Together, America Prospers

Rural Economic Development Loan 

& Grant Program

What does this 

program do? 

The Rural Economic Development 

Loan (REDL) and Grant (REDG) 

programs provide funding to 

rural projects through local 

utility organizations. Under 

the REDLoan program, USDA 

provides zero interest loans 

to local utilities, which they, 

in turn, pass through to local 

businesses (ultimate recipients), 

for projects that will create and 

retain employment in rural areas. 

The ultimate recipients repay the 

lending utility directly. The utility 

is responsible for repayment to 

the Agency. 

Under the REDGrant program, 

USDA provides grant funds to 

local utility organizations to use 

the funding to establish revolving 

loan funds (RLF). Loans are made 

from the revolving loan funds to 

projects that will create or retain 

rural jobs. When the revolving 

loan fund is terminated, the grant 

is repaid to the Agency. 

Who may apply for this program? 

To receive funding under the REDLG 

program, which will be forwarded to 

selected eligible projects, an entity 

must be described as: 

• Any former Rural Utilities Service

(RUS) borrower who borrowed,

repaid or pre-paid an insured,

direct, or guaranteed loan

• Nonprofit utilities that are eligible

to receive assistance from the

Rural Development Electric or

Telecommunication Programs; or

• Current Rural Development

Electric or Telecommunication

Programs Borrowers

What is an eligible area? 

Intermediaries may use Rural 

Economic Development Loan & Grant 

(REDLG) funds to lend for projects in 

rural areas or towns with a population 

of 50,000 or less.

How much funding is available to 

intermediaries? 

• Up to $300,000 in grants may be

requested for establishment of the 

RLF

• Up to 10% of grant funds may be

applied toward operating expenses

over the life of the RLF

• Up to $1 million in loans may

be requested

The intermediary applies to USDA 

for funding support on behalf of 

specified local projects. Projects 

may commence after application 

submission, but there is no guarantee 

of approval. USDA funds are issued to 

the intermediary at project completion. 

What are the terms for 

the intermediary? 

• 10 years at 0%

• Grants require 20% match from

the intermediary

• Grant funds must be repaid to

USDA upon termination of the RLF

How may funds be used? 

REDLG intermediaries pass the 

funding to ultimate recipients on to 

eligible projects. Examples of eligible 

projects include: 

• Business incubators

• Community development assistance

to nonprofits and public bodies

(particularly job creation or

enhancement)

• Facilities and equipment for

education and training for rural

residents to facilitate economic

development

• Facilities and equipment for medical

care to rural residents

• Start-up venture costs, including,

but not limited to, financing fixed

assets such as real estate, buildings

(new or existing), equipment, or

working capital

• Business expansion

• Technical assistance

NOTE: 7 CFR, Part 4280.27 and 

7 CFR, Part 4280.30 list ineligible uses
Rural Economic Development Loan 

& Grant Program

How much funding is available to 

business and community borrowers 

(ultimate recipients) through the RLF? 

An ultimate recipient may request up 

to 80% of project cost using REDLG 

funds, with the remainder provided 

by the ultimate recipient or the 

intermediary 

What are the terms on the RLF 

loan to the ultimate recipient? 

• Interest rate is 0%

• Maximum term is 10 years

• Up to 80% of project cost, with

20% from either the ultimate

recipient or the intermediary

• The intermediary may incorporate

interest rates or administrative loan

fees after the funds have been loaned

out and revolved once. First time

around all loans are at zero interest.

• Repayment may be deferred up to

two years

How do we get started? 

Applications for this program are 

accepted through your local office 

year round. Program Resources 

are available online (includes forms 

needed, guidance, certifications, etc.) 

Who can answer questions? 

Contact your local RD office. 

What governs this program? 

• Basic Program – 7 CFR, Part 4280

• Loan Servicing – 7 CFR, Part 4280

and 2 CFR Part 200

• This program is authorized by the

Rural Electrification Act of 1936

Why does USDA Rural Development 

do this? 

The REDLG programs provide 

financing to eligible RUS electric or 

telecommunications borrowers to 

promote rural economic development 

and job creation projects.

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