Frequently asked questions for
Community Facilities Direct Loans and Grants:
What is an essential community facility?
community facilities are broad based, viable facilities that provide lasting services and
benefits to the entire community. Essential
community facilities must meet all of the following criteria:
Provide an essential public service to
the local community - the service should be
a service that is typically provided by a local unit of government;
Be needed for the orderly development
of the rural community - considered a public improvement;
Does not include private, commercial or
business undertakings; and
Must include significant community
What kind of projects qualifies as a community facility?
community facilities are:
Community Health Care: physicians clinics, outpatient care, nursing home,
dental clinic, telemedicine, assisted care, ambulatory care, etc.
Cultural and Educational: library,
museum, vocational school, public school, all purpose building, college, educational camp
for persons with disabilities, shelters, alcohol treatment centers, etc.
Fire Rescue and Public Safety: fire
department, fire trucks, jail, police station,
center, civil defense building, rescue and ambulance service building, multiservice
Public Building and Improvements: adult day care center, child day care center, city
hall, community health department office building, community center, county courthouse,
food preparation center, home for delinquents, public maintenance building, domestic
important factor is that the project serves the community as a whole and is needed for the
orderly development of the community such as providing an essential service to the
residents (health care services, fire and safety services, educational services, etc.).
Can we pay 100% of the project costs with CF funds?
and guaranteed loan funds can be used to pay 100% of the project costs. Normally, under the direction of Rural
Development, applicants use interim financing to pay construction costs and CF loans are
used for long-term financing. This
arrangement encourages participation from commercial banks.
of grant assistance is 75% of project costs depending upon the median household income and
population in the community where the project is located and the availability of grant
funds. Grant assistance is very limited. The average grant award for projects in FY 1999
was $30,700. In most instances, projects,
which receive grant assistance, have a high priority for funding and are highly leveraged
with other loan and grant awards.
What is the maximum loan amount I can apply for?
There is no set maximum loan limits with the Community Facilities
direct and guaranteed loan programs. The
amount that can be financed is based on realistic project costs, project feasibility and
funding availability at the time.
5. What are the eligibility rules?
Facilities programs has eligibility issues that are unique to the type of loan program. Applicant eligibility:
Public body, non-profit corporation,
special purpose district, or Indian tribe
Project must be in a city or town of
20,000 or less, or an unincorporated area;
Have legal capacity to borrow, pledge
security, construct, operate and maintain the facility for the life of the loan;
Be financially sound;
Provide certification they are unable
to obtain other credit at reasonable rates and terms and are unable to finance the
proposed project from their own resources. A
letter from a Lender will be sufficient.
Have loan repayment ability based on
revenues, fees, taxes, and assessments;
Final control of the facility must
remain with the borrower organization for the life of the loan. The borrower may enter into a contractual
agreement for management of the facility by a third party by contract management
Facility being financed must be for
What forms are required for filing a Community Facilities (CF) Direct loan
or Grant application?
application process for CF Direct loans and Grants, or a combination of both, is a
two-stage process. An applicant must submit
documentation to support its eligibility status and priority for funding before making a
formal application. The form needed to start the application process is SF 424.2,
Application for Federal Assistance. You should also contact the Rural Development State
Office where you are located in order to obtain all other necessary forms. The
requirements for each type of project differ. As
always, Rural Development staff members will fully assist in completing the requirements
for a loan or grant.
Can we use CF funds to refinance existing debts?
existing debts may be considered an eligible direct or guaranteed loan purpose if the debt
being refinanced is a secondary part of the loan, is associated with the project facility,
and if the applicants creditors are unwilling to extend or modify terms in order for
the new loan to be feasible.
What types of projects are eligible for grant assistance?
All of the Community Facility programs have the same
eligibility rules pertaining to the types of projects that can be financed. With the grant
program, such projects as health care and public safety receive a higher priority for
Were a small community and we understand you have grant money
available for small rural communities. How
much grant money are we eligible for?
population and income limits based on where the project is located. There are three levels of percentage of grant
assistance ranging from 75% down to 15% based on population and income.
cannot be made to an entity whose service area has a median household income of more than
90% of the state nonmetropolitan median household income.
Priority is given to projects whose service area has a median household
income below 60% of the state nonmetropolitan median household income and if the
population where the project is located is less than 5,000.
Rural Development State Office to determine if your community is eligible for grant funds.
Where are the Community Facilities applications processed?
applications are filed and processed in either the State or local office of the State the
project is located in. Contact USDA Rural
Developments State Office either by telephone or through our web site and request
information on how to proceed with your loan or grant request.