Community Facilities

USDA Rural Development administers the Community Facilities Program on behalf of the Rural Housing Service. Rural Development is authorized to administer direct loans and guaranteed loans in rural areas. A rural area, as it applies to the CF program, is defined as any city, town or unincorporated area with a population of 20,000 or less, other than an urbanized area immediately adjacent to a city, town or unincorporated area with a population in excess of 20,000 residents. Public bodies, nonprofit corporations, and federally recognized Indian Tribes can be eligible applicants.

Community Facilities Direct and Guaranteed Loans:

Funds can be used for construction, land acquisition, legal fees, architect fees, capitalized interest, equipment, initial operation and maintenance costs, project contingencies, and any other cost that is determined by Rural Development to be necessary for the completion of the project.

Direct loans may be obtained for 100% of eligible project costs subject to adequate security, ability to repay, applicant's authority to borrow, and availability of funds. Repayment terms cannot exceed the useful life of the security or 40 years. Interest rate is dependent on the median household income of the service area.

Rural Development has the authority to administer guaranteed loans made by eligible lenders to eligible borrowers. The guarantee may be up to 90% of loss of principal and interest on a loan, however, guarantees normally will not exceed 80% unless extraordinary circumstances exist.

Community Facilities Grants:

Grants are made on a graduated basis for developing essential community facilities in rural areas. For the grant program, rural area means a city or town that has a population of 20,000 or less, or an unincorporated area. To be eligible for grant consideration, the median household income to the population to be served must not exceed $33,794.

Eligible grant applicants are public entities, such as a city, town, county or special purpose district, nonprofit corporations, or federally recognized Indian tribes. Grant applicants must be unable to finance the proposed project from their own resources, through commercial credit at reasonable rates and terms, or other legal authority necessary for construction, operation, and maintenance of the proposed facility. Eligible projects must be consistent with the state's strategic plan.

Grant assistance will be provided on a graduated scale with higher grant funds going to small communities with the lowest median household income.

Federal grant funds may be used to pay up to 75% of the cost to develop the essential community facility. The remaining 25% becomes the applicant's responsibility. Other CF financial assistance, or applicant contribution will enable grant funds to reach a broader range of rural economic development efforts. The graduated scale for grant assistance for eligible assistance for eligible project costs is as follows: