Rural Broadband Access Loans and Loan Guarantees

To assure that people in eligible rural communities have access to broadband service comparable in reliability and quality to the rest of the Nation.




Related Programs

Examples of Funded Projects

Loans have been approved to construct wireless, DSL, cable modem, and fiber to the premises (FTTP) broadband systems.


Agency - Department of Agriculture

Established in 1862, the Department of Agriculture serves all Americans through anti-hunger efforts, stewardship of nearly 200 million acres of national forest and rangelands, and through product safety and conservation efforts. The USDA opens markets for American farmers and ranchers and provides food for needy people around the world.



Program Accomplishments

In Fiscal Year 2006, RUS approved 15 Cost of Money loans totaling $329,000,000.

Uses and Use Restrictions

RUS makes long term direct and guaranteed loans to eligible entities for the purpose of financing the construction, improvement, and acquisition of telecommunications facilities and equipment to provide broadband service in eligible rural communities.

Eligible rural communities are defined as any area of the United States (which includes its territories and insular possessions, including the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau); that is not contained in an incorporated city or town with a population in excess of 20,000 inhabitants, based on the most recent available information of the Bureau of the Census.

Broadband Service means any technology having the capacity to transmit at a minimum transmission speed of 200 kbps both from and to a residential subscriber.

The rate of data transmission is subject to annual review and will be published in the Notice of Funds Availability at the beginning of each fiscal year.

Loans maturities are equal to the composite economic life of the facilities financed.

The interest rate for the Cost-of-Money program is equal to the cost of borrowing to the Department of Treasury for a comparable maturity.

The 4-Percent program interest rate is 4 percent and the maximum loan amount for the 4-Percent program is $7.5 million.

The interest rate for the Guarantee program is set by the lender.

Eligibility Requirements

Applicant Eligibility

Cooperative, nonprofit, limited dividend or mutual associations, limited liability companies, commercial organizations, Indian tribes, tribal organizations, state government, local government, including those located in the U.S.

territories and countries included in the Compact of Free Association Act of 1985, providing or proposing to provide broadband services in eligible rural communities.

The following are not eligible: individuals, partnerships, limited liability partnerships, and any entity serving more than 2 percent of the telephone subscriber lines installed in the United States.

Applicants must meet a credit support requirement; see7 CFR 1738.20.

Beneficiary Eligibility

Residents of eligible rural communities and others who may receive service as a result of service provided to a rural area.

Credentials/Documentation

None.

Aplication and Award Process

Preapplication Coordination

Applicants must supply environmental impact information to determine whether an environmental impact assessment or an environmental impact statement will be required.

This program is excluded from coverage under Executive Order 12372.

Application Procedures

The completed loan application consists of twenty-one schedules. Form 532, Rural Broadband Access Loan and Loan Guarantee Application, serves as the official application document and as a checklist to assure all relevant information is included. The major sections of an application include: business plan, market research, historical and 5 year pro forma financial statements, system design and project costs. The instructions for completing an application are outlined in RUS Bulletin 1738-1: Rural Broadband Access Loan and Loan Guarantee Program Application Guide. The bulletin and application are available from RUS on request and on our website: www.usda.gov/rus/telecom/broadband.htm.

Award Procedures

Depending on the amount of the application, and loan committee(s) recommendation, the RUS Administrator or Assistant Administrator Telecommunications, makes the final decision on approval of the loan or loan guarantee. There must be a finding that the project is economically feasible, capable of delivering Broadband Service, and services the purposes of the program. Borrowers and member of Congress are notified directly of the approval of a loan or loan guarantee.

Deadlines

The program is an ongoing program with applications evaluated on a first come, first served basis. There is no deadline for applications.

Authorization

Rural Electrification Act of 1936, as amended, Title VI; 7 U.S.C. 950bb.

Range of Approval/Disapproval Time

Normal processing time is four to five months.

Appeals

Not applicable.

Renewals

Not applicable.

Assistance Considerations

Formula and Matching Requirements

This program has no statutory formula.

Length and Time Phasing of Assistance

Loan funds must be used within a five year period from the date of loan closing. A one time extension is permitted.

Post Assistance Requirements

Reports

The borrower must submitted quarterly financial statements within 30 days of the end of each calendar quarter.

The statements must consist of a balance sheet, income statement, and statement of cash flows.

Audits

All borrowers must have their books audited annually by a Certified Public Accountant. Information on audits is contained in 7 CFR Part 1773.

Records

Not applicable.

Financial Information

Account Identification

12-1232-0-1-452.

Obigations

(Cost of Money Loans) FY 07 $923,186,000; FY 08 est $300,000,000; and FY 09 est not reported. (4 Percent Loans) FY 07 $0; FY 08 est $0; and FY 09 est not reported. (Loan Guarantees) FY 07 $0; FY 08 est $0; and FY 09 est not reported.

Range and Average of Financial Assistance

The minimum loan amount for the program is $100,000. There is no maximum loan amount except for 4 Percent loans (that amount is published by RUS in the Federal Register at the beginning of each fiscal year). The smallest loan approved to date is $362,000; the largest, $168,406,000.

Regulations, Guidelines, and Literature

7 CFR 1738 - Rural Broadband Access Loans and Loan Guarantees Notice of funds availability, Federal Register, March 4, 2005 (Volume 70, Number 42) RUS Bulletin 1738-1: Rural Broadband Access Loan and Loan Guarantee Program Application Guide.

Information Contacts

Regional or Local Office

None.

Headquarters Office

Assistant Administrator, Telecommunications Program, Rural Utilities Service, Department of Agriculture, 1400 Independence Avenue, S.W., STOP 1590, Room 5151, Washington, DC 20250 1590. Telephone number (202) 720 9554, Facsimile (202) 720 0810.

Criteria for Selecting Proposals

See 7 CFR 1738.



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