Are There Any Programs for Rural American Community Needs? Learn All About Community Facilities Programs!

At August Brown, we have noticed that prospective clients generally ask the same or similar questions. Hopefully, this article will help you clarify burning questions about the United States Department of Agriculture (USDA) and Community Facilities (CF) Program. USDA CF Programs aim to help rural communities by funding loans or grants. USDA’s primary aim is to fund projects and facilities that would set quality benchmarks for rural residents. The USDA runs CF Program to create a more resilient, competitive, and strengthening rural America. Many questions may arise about it, such as Lender’s qualifying procedure, how many specific programs to help different sectors, feasibility study requirements, and many more.

How Many Specific Programs To Help Different Sectors?

What are the different community facilities programs helping rural America,

CF Direct Loans & Grants
In this program, low-income rural communities can obtain affordable funding to construct and improve essential community facilities. It is necessary to provide a service that benefits the rural community so that the community can develop and live a quality life.
CF Loan Guarantees
Loan guarantees are provided to eligible lenders who wish to create essential community facilities in rural areas. Important community facilities are public improvements operated on a non-profit basis to develop the rural regions.
CF Relending Program
Eligible lenders (re-lenders) can in turn, re-loan for the improvement, expansion, or new essential community facilities. Applicant must have an existing loan portfolio where at least 30 percent of its loans are made in rural, high- or persistent-poverty areas.
CF Technical Assistance & Training Grant
Rural communities, Indian tribes, and nonprofit corporations will receive technical assistance and/or training to identify and plan for community facility needs. Grants will be made to associations for technical assistance and/or training related to essential community facilities programs by the Agency.
Economic Impact Initiative Grants
Funds are provided to assist rural communities experiencing severe economic depression and unemployment by developing essential community facilities.
Emergency Rural Healthcare Grants
Through the Emergency Rural Health Care program, rural health care services, food assistance, and COVID-19 testing are all made available to rural communities.
Rural Community Development Initiative (RCDI) Grants
In rural areas, RCDI grants help non-profits support housing, community facilities, community and economic development projects to support housing, community facilities, and tribal communities.
Tribal College Initiative Grants
The program assists 1994 Land Grant Institutions (Tribal Colleges) in improving their educational facilities and purchasing equipment. Tribal colleges can use the funds to improve infrastructure, purchase equipment, and develop essential community facilities.

Which Borrowers can take advantage of the USDA CF Programs?

Eligible borrowers include:

Public bodies,
Community-based non-profit corporations,
Federally-recognized Tribes.

What Projects Or Facilities Are Eligible For Funding?

The program offers funds to construct, expand, or improve healthcare, education, public safety, and other facilities that can assist rural communities in attracting and retaining businesses. These projects or facilities include

Fire and rescue stations,
Village and town halls,
Health care clinics,
Hospitals & adult and child care centers,
Assisted living facilities,
Rehabilitation centers,
Public buildings,
Other community-based initiatives include schools and libraries.

The financing may include professional fees, land acquisition, and equipment purchases. In short, those facilities that are eligible will improve the essential quality of life and assist in rural America’s development and sustainability.

What is an eligible area?

This program is available in rural areas with no more than 20,000 residents, including cities, villages, townships, and towns, as well as Federally Recognized Tribal Lands.

Are there any funding priorities?

Population and median household income will determine priority.
The population of a small community should be less than 5,500.
A community with a median household income below 80% of the nonmetropolitan state average.

What Are The Terms For Direct Loan?

Funding is provided through a competitive process.

State statutes, the applicant’s authority, or a maximum of 40 years may determine how long the loan must be repaid.
After approval, the interest rate is fixed for the entire term of the loan and is calculated based on the median household income and population in the service area.
There are no pre-payment penalties.
Contact Rural Development for current interest rates and details.

Additional Requirements for CF Direct Loan & Grant Program?

Borrowing money, obtaining security, repaying loans, building, operating, and maintaining the proposed facilities need legal authorization.
A project cannot be financed through its resources or reasonable terms and rates of commercial credit.
The facility must serve the rural area where it is/will be located.
There must be substantial community support for the project.
There must be an environmental review completed and acceptable.

Construction Or Renovation Buildings Requirements To Get Funds

Architectural services are needed to prepare construction plans, specifications, bids, and contracts and monitor the construction process.

A Preliminary Architectural Feasibility Report, including a Cost Estimate, must be submitted to the RD Area Loan Specialist and RD State Architect at the earliest possible time. If the applicants are decided to get funds for architectural projects, the State Architect will evaluate and provide architectural and construction advice to them and their Architects. State Architect can guide in the following areas:

Preliminary site visit and project evaluation
Agency approval of Owner/Architect Agreements in the Preliminary Architectural Feasibility Report
Acceptance of Plans & Specifications by the Agency
Documents for the Construction Contract that have agency approval
Building work and construction oversight

Final Words

Do you want to help low-income, financially distressed rural communities? USDA is ready to fund your projects if all eligibility and feasibility requirements are met. It benefits lenders with loan guarantees to develop essential community facilities in rural areas.

For a lender to get approved, proper feasibility studies, collateral, underwriting, and other requirements must be met.

August Brown is here to help you with the complicated part of the application process – the feasibility study that helps you become a lender. Providing feasibility studies on time, adhering to rigorous technical standards, and using comprehensive methods ensures the highest quality.

Discover how our consultations can help you improve your business outcomes. Contact us today!

About August Brown, LLC – Founded in 2011 by Dr. Gordon Nameni, August Brown is a boutique technology-focused management consulting and advisory firm with a specialization in feasibility studies. The August Brown team is comprised of passionate individuals from a diverse set of backgrounds (engineers, CPAs, marketers and analysts). August Brown provides feasibility studies that support for USDA loans, M&A transactions, and financial decisioning. The company delivers deep insights with analytical rigor that drive growth strategies, market positioning and continuous improvement.

Content inspiration references:

https://www.rd.usda.gov/programs-services/community-facilities
https://www.rd.usda.gov/sites/default/files/fact-sheet/508_RD_FS_RHS_CFDirect.pdf