Rural Electrification Loans and Loan Guarantees

To assure that people in eligible rural areas have access to electric services comparable in reliability and quality to the rest of the Nation.

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

Not available.

Uses and Use Restrictions

Long-term, direct loans and loan guarantees to qualified organizations for the purpose of supplying or improving inadequate or unreliable electric services on a continuing basis in rural areas.

Eligibility Requirements

Applicant Eligibility

Rural electric cooperatives, public utility districts, power companies, municipalities, and other qualified power suppliers including those located in the U.S.


Beneficiary Eligibility

Persons in rural areas who do not have electric service, have inadequate or unreliable electric service, or those currently served through RUS financing. Rural areas are defined in the Rural Electrification Act as any area of the United States not included within the boundaries of any urban area as defined by the Bureau of the Census. Such term shall be deemed to include both the farm and nonfarm populations.


None. This program is excluded from coverage under OMB Circular No. A-87, "Cost Principles for State, Local and Indian Tribal Governments."

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 E.O.

12372 and OMB Circular No.

A-102, "Grants and Cooperative Agreements with State and Local Governments."

Application Procedures

Applications for direct loan and loan guarantees are made by resolution of the board of directors of the borrowing organization. Information on submitting applications is contained in 7 CFR Part 1710 and 1714. This program is excluded from coverage under OMB Circular No. A-110, "Uniform Administrative Requirements for Grants and Agreements with Institutes of Higher Education, Hospitals and other Nonprofit Organizations."

Award Procedures

Depending on the amount of the application, the RUS Administrator, Assistant Administrator, or appropriate Regional Director makes the final decision on approval of the loan upon a finding that it is economically feasible and serves the purposes of the Rural Electrification Act. Borrowers and Members of Congress are notified of the approval of a loan or loan guarantee directly, and the public is notified through normal media communications.




Rural Electrification Act of 1936, as amended, 7 U.S.C. 901-950.

Range of Approval/Disapproval Time

Direct loans are approved generally on an average of 3 to 6 months as funding becomes available. Loan guarantees are approved generally on an average of 9 to 12 months.


Not applicable.


Not applicable.

Assistance Considerations

Formula and Matching Requirements

Under certain conditions, obtaining a municipal rate will require obtaining a concurrent loan (of 10, 20, or 30 percent of the total amount required) from a supplemental financing source. The factors used for determining the amount of concurrent financing required are set forth in 7 CFR 1710.110.

Length and Time Phasing of Assistance

Direct loans are generally made for a period up to 35 years, that approximates the expected useful life of the facilities financed. Provision is normally made for advances to be completed within 4 years, but this period is subject to extension if required. Advances of funds are made as required by the borrower. The terms and conditions of loan guarantees are negotiated between the borrower and the non-RUS lender, subject to RUS approval.

Post Assistance Requirements


RUS borrowers must submit to the Rural Utilities Service regularly scheduled operating reports showing financial condition and operating progress.


In accordance with the provisions of OMB Circular No. A-133 (Revised, June 27, 2003), "Audits of States, Local Governments, and Nonprofit Organizations," nonfederal entities that expend financial assistance of $500,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. All other RUS borrowers have their books audited annually by a Certified Public Accountant. Information on audits of RUS borrowers is contained in 7 CFR Part 1773.


RUS borrowers keep the records prescribed for utility companies by the RUS uniform system of accounts, and by sound business practices.

Financial Information

Account Identification

12-1230-0-1-271; 12-4230-0-3-271.


(Direct Loans) FY 07 $2,542,001,000; FY 08 est not available; and FY 09 est not reported.(Guaranteed FFB) FY 07 $3,600,000,000; FY 08 est not available; and FY 09 est not reported.

Range and Average of Financial Assistance

Direct Loans: $772,000 to $1,000,000,000 $23,664,000 Average. Guaranteed FFB: $334,600 to $82,448,000 $12,924,000 average.

Regulations, Guidelines, and Literature

7 CFR XVII. RUS publishes and issues upon request bulletins bearing on the financing, construction, operation, and maintenance of rural electric systems. Also available are annual statistical summaries; and the Rural Electrification Act of 1936, as amended.

Information Contacts

Regional or Local Office


Headquarters Office

Administrator, Rural Utilities Service, Department of Agriculture, Washington, DC 20250-1500. Telephone: (202) 720-9540. Use the same number for FTS.

Criteria for Selecting Proposals

Not applicable.

Social Entrepreneurship

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Edited by: Michael Saunders

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