Rural Economic Development 
Loans and Grants 

Rural Business-Cooperative Programs now administers the Rural Economic Development Loan program and the Rural Economic Development Grant (REDLG) program, which were formerly part of the Rural Electrification Administration (REA). The former REA is now part of the Rural Utilities Programs (RUP). Loans or grants under the REDLG programs are available only to rural electric cooperative or telephone borrowers of RUP.  The programs are intended to help these utilities promote economic and community development projects within their service areas.

Eligible Applicants - Eligible applicants must be an entity which has an outstanding RUP and/or Rural Telephone Bank (RTB) loan or loan guarantee for an electric or telephone purpose under the provisions of the Rural Electrification Act of 1936, as amended.

Type of Assistance - The applicant receives either a zero-interest loan or a grant. Grants are available only for purposes of establishing a revolving loan fund. Funds are used by the applicant or passed through to another entity which will own or undertake the project.

Eligible Projects - Funds must be used to further the development of a project which will develop the economy of a rural area or result in job creation, provide needed community facilities and services, provide medical care to rural residents or utilize advanced telecommunications and/or computer networks to facilitate medical or educational or job training.

Amount of Assistance - The minimum size loan or grant is $10,000. The maximum size of loan or grant is determined annually based on the amount of funds available. Currently the maximum loan is $450,000 and the maximum grant is $200,000.

Terms - Zero-interest loans will normally be repaid over the same period of time as set for any pass- through loan and will depend on the nature of the project. Normally, the period will not exceed 10 years. Any pass-through loans must also be made at zero percent interest. The applicant can charge reasonable fees to the project.

Applications - Applications can be filed with any Rural Development office on any official workday during the first 14 days of every month. The application will be processed by Rural Development and a priority score developed for the application based on the factors set forth in the regulation. Funding must be requested from the Rural Business-Cooperative Programs office in Washington. They will fund applications according to the highest priority scores on a quarterly basis. For Fiscal Year 2000 there is $19 million  available.

Applications and further information about the  Rural Economic Development loan and Grants Program can be obtained from the Rural Development office nearest you.   Or contact Dave Schermerhorn (315) 477-6425.