Together, America Prospers

Community Facilities Direct Loan & Grant

What does this 

program do?

This program provides affordable 

funding to develop essential 

community facilities in rural 

areas. An essential community 

facility is defined as a facility 

that provides an essential 

service to the local community 

for the orderly development of 

the community in a primarily 

rural area, and does not include 

private, commercial, or business 

undertakings.

Who may apply 

for this program?

Eligible borrowers include:

• Public bodies

• Community-based nonprofit 

corporations

• Federally recognized Tribes

What is an eligible area?

Rural areas including cities, villages, 

townships, and towns including Federally 

recognized Tribal lands with no more 

than 20,000 residents according to the 

latest U.S. Census Data are eligible for 

this program.

How may funds be used?

Funds can be used to purchase, 

construct, and/or improve essential 

community facilities, to purchase 

equipment, and to pay related 

project expenses.

Examples of essential community 

facilities include:

• Healthcare facilities such as 

hospitals, medical clinics, dental 

clinics, nursing homes, or assisted 

living facilities

• Public facilities such as town halls, 

courthouses, airport hangars, or 

street improvements

• Community support services such as 

child care centers, community centers, 

fairgrounds, or transitional housing

• Public safety services such as 

fire departments, police stations, 

prisons, police vehicles, fire trucks, 

public works vehicles, or equipment

• Educational services such as 

museums, libraries, or private schools

• Utility services such as telemedicine 

or distance learning equipment

• Local food systems such as 

community gardens, food pantries, 

community kitchens, food banks, 

food hubs, or greenhouses

For a complete list see Code of 

Federal Regulations 7 CFR, 

Part 1942.17(d) for loans; 

7 CFR, Part 3570.62 for grants.

What kinds of funding are available?

• Low interest direct loans

• Grants

• A combination of the two above, as 

well as our loan guarantee program. 

These may be combined with 

commercial financing to finance one 

project if all eligibility and feasibility 

requirements are met.

What are the funding priorities?

Priority point system based on 

population, median household income

• Small communities with a population 

of 5,500 or less

• Low-income communities having 

a median household income below 

80% of the state nonmetropolitan 

median household income.
Community Facilities Direct Loan & Grant

What are the terms?

Funding is provided through a 

competitive process.

Direct Loan:

• Loan repayment terms may not be

longer than the useful life of the

facility, state statutes, the applicants

authority, or a maximum of 40 years,

whichever is less.

• Interest rates are set by

Rural Development, contact us

for details and current rates.

• Once the loan is approved, the

interest rate is fixed for the entire

term of the loan, and is determined

by the median household income of

the service area.

• There are no pre-payment penalties.

• Contact us for details and

current interest rates applicable

for your project.

Grant Approval:

Grant funds must be available. 

Applicant must be eligible for grant 

assistance, which is provided on 

a graduated scale with smaller 

communities with the lowest median 

household income being eligible for 

projects with a higher proportion of 

grant funds. Grant assistance is limited 

to the following percentages of eligible 

project costs:

Maximum of 75 percent when the 

proposed project is:

• Located in a rural community having

a population of 5,000 or fewer; and

• The median household income of the

proposed service area is below the

higher of the poverty line or 60 percent

of the State nonmetropolitan median

household income.

Maximum of 55 percent when the 

proposed project is:

• Located in a rural community having

a population of 12,000 or fewer; and

• The median household income of

the proposed service area is below

the higher of the poverty line or 70

percent of the State nonmetropolitan

median household income.

Maximum of 35 percent when the 

proposed project is:

• Located in a rural community having

a population of 20,000 or fewer; and

• The median household income of the

proposed service area is below the

higher of the poverty line or 80 percent

of the State nonmetropolitan median

household income.

Maximum of 15 percent when the 

proposed project is:

• Located in a rural community having

a population of 20,000 or fewer; and

• The median household income of the

proposed service area is below the

higher of the poverty line or 90 percent

of the State nonmetropolitan median

household income. The proposed

project must meet both percentage

criteria. Grants are further limited.

Are there additional requirements?

• Applicants must have legal authority

to borrow money, obtain security,

repay loans, construct, operate, and

maintain the proposed facilities

• Applicants must be unable to

finance the project from their

own resources and/or through

commercial credit at reasonable

rates and terms

• Facilities must serve rural area

where they are/will be located

• Project must demonstrate substantial

community support

• Environmental review must be

completed/acceptable

How do we get started?

Contact your local RD office to discuss 

your specific project. Applications are 

accepted year round.

Who can answer questions?

Contact your local RD office.

What governs this program?

• Direct Loan: 7 CFR Part 1942,

Subpart A

• Grant: 7 CFR Part 3570, Subpart A

NOTE: Because citations and other information may be subject to change, 

please always consult the program instructions listed in the section above 

titled “What Governs This Program?” You may also contact your local office for 

assistance. You will find additional forms, resources, and program information at 

rd.usda.gov. USDA is an equal opportunity provider, employer, and lender.

Last Updated January 2020