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U.S. Department of Agriculture Rural Development Community Facilities Program


Authorized by Section 306 of the Consolidated Farm and Rural Development Act of 1972, as amended (7 U.S.C. 1926), the United States Department of Agriculture Rural Development division’s Community Facilities Programs provide loans, guarantees, and grants for essential community facilities in rural areas and towns of up to 20,000 in population. These facilities include libraries, hospitals, assisted living facilities, fire and rescue stations, community centers, and schools, including charter schools. Program funds are available for public entities and nonprofit organizations. Applicants must have the legal authority to borrow and repay loans, pledge security for loans, and construct, operate, and maintain the facilities. Loan repayment must be based on tax assessments, revenues, fees, or other sources of funds sufficient for operation and maintenance, reserves, and debt retirement.

The program provides guarantees of up to 90% for traditional lenders, such as commercial banks, savings and loans, and certain regulated insurance companies. The program also makes direct loans to applicants that are unable to obtain affordable financing, with interest rates set according to the median household income of the area and repayment terms of up to 40 years. Interest rates are designed to be affordable, ranging from 4.5% for areas of high poverty to market rate. Both guaranteed and direct loan funds may be used for construction, renovation, and improvement of facilities as well as refinancing under certain conditions. The program’s grant funding is typically used to fund projects under special initiatives, such as Native American community development efforts and federally designated Enterprise and Champion Communities. Highest priority for these grants is given to projects serving communities with populations of 5,000 or less and with median household incomes below the higher of the poverty line or 60% of the state non-metropolitan median household income. As detailed in the downloadable table, to date, the program has provided loans, guarantees, and grants totaling more than $858.2 million for 287 charter school projects.

 

Last Updated: May 2017