![](media/image1.png)

**[Rural Economic Development Loan Program (REDL)]{.underline}**

*The purpose of the rural economic development grant program is to
provide zero-interest loans and grants to USDA Rural Development
Borrowers to promote rural economic development and job creation
projects. Reference: Section 313 of the RE Act 7 CFR 4280, Subpart A.*

**Applicant Eligibility**

Zero interest loans and grants may be made, at the discretion of the
Administrator, to any USDA Rural Development borrower that is not
delinquent on any Federal debt, or in bankruptcy proceedings.

**Loan And Grant Purposes**

-   To promote rural economic development and/or job creation projects,
    including, but not limited to:

```{=html}
<!-- -->
```
-   Start up costs.

-   Incubator projects.

-   Other reasonable expenses.

**Ineligible Purposes**

-   Any project in which any director, officer, manager or stockholder,
    or relative thereof, who has a significant ownership interest or
    which would, in the judgment of the Administrator, present a
    potential for, or appearance of, a conflict of interest.

-   Costs incurred prior to receipt of the completed application,
    without prior written approval.

-   Projects located in areas covered by the Coastal Barrier Resources
    Act or projects which would adversely impact the environment.

-   For the purchase or lease of any real property materials, equipment,
    or services from the borrower, or significant stockholders,
    officers, managers, or close relatives thereof without [the
    Administrator's prior written approval]{.underline}.

-   To refinance any debt incurred prior to the receipt of the completed
    application.

-   For any electric or telephone purpose.

-   For the borrower's electric or telephone operation.

-   Any operations affiliated with the borrower without prior written
    approval.

-   To pay salaries or any employee or owner of the borrower or its
    affiliates.

-   Community antenna television systems or facilities unless in
    conjunction with educational or medical entities and projects.

**Maximum And Minimum Sizes**

Maximum size of loan: 3% of projected total funds available under Sec.
313 of the Act, during that Fiscal Year, rounded to nearest \$10,000.

> Maximum size in FY 2007: \$740,000
>
> Minimum size of application: \$10,000

**Supplemental Funding Requirement**

A project will not be selected unless supplemental funding is proved in
an amount equaling at least 20% of the amount of the zero-interest loan
or grant funds provided by USDA Rural Development.

Supplemental funding may be provided by the project owner in the form of
equity funds, private sources, state and local government sources, other
Federal Government sources, the RUS Borrower, etc.

**Terms Of Zero-Interest Loan Repayment**

-   The promissory note covering the repayment of the zero-interest loan
    is between USDA Rural Development and the Borrower.

-   Repayment terms on a loan to the Borrower are based on the nature of
    the project. Ordinarily, the term, including any principal deferment
    period, will not exceed ten (10) years.

-   Repayment by the recipient must equal the terms to the USDA Rural
    Development borrower, unless approved by the Administrator.

-   Principal repayments may be deferred for a period of up to two years
    by the Administrator. Ordinarily, the deferment for an established
    business will be limited to one year.

**Policy**

-   Promote projects that will result in a sustainable increase in the
    productivity of economic resources in rural areas and thereby lead
    to a higher level of income for rural citizens.

-   USDA Rural Development Borrowers promote economic development in
    rural areas and job creation projects that (1) are based on sound
    economic and financial analyses and (2) take a long-term
    perspective.

-   Encourage economic development in rural areas and job creation
    projects without regard to service area.

-   To promote financially viable projects.

-   To encourage USDA Rural Development Borrowers to deposit funds in
    Cushion-of-Credit accounts.

**Application Filing Period**

-   Applications may be filed on any official workday.

**An "Application" Must Consist Of:**

-   Standard Form 424, "Application for Federal Assistance".

-   Board Resolution \[ref. To 7 CFR 1703.34(2)\].

-   Miscellaneous Federal Forms and Certifications per RD Instruction
    4280, Guide 5.

-   Narrative discussion of the following:

```{=html}
<!-- -->
```
-   "Selection Factors" as set forth in 1703.35;

-   "Project Description" as set forth in 1703.36;

-   Except for applications for feasibility studies, a discussion
    regarding the "Environmental Impact of the Proposed Project".

**Application Review**

-   Completed applications are accepted on any official workday.

-   The following factors will be considered in the selection process:

-   Nature of the project.

-   Job creation projections.

-   Long term improvements in economic development.

-   Diversifying the rural economy or alleviating under employment.

-   Supplemental funds.

-   Economic conditions and job creation.

-   Unemployment rates.

-   Per capita personal income.

-   Change in population.

-   Community based Economic Development Program.

-   Plan for improving the marketable skills of people in rural areas.

-   Location (rural).

-   Support for the program - funds deposited in the cushion-of-credit
    account.

-   Strength of Ultimate Recipient's business plan

-   Probability of success.

-   Special economic status.

-   **Other Consideration**

-   Environmental requirements.

-   Equal opportunity and nondiscrimination.

-   Architectural Barriers Act of 1968.

-   Flood Hazard Area Precautions.

-   Real property acquisition and relocation.

-   Debarment and suspension.

-   Drug free workplace (grant only).

-   Restrictions on lobbying.

**Sources Of Funds**

Funds for zero interest loans are derived from annual appropriations
from Congress.

U.S. Department of Agriculture

Rural Development - Rural Business-Cooperative Program

(Revised December 2007)

National Office Web Site: http://www.rurdev.usda.gov\
South Dakota Web Site: http://www.rurdev.usda.gov/sd/

South Dakota State Office Telephone Number: (605) 352-1100

South Dakota State Office Facsimile Number : (605) 352-1146

South Dakota State Office TDD Number : (605) 352-1147

E-Mail Address: tammi.schone@sd.usda.gov

*The U.S. Department of Agriculture (USDA) prohibits discrimination in
all its programs and activities on the basis of race, color, national
origin, age, disability, and where applicable, sex, marital status,
familial status, parental status, religion, sexual orientation, genetic
information, political beliefs, reprisal, or because all or part of an
individual\'s income is derived from any public assistance program. (Not
all prohibited bases apply to all programs.) Persons with disabilities
who require alternative means for communication of program information
(braille, large print, audiotape, etc.) should contact USDA's TARGET
Center at (202) 720-2600 (voice and TDD). To file a complaint of
discrimination, write to USDA, Director, Office of Civil Rights, 1400
Independence Avenue, S.W. Washington, D.C. 20250-9410, or call (800)
795-3272 (voice), or (202) 720-6382 (TDD). "USDA is an equal opportunity
provider, employer, and lender." (RBS-4)*