Development do this?

This program helps very small communities extend and improve water and waste treatment facilities for households and businesses. 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 program specialist in your local office for assistance, or consult the Program Instructions listed in the section above titled "What Governs this Program?"

A revolving loan fund is a pool of public- and private-sector funds that recycles money as loans are repaid (revolved funds). Funding by a grant or a long-term/low-cost loan is used to start, replenish and expand revolving loan funds. Funding recipients are state or local government agencies and nonprofit entities structured to make loans. They must demonstrate economic need and have a plan that both meets program requirements and spurs growth.