The Rural Economic Development Loan and Grant program provides funding for rural projects through local utility organizations. USDA provides zero-interest loans to local utilities which they, in turn, pass through to local businesses (ultimate recipients) for projects that will create and retain employment in rural areas. The ultimate recipients repay the lending utility directly. The utility is responsible for repayment to USDA.
USDA provides grants to local utility organizations which use the funding to establish revolving loan funds (RLF). Loans are made from the revolving loan funds to projects that will create or retain rural jobs. When the revolving loan fund is terminated, the grant is repaid to USDA.
To receive funding (which will be forwarded to selected eligible projects) an entity must be:
- A former Rural Utilities Service borrower who borrowed, repaid or pre-paid an insured, direct, or guaranteed loan
- Nonprofit utilities that are eligible to receive assistance from the Rural Development Electric or Telecommunication Programs; or
- Current Rural Development Electric or Telecommunication Programs borrowers.
Intermediaries may use Rural Economic Development Loan & Grant (REDLG) funds to lend for projects in rural areas or towns with a population of 50,000 or less.