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Rural Economic Development Grants (REDG)

Rural Economic Development Grants (REDG) provide funds to electric and telephone utilities financed by USDA Rural Development to promote sustainable rural economic development and job creation projects through the operation of a revolving loan fund program. Grants can be made (at the discretion of USDA Rural Development) to any rural electric or telephone utility that is not delinquent on any Federal debt or in bankruptcy proceedings. The rural utility is required to operate and administer a revolving loan fund program using the grant proceeds. To establish the revolving loan fund, the utility is required to contribute to the fund an amount equal to 20 percent of the grant. This contribution will be provided by the utility from its own sources and will remain as part of the fund until the fund is terminated. Initial loans, at zero-interest, from the revolving loan fund may only be made to:

  • Non-profit entities or public bodies for community development projects and community facilities and services.
  • Non-profit entities, public bodies, or for-profit entities for educational facilities.
  • Non-profit entities, public bodies, or for-profit entities for medical facilities.
  • Non-profit entities and public bodies for business incubators to assist in developing emerging enterprises.
  • Subsequent loans, at an interest rate not to exceed prime, may be made to for-profit entities, non-profit entities, or public bodies for any rural economic development purpose eligible under the program in accordance with the utility's revolving loan fund plan. Subsequent loans are made using repayment funds from the initial loan.

Grant funds will not be used by the utility or the third-party recipient for:

  • Refinancing or paying off any existing debt owed by the third-party recipient.
  • Electric or telephone purposes related either to the utility or the third-party recipient.
  • 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.

For more information about the program, please contact the  USDA Rural Development Area Office nearest you. 

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 Last modified: June 15, 2009