Together, America Prospers

Relending Under the Community Facilities 

Direct Loan Program

A new tool 

to empower 

community lending

USDA Rural Development’s Rural 

Housing Service has amended 

their existing Community 

Facilities Direct Loan Program 

regulations to enable the Agency 

to make loans to eligible lenders 

who can then reloan those funds 

to eligible applicants under the 

Community Facilities Direct Loan 

Program. This now allows us to 

make direct loans to community 

lending institutions, (referred 

to as “relenders”), which then 

reloan the funds to eligible 

applicants to acquire, maintain, 

build, or renovate essential 

community facilities. These 

Relending Projects aim to target 

community lending institutions 

working in high-poverty and 

persistent-poverty areas.

What does this program do?

We make loans to eligible lenders 

(relenders), which will in turn reloan 

those funds to applicants for essential 

community facilities. Our Community 

Facilities programs provide loans for 

essential community infrastructure, 

so that people who live and work in 

rural areas can enjoy the same basic 

quality of life and services as those in 

urban and metropolitan areas.

Who may apply for this program as 

a relender?

A relender must demonstrate that:

1. It has an existing loan portfolio

where at least 30 percent of its

loans are made in rural, high- or

persistent-poverty areas

2. It can provide documentation that

it can obtain an irrevocable letter

of credit from a financial institution

covering principal and intererst

payments for the first five years of

the loan.

The relender must also demonstrate 

that it meets one of the following:

1. That it is regulated and supervised

by a Federal or State banking

authority and is not on any watch

list, or

2. That it has an Aeris Financial

Strength and Performance Rating

of 1 or 2 within the last 2 years, or

3. That it has obtained an Aeris

Financial Strength and Performance

Rating of 1 or 2 prior to any funds

being advanced, or

4. Be proven to be a financially

sound institution as determined by

our risk assessment.

Who may apply as applicants for 

funds from the relender?

Eligible applicants include public 

bodies, community-based nonprofit 

corporations, and Federally 

recognized Tribes.

What is an eligible area?

Relenders may be located anywhere 

in the United States. The applicant’s 

facility must be located in rural areas 

such as cities, villages, townships, and 

towns, including those on Federally 

recognized Tribal Lands, with no more 

than 20,000 residents.

How may funds be used?

The relender uses funds from USDA 

to relend to applicants. Applicants 

may use the funds from the relender 

to purchase, construct, and/or 

improve essential community facilities, 

purchase equipment, and pay related 

project expenses. Examples include 

but are not limited to:

• Health care facilities such as hospitals,

medical clinics, dental clinics, nursing

homes, or assisted-living facilities

• Public facilities such as town halls

or courthouses

• 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;

and educational services such as

museums, libraries, colleges, and

public or private schools.
Relending Under the Community Facilities 

Direct Loan Program

What kind of funding is available?

Low-interest direct loans. 

What are the funding priorities?

We will score and rank relender 

applications based upon experience 

and the amount of the relender’s 

existing portfolio for projects in 

persistent- or high-poverty areas.

What are the loan terms?

Loans we make to relenders will have 

fixed interest rates and may be for 

up to 40 years. The terms of the loan 

by the relender to the applicant are 

negotiated between the two parties. 

What are some of the benefits of 

these loans?

These loans are targeted to high- or 

persistent-poverty areas. Relenders 

must demonstrate that they have 

experience making loans in these 

economically distressed rural areas. 

This expertise enables the relenders 

to provide technical assistance and 

financial expertise to help applicants 

access capital that may not have 

been available to them before. The 

low-interest, long-term, fixed-rate loans 

also make access to capital much 

more affordable.

Are there any additional 

requirements?

• Relenders must demonstrate that

they have the financial strength to

carry out the loan requirements. They

are required to provide us with an

irrevocable letter of credit equal to the

first five years of payments to USDA.

• Applicants must demonstrate that

they have significant ties to the

local community. They must use

loan funds for eligible essential

community facilities as outlined in

our regulations. Examples include

healthcare centers, town halls,

courthouses, street improvements,

child care centers, public safety

services, and educational facilities.

How do we get started?

• Both relenders and applicants

may contact the local RD office in

which their headquarters are located.

Who can answer questions?

• Contact Community Facilities program

staff in State Office for assistance.

What governs this program?

• Code of Federal Regulation

7 CFR 1942, 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