Rural Telephone Loans and Loan Guarantees

To assure that people in eligible rural areas have access to telecommunications 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

During fiscal year 2004, 65 borrowers received loans.

Uses and Use Restrictions

Long-term direct and guaranteed loans to qualified organizations for the purpose of financing the improvement, expansion, construction, acquisition, and operation of telephone lines, facilities, or systems to furnish and improve Telecommunications service in rural areas.

"Rural area" is defined as any area of the United States, its territories and insular possessions (including any areas within the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau) not included within the boundaries of any incorporated or unincorporated city, village, or borough having a population exceeding 5,000 inhabitants.

The population figure is obtained from the Bureau of Census.

For purposes of the "rural area" definition, the character of an area is determined at the time the initial loan for the system is made.

Eligibility Requirements

Applicant Eligibility

Telephone companies or cooperatives, nonprofit associations, limited dividend associations, mutual associations or public bodies 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 telecommunications service to meet the needs of rural areas.

Beneficiary Eligibility

Residents of rural areas, and others who may also receive telephone service as a result of service provided to a rural area.


None. This program is excluded from coverage under OMB Circular No. A-87.

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.


Application Procedures

The completed loan application consists of four parts: an RUS Form 490; Application for Telephone Loan or Loan Guarantee; a market survey called Area Coverage Survey (ACS); the plan and associated costs for the proposed construction called the Loan Design (LD); and other various supplementary information specified in 7 CFR 1737.22. Detailed information on applying for an RUS telephone loan or loan guarantee is in 7 CFR Part 1737, available from RUS upon request. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedures

Depending on the amount of the application, and loan committee(s) recommendation, the RUS Administrator, Assistant Administrator, or appropriate Area Director makes the final decision on approval of the loan or loan guarantee 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.


Applications are processed on a first-come, first-serve basis through out the fiscal year ending September 30.


Rural Electrification Act of 1936, as amended, Titles II and III, 7 U.S.C. 921, 922-924, and 930-940.

Range of Approval/Disapproval Time

Normal loan processing time is from 2 to 3 months.





Assistance Considerations

Formula and Matching Requirements

The statistical factor used for eligibility is any area of the United States; its territories or possessions, not within the boundaries of any city, village or borough having a population over 5,000 (farm and nonfarm). The source is the Department of Commerce's Bureau of the Census. The statistical factor used for fund allocation does not apply to this program.

Length and Time Phasing of Assistance

Direct and guaranteed loans can be made not to exceed the economic life of facilities and equipment. (average loan maturity is 18 yrs). Provision is normally made for advances to be completed within 5 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 guaranteed loans 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 7 CFR Part 3052, "Audits of States, Local Governments, and Non-Profit Organizations," which implement 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 telephone companies by the State regulatory body having jurisdiction, or by the Federal Communications Commission if there is no such regulatory body.

Financial Information

Account Identification

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


(Hardship Loans) FY 07 $54,413,000,000; FY 08 est $145,000,000; and FY 09 est not reported. (Cost of Money Loans) FY 07 $397,792,000; FY 08 est $250,000,000; and FY 09 est not reported. (FFB Treasury Loans) FY 07 $129,961,000; and FY 08 est $295,000,000; and FY 09 est not reported.

Range and Average of Financial Assistance

For FY 2006: Direct loans: $249,000 to $55,658,000; Average: $13,774,634. Loan Guarantees: $2,351,000 to 23,877,000; Average: $12,500,000.

Regulations, Guidelines, and Literature

7 CFR-XVII. RUS publishes and issues upon request technical operations manuals and bulletins covering financing, construction, operation and maintenance of rural telephone systems. Also available are annual statistical summaries; and Rural Electrification Act of 1936, as amended.

Information Contacts

Regional or Local Office


Headquarters Office

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

Criteria for Selecting Proposals


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Edited by: Michael Saunders

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