USDA Community Facilities Guaranteed Loans

Program Overview

The USDA Community Facilities guaranteed loan program backs loans made by private lenders to finance essential community facilities in rural areas. INSIGNIA Financial Services arranges these financings by positioning the project with lenders that participate in the program.

The borrower is a public body, a community-based nonprofit corporation or a federally recognized tribe. The program is not available to for-profit businesses. A for-profit operator in a rural area, including a rural healthcare or commercial operator, will generally be directed to the USDA Business & Industry loan program instead.

Program at a Glance

Program terms are set by USDA Rural Development and are subject to change. The loan guarantee note is issued upon project completion and satisfaction of conditions. A guaranteed loan may be combined with direct loans, grants and other commercial financing on a single project if all eligibility and feasibility requirements are met.

What Is an Essential Community Facility

An essential community facility provides an essential service to the local community for its orderly development in a primarily rural area. It does not include private, commercial or business undertakings. Examples include:

• Health care facilities such as hospitals, medical and dental clinics, nursing homes and assisted living facilities
• Public facilities such as town halls, courthouses, airport hangars and street improvements
• Community support services such as child care centers, community centers, fairgrounds and transitional housing
• Public safety facilities and equipment such as fire and police stations, fire trucks and public works vehicles
• Educational facilities such as museums, libraries and private schools
• Utility and technology services such as telemedicine and distance learning equipment
• Local food systems such as community gardens, food pantries, community kitchens, food banks, food hubs and greenhouses

The full list appears in 7 CFR Part 3575.

Eligibility and Underwriting Requirements

• The applicant must have the legal authority to borrow, grant security, repay the loan, and construct, operate and maintain the facility
• The applicant must be unable to finance the project from its own resources or through commercial credit at reasonable rates and terms
• Tax-exempt financing is not eligible
• The lender is responsible for credit quality and economic feasibility, including equity, cash flow, security, history and management capability
• The facility must serve the rural area in which it is or will be located
• The project must demonstrate substantial community support
• An environmental review must be completed and found acceptable

USDA reserves a portion of its annual funding for projects located in communities of 20,000 or fewer residents, so project location can affect timing. Property eligibility can be checked with the USDA property eligibility tool. Enter the full street address, city and ZIP code.

The Community Facilities Financing Process

We assess whether the borrower and project fit the program, identify lenders that participate in it, and organize the financial and project documentation the lender and USDA will review. That includes the borrower's financial statements, the project budget and feasibility support, evidence of community support, and the environmental information USDA requires.

When This Is Not the Right Program

• For-profit businesses should review USDA B&I loans or SBA 504 and 7(a) loans
• For-profit senior housing and healthcare operators should review assisted living and healthcare financing and HUD 232 and 223(f) loans
• Nonprofits and public bodies with a project that is not an essential community facility may still fit the USDA B&I program, which is open to nonprofits, tribes and public bodies as well as for-profit businesses
• Borrowers with access to tax-exempt financing cannot use this program for that financing
• Projects in urbanized areas outside the program's rural definition are ineligible

A side-by-side view of options is on the loan programs comparison and the capital sources page.

This page summarizes the USDA Community Facilities guaranteed loan program for informational purposes and is not an offer of financing. Program terms, fees and funding priorities are set by USDA Rural Development and change without notice. All loans are subject to lender and USDA approval.