Community Facilities Direct Loan & Grant Program

The Community Facilities Direct Loan and Grant Program, administered by USDA Rural Development, aims to enhance the quality of life in rural areas by providing affordable funding for the development of essential community facilities. These facilities are defined as those delivering crucial services that foster orderly community development in primarily rural areas, excluding private, commercial, or business enterprises. The program supports projects that contribute significantly to the vitality and infrastructure of rural communities. Eligible applicants include public bodies, community-based non-profit corporations, and Federally Recognized Tribes. To qualify, projects must be located in rural areas with populations of 20,000 or fewer based on the latest U.S. Census data. Eligible rural areas encompass cities, towns, townships, villages, and Tribal Lands. Applicants must also demonstrate an inability to secure funding through other financial means and possess legal authority to borrow funds, operate and maintain proposed facilities. Funds under this program can be used for the purchase, construction, or improvement of essential community facilities, the acquisition of necessary equipment, and the coverage of related project costs. Examples include healthcare facilities, public and safety services, community support centers, educational institutions, utility services, and local food systems. Grant percentages vary and are awarded on a graduated scale based on community size and median household income. The maximum grant coverage ranges from 15% to 75% of eligible project costs, depending on specific population and income criteria. Funding is available in the form of low-interest direct loans, grants, and combinations thereof, including loan guarantees. The terms for direct loans include a fixed interest rate (once approved), a maximum term of 40 years, and no pre-payment penalties. Interest rates for Q1 FY2025 are: Poverty rate at 4.500%, Intermediate at 4.375%, and Market rate at 4.25%. Grants are limited and competitive, and grant assistance is prioritized for smaller, lower-income communities. The program operates on a year-round application basis. Interested applicants should begin by contacting their local Rural Development office to discuss their project and obtain required forms and guidance. Applications must include environmental reviews and a Preliminary Architectural Feasibility Report with a cost estimate. Projects are reviewed by RD Area Loan Specialists and RD State Architects. Final application materials should comply with both national and state-specific requirements. Applicants must also register for a Unique Entity ID and be listed in the System for Award Management (SAM). The governing regulations for this program include 7 CFR Part 1942, Subpart A for direct loans and 7 CFR Part 3570, Subpart A for grants. Additional resources and application checklists are available online, including Forms RD 1942-39 and RD 1942-40 for different applicant types.

Contact your local RD office early in the process. Use provided checklists and guidance documents. Submit a complete environmental review.