Direct Loan Program:
PURPOSE
The Direct Loan Program provides loans to public bodies, non-profit corporations, and Indian tribes for the development of essential community facilities for public use in rural areas and towns.
ELIGIBILITY
Public Bodies
Non-Profit Corporations
Federally Recognized Indian Tribes
Rural
communities and/or small towns/cities with populations of 20,000 or less based
on the latest decennial Census of the
FUND USE
Professional (Legal & Engineering) Fees
Purchase of natural gas distribution system
Relocation of private buildings, roads, bridges, fences, or utilities
Purchase existing facilities for improvement or to prevent loss of service
Construction of transportation facilities such as: streets, roads, and bridges
Purchase of major equipment which will provide an essential service to rural community residents
Purchase and preparation of industrial park sites only land acquisition and site preparation
Construction or
relocation of public buildings, roads, bridges, fences, or utilities
Paying for business start up expenses such as: reasonable fees and costs, interest, costs of acquiring interest in land and rights, purchasing or renting equipment, and initial operating expenses
Refinancing debts
when all of the following exist:
debts being refinanced are secondary the secondary part of a loan ( less than
50%), debts being refinanced were incurred for facility or service being
currently financed, and arrangements are not
made with present creditors to extend or modify terms of existing debts
Financing of supplemental and supporting structures for other rural electric or telephone systems which are not eligible for electric financing
New Construction, enlargement, or improvement of community facilities for health care, community, social or cultural services and public safety services
Financing hydroelectric generating facilities and related connecting systems and fixtures, not eligible for traditional financing
Refinancing of existing debts (Direct or Guaranteed Loans) if the debt being refinanced is (1) a secondary part of the loan, (2) associated with the project facility, (3) and if the applicant’s creditors are unwilling to extend or modify terms in order for the new loan to be feasible.
RATES
Poverty Rate – Set at 4.5%
Intermediary Rate – Set halfway between the Market and the Poverty rates
Market Rate – Indexed to the eleventh bond buyers rate as determined by the U.S. Treasury Department
Rate Eligibility is determined by the Median Household Income (MHI) of the area being served and the type of project
TERMS OF REPAYMENT
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.
SECURITY/COLLATERAL
Borrower and lender must certify credit would be unavailable to the borrower without the loan guarantee
APPLY TODAY
To get started
building your future today, contact your Local Area Office
to fill out an application packet and begin the approval process.