Together, America Prospers 

OneRD Guarantee Loan Initiative: 

Water and Waste Disposal Loan Guarantees 

What does this 

program do? 

This program helps private lenders 

provide affordable financing to 

qualified borrowers to improve 

access to clean, reliable water 

and waste disposal systems for 

households and businesses in 

rural areas. Affordable terms 

and 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. 

Who may apply for 

this program? 

Lenders need the legal authority, 

financial strength and sufficient 

experience to operate a 

successful lending program. 

This includes lenders that are 

subject to supervision and credit 

examination by the applicable 

agency of the United States or a 

State including: 

• Federal and 

State-chartered banks. 

• Savings and loans. 

• Farm Credit Banks with direct 

lending authority. 

• Credit unions. 

Other non-regulated lending 

institutions may also be approved 

by the Agency under the criteria of 

the OneRD regulation. 

Who may qualify for these 

loan guarantees? 

Eligible borrowers are: 

• Public bodies. 

• Federally-recognized Tribes. 

• Non-profit businesses. 

• Additional entities may be eligible 

for other types of loan guarantees 

under the OneRD Guarantee 

Loan Initiative. 

What is an eligible area? 

Areas that may be served include: 

• Rural areas with populations of 

50,000 residents or less. 

• Tribal lands in rural areas 

• Colonias 

Check eligible addresses. 

How may funds be used? 

Construct or improve facilities for: 

• Drinking water 

• Sanitary sewers 

• Solid waste disposal 

• Storm water disposal facilities 

Depending on the circumstances, 

some funds may also be used for: 

• Guarantee and lender fees 

• Legal and engineering fees 

• Land acquisition and equipment 

• Additional borrower labor to install 

and extend service 

• Initial operating expenses 

• Capitalized interest 

• Purchase of existing facilities to 

improve service or prevent loss 

of service. 

• Debt refinancing in some instances. 

See Code of Federal Regulations 

7 CFR, Part 5001 for a complete list 

What is the maximum amount of a 

loan guarantee? 

The loan guarantee percentage is 

published annually in a Federal 

Register notice. 

What are the loan terms? 

The lender, with Agency concurrence, 

will establish and justify the guaranteed 

loan term based on the use of 

guaranteed loan funds, the useful 

economic life of the assets being 

financed and those used as collateral, 

and the borrower’s repayment ability. 

The loan term will not exceed 40 years. 

What are the interest rates? 

• Interest rates are negotiated 

between the lender and borrower. 

• Rates may be fixed or variable. 

• Variable interest rates may not be 

adjusted more often than quarterly. 

What are the applicable fees? 

• There is an initial guarantee 

fee, currently 1 percent of the 

guaranteed amount. 

• There is a fee for the Issuance 

of Loan Note Guarantee Prior to 

Construction of 0.5 percent. 

• Reasonable and customary fees 

for loan origination are negotiated 

between the borrower and lender. 
  

OneRD Guarantee Loan Initiative: 

Water & Waste Disposal Loan Guarantees 

What are the 

underwriting requirements? 

• The lender will conduct a credit 

evaluation using credit documentation 

procedures and underwriting 

processes that are consistent with 

generally accepted prudent lending 

practices and also consistent with 

the lender’s own policies, procedures 

and lending practices. 

• The lender’s evaluation must 

address any financial or other 

credit weaknesses of the borrower 

and project and discuss risk 

mitigation requirements. 

• The lender must analyze all credit 

factors to determine that the credit 

factors and guaranteed loan terms 

and conditions ensure guaranteed 

loan repayment. 

• Credit factors to be analyzed 

include but are not limited to 

character, capacity, capital, 

collateral, and conditions. 

Are there additional requirements? 

• The borrower must have the legal 

authority needed to construct, 

operate and maintain the proposed 

facilities and the services they provide. 

• All facilities financed with the aid of 

a loan guarantee must be used for 

public purposes. 

Who will service the loan? 

The lender is responsible for servicing 

the entire loan and taking all servicing 

actions that a reasonably prudent 

lender would perform in servicing 

its own portfolio of loans that are 

not guaranteed. 

How do we get started? 

• Lenders: Contact a representative 

in your local RD office. For details 

visit our website at 

www.rd.usda.gov/onerdguarantee. 

• Borrowers: Ask your private lender 

if they participate in USDA loan 

guarantee programs. 

Who can answer questions? 

Contact the local Rural Development 

office that serves your area. 

What governs this program? 

• Code of Federal Regulations, 

7 CFR 5001. 

NOTE: Program details may change over time. Before you begin an application, 

please confrm you have the most current information by contacting a program 

specialist in your local RD offce for assistance, or consult the program instructions 

listed in the section above titled “What Governs this Program?” USDA is an equal 

opportunity provider, employer, and lender. 

September 2020