Benefits of Rural Housing Service Community Facility Loan

A rural loan for the building of new and refinancing of old facilities within rural communities.  These loans are made through the Community Facilities Direct and Guaranteed Loan programs.  These programs are part of the U.S. Department of Agriculture (USDA) and can provide direct loans or loan guarantees through private lenders for rural governments, non-profits associations and American Indian tribes.

Types of Facilities

The loan program helps rural communities provide certain facilities such as schools, hospitals, clinics, care facilities for the aged, libraries, fire and police. The use of these monies gives rural communities an opportunity to fund buildings and other facilities necessary to deliver essential services. This benefit is the chief reason for the Community Facilities program and why it exists.

Applicants for Rural Housing Service Community Facility Loans

Applicants for the community facility loan programs are rural governments, American Indian tribal communities and non-profits that work in rural areas. These non-profits can include hospital associations and medical co-ops in need of a facility necessary to provide primary and emergency care services to rural residents. The programs can give the needed funding that helps the residents of a rural community build local facilities and not have to risk their lives or property relying on those services being provided by a nearby larger community.  

Community Facilities Guaranteed Loan Program

The Community Facilities Guaranteed loan program enables private lenders to make loans to rural communities with an up to 90 percent guarantee in the event that the loan defaults. This guarantee is similar to that provided by the U.S. Small Business Administration (SBA) to small businesses. Private lenders will use the guarantee with its own requirements to make loans in order for a rural community to secure a needed facility.

Community Facilities Direct Loan Program

The Community Facilities Direct loan program lends money to rural communities directly from the USDA.  This is unlike the SBA, which does not make direct loans except in the case of disaster relief loans. The direct loans are made bases on a feasibility study performed by an independent outside consultant with no interest in the outcome of the study or funding decision made in behalf of the rural community. 

Receipt of the report and an application can lead to a loan decision within 45 days of application.

The budgetary stress placed on rural communities to maintain existing facilities that may be outdated or inadequate to the needs of a community is relieved by the proceeds provided directly or on a guaranteed basis through a private lender.  This allows the rural community to focus resources on other aspects of the community in order to improve the overall quality of life.