What does this program do?

The electric program makes insured loans and loan guarantees to nonprofit and cooperative associations, public bodies, and other utilities. Insured loans primarily finance the construction of electric distribution facilities in rural areas. The guaranteed loan program has been expanded and is now available to finance generation, transmission, and distribution facilities. The loans and loan guarantees finance the construction of electric distribution, transmission, and generation facilities, including system improvements and replacement required to furnish and improve electric service in rural areas, as well as demand side management, energy conservation programs, and on-grid and off-grid renewable energy systems.

Who may apply for this program?

Most retail or power supply providers serving qualified rural areas, including:

• State and local governmental entities
• Federally-recognized Tribes
• Nonprofits including cooperatives and limited dividend or mutual associations
• For-profit businesses (must be a corporation or limited liability company)

What is an eligible area?

• The law requires the consideration of several factors to determine whether an area qualifies as rural for the purposes of this program.
• Check with General Field Representative (GFR) to determine whether the proposed service area qualifies as rural.

How may funds be used?

Funds may be used to finance:

• Maintenance
• Upgrades
• Expansion
• Replacement of distribution, sub transmission and headquarters (service, warehouse) facilities
• Energy efficiency
• Renewable energy systems
• For additional details, see the Code of Federal Regulations

What kind of funding is available?

• Loan Guarantees up to 100% allow the Federal Financing Bank (FFB) to extend credit to qualified borrowers in rural areas. 100% of the construction work plan can be financed.
• Hardship Loans may be used, at the sole discretion of the Rural Utilities Service, to assist applicants in rural areas that are either economically distressed or recovering from an unavoidable event, such as a natural disaster.

What are the loan terms?

• Generally, repayment may not exceed the useful life of the facility being financed, with a maximum repayment schedule of 35 years.
• Power supply borrowers are also limited by the terms of their wholesale power contracts.
• Loan Guarantees and Treasury Rate Loans: interest rates are fixed at the time of each advance based on rates established daily by the United States Treasury plus 1/8 of 1%.
• Hardship Loans: interest rates are fixed at a rate of 5% for up to 35 years.
• Borrowers must have legal authority to provide, construct, operate and maintain the proposed facilities or services.
• All facilities receiving federal financing must be used for a public purpose.
• Partnerships with other federal, state, local, private and non-profit entities are encouraged.