• Provides zero-interest loans to electric and telephone utilities financed by the Rural Utilities Service (RUS), an agency of the United States Department of Agriculture, to promote sustainable rural economic development and job creation projects.
• Reference: Section 313 of the Rural Electrification Act of 1936 and 7 CFR 1703, Subpart B.

• Zero-interest loans can be made, at the discretion of the Administrator of the Rural Business-Cooperative Service (RBS), to any RUS electric or telephone utility that is not delinquent on any Federal debt or in bankruptcy proceedings.
• The RUS utility is required to re-lend, at zero-percent interest, the loan proceeds to an eligible "third-party recipient" for the purpose of financing job creation projects and sustainable economic development within rural areas. Priority is given to financing third-party recipient projects that are physically located in rural areas having a population of less than 2,500 people.
• The RUS utility receiving the zero-interest loan is responsible for repaying the loan to RBS in the event of delinquency or default by the third-party recipient.

• Business expansions and business startups, including cost of buildings, equipment, machinery, land, site development, and working capital.
• Community infrastructure necessary for economic development and job creation purposes.
• Community facilities and services necessary for economic development and job creation purposes.
• Medical facilities and equipment to provide medical care to rural residents.
• Educational facilities and equipment to provide training and job enhancement skills to rural residents to facilitate economic development.
• Business incubator projects to assist in developing emerging enterprises.

• Projects related to the sponsoring RUS utility that would, in the judgment of RBS, create a conflict of interest, or present a potential for or the appearance of a conflict of interest.
  
• Project costs incurred by the third-party recipient prior to filing of the completed application with RBS.
  
• Refinancing or paying off any existing debt owed by the third-party recipient.
  
• Electric or telephone purposes related either to the RUS utility or the third-party.
  
• Projects located in areas covered by the Coastal Barrier Resources Act or projects that would adversely impact the environment.
  
• Projects that will be used for residential purposes or entertainment purposes at the residential level.
  
• The purchase of an established business or operation or to primarily transfer property or real estate between owners without making substantial improvements or additions that will result in long-term job creation.
  
• Projects that will result in the transfer of existing employment or business activities from one area to another.
  

• Minimum requirement - 20 percent of the amount of RBS zero-interest loan. Priority will be given to third-party recipient projects with greater than 20 percent supplemental financing.
  
• No in-kind contributions accepted as supplemental financing.
  

• RUS utility signs a 10-year promissory note, payable to the Government. Lesser term notes are acceptable.
  
• Note will carry a zero-interest rate.
  
• Principal repayment will be on a monthly basis.
  
• Deferment of principal payments may be included within the note term. The deferment period for an established third-party business will be limited to 1 year; for a startup business or community infrastructure project, 2 years.
  

• Terms will mirror those provided by RBS to the RUS utility.
  
• The third-party recipient will provide collateral to the RUS utility that is acceptable to the RUS utility.
  
• Reasonable loan servicing fees may be charged by the RUS utility to the third-party recipient, not to exceed 1 percent a year on the unpaid principal balance of the loan.
  

• Standard Form 424, "Application for Federal Assistance" signed by the RUS utility.
  
• RUS utility Board of Directors resolution requesting the third-party loan.
  
• Miscellaneous Federal forms and certifications as set forth in 7 CFR 1703.34.
  
• Narrative discussion of the third-party project consisting of the following:
  
  • "Selection Factors" as set forth in 7 CFR 1703.35
    
  • "Project Description" as set forth in 7 CFR 1703.36
    
  • Discussion regarding environmental impact of the third-party project.
    

• Applications may be filed on any official workday at the Rural Development State Office.
  
• A simultaneous filing must also be sent to the State single point of contact for State and local governments, if applicable.
  
• Application selection is competitive. Applications are awarded priority points by RBS based on the selection factors, and the highest-ranked applications are selected for funding.
  

• Nature of the project (business expansion or startup, community infrastructure, etc.)
  
• Direct job creation resulting from the proposed project
  
• Long-term improvements in economic development resulting from the project
  
• County economic conditions -- unemployment rate and per capital personal income
  
• Number of long-term jobs to be created per $100,000 of total project cost
  
• Physical location of project in rural area of less than 2500 people
  
• Loan repayment ability of the third-party recipient based on its business plan
  

It is recommended that you discuss the proposed project and process with the State office before completing the application.