Rural Decentralized Water System Grant Program

The Rural Utilities Service, a mission area within USDA Rural Development, has released the Rural Decentralized Water Systems Program under a Notice of Funding Opportunity. This program is designed to strengthen water access and wastewater services for individuals in rural areas who may not be served by centralized public systems. The initiative emphasizes that safe and reliable household water and wastewater systems are essential to human health and local economic development. Where centralized public utilities are not feasible, household wells and decentralized septic systems are often the most practical solution. The program provides funding to nonprofit organizations to create revolving loan funds and sub-grant programs. These nonprofits will then make loans or sub-grants to individuals for the construction, refurbishment, or servicing of household water well systems and decentralized wastewater systems. Loans may not exceed $15,000, with repayment terms up to 20 years at a 1 percent annual interest rate. Sub-grants are permitted where necessary, covering up to 50 percent of awarded funds. A portion of the total funding, amounting to $1,000,000, is specifically allocated for sub-grants supporting decentralized household wastewater systems. Approximately $6,000,000 is anticipated to be available in this funding round, though this is contingent on appropriations. There is no minimum or maximum award amount defined. Funds must be used for eligible purposes under 7 CFR part 1776, including construction, rehabilitation, and servicing of individual systems, and may not be used for ineligible costs as outlined in federal regulations. Applicants are responsible for meeting all application costs, and prior grants under this program cannot be renewed. Eligible applicants are nonprofit organizations meeting the requirements of 7 CFR 1776.5. These organizations must demonstrate compliance with cost-sharing requirements for revolving fund components, while sub-grant awards do not require cost sharing. Applicants proposing to serve tribal lands must include a tribal resolution of support. Individual loan or sub-grant recipients must be eligible households, generally with low to moderate incomes, and subject to income rules that exclude certain categories such as minor children’s earnings. Applications must be submitted electronically via Grants.gov by December 1, 2025, at 11:59 p.m. Eastern Time. Applicants must have a UEI number, maintain an active SAM registration, and ensure all application materials comply with submission requirements. Required forms and guidance are available on USDA Rural Development’s program website. Incomplete or late applications will not be considered. The review process involves competitive scoring according to criteria set forth in 7 CFR 1776.9. Applications may earn up to 10 administrative points if they address specific additional requirements. Evaluation will be conducted by a panel of RUS staff, and the Administrator may exercise discretion in awarding points and funding. Award notifications are expected by December 31, 2025, with the performance period running from February 1, 2026, to January 31, 2027. For further information, applicants may contact Sandra Alarcón, Community Programs Specialist at the Rural Utilities Service, USDA, at Water-RD@usda.gov or (202) 568-1119. This program is national in scope and subject to applicable civil rights, nondiscrimination, and environmental review requirements. Awards are governed by federal administrative and reporting requirements, and grantees must comply with auditing and financial disclosure obligations.

Apply early and maintain SAM registration; follow the application guide closely; incomplete applications will be rejected.