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
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
• 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
• 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
Maximum of 35 percent when the
• 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
• 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
