Community Facilities Direct Loan Program

What is the purpose of the program? Who is eligible to apply? How can funds be used? How much assistance can our group apply for?           What are the rates and terms? What are the security requirements? When can we apply for assistance? How will our application be evaluated? How do we apply?

What is the purpose of the program?  return to top
The Community Facilities Direct Loan program is designed to assist in the development of essential community facilities in rural areas.

Who is eligible to apply?  return to top

• Eligible organizations include:
• Community based non-profit corporations
• Public bodies, such as municipalities, counties, and special purpose districts
• Federally recognized Native American Tribes
• Facilities must be located in rural areas with less than 20,000 residents.
• Borrowers must be unable to obtain commercial credit, including a loan guarantee, at reasonable rates and terms.

How can funds be used?  return to top

• Purchase, construct, and/or improve facilities, purchase major equipment, and pay related project expenses, such as legal, engineering, architectural, and environmental fees.
• Examples of projects:

           Health Care (Clinics/Hospitals)            Educational
           Public Service                                     Utility (Telemedicine/Distance learning)
           Community Support Services              Public Safety (Fire/Rescue)
           Transportation

How much assistance can our group apply for?  return to top

• Maximum loan limits are determined by project feasibility.
• Direct loan funds may be used to pay 100% of the project costs.

What are the rates and terms of this financial assistance?  return to top

• Interest rates are fixed and are based on the median household income of the service area and the type of project. Contact your local Rural Development Office to determine the interest rate for your area.
• Loan repayment terms may not exceed the applicant's authority (under state law or organizational structure), the useful life of the facility, or a maximum of 40 years.

What are the security requirements of this financial assistance?  return to top

• Loans will be secured by the best security position available, and must be adequate to protect the Government's interest during the lifetime of the loan.
• Security can include the following:

           General obligation bonds                               Revenue bonds
           Pledges of taxes or assessments                    Assignment of facility revenue
           Land and buildings                                        Machinery and equipment
           Accounts Receivable                                    Assignments of leases or leasehold interest

When can we apply for assistance?  return to top

• Applications are accepted year round.

How will our application be evaluated?  return to top

• Borrower eligibility
• Proposed loan is for an eligible purpose
• Reasonable assurance of repayment ability, sufficient collateral and equity
• Proposed loan complies with all applicable statutes and regulations
• Compliant environmental review is complete
• Adequate funding is available

How do we apply?  return to top

• The application process is a two-stage procedure (preapplication and application).
• Applicants are strongly encouraged to contact their local Rural Development Office to discuss potential projects.
• Rural Development Application materials will be available online in the near future.

Please send any comments or suggestions to:
keith.bastow@ia.usda.gov
Iowa Rural Development
Revised on: April 15, 2008