What is a USDA Loan?

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Written By SmarterrMoney.org

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The USDA offers government-backed loans to individual, lower-income homebuyers in rural areas. They also offer loans to certain municipalities for economic development.

How the USDA helps Municipalities

The United State Department of Agriculture (USDA) offers several different loan programs, including the USDA Rural Development Guaranteed Housing Loan Program, and Single Family Housing Guaranteed Loan Program. These loans are what many people think of when they hear of a USDA loan. 

But the USDA also offers loans for municipalities under the Rural Economic Development Loan & Grant Program. Under this program, the USDA offers rural business development grants, community facilities loans and grants, and water and waste disposal loans and grants. 

These initiatives provide financing to eligible Rural Utilities Service electric or telecommunications borrowers to promote rural economic development and job creation projects. 

USDA Rural Economic Development Loan & Grant Program funds can go towards building large projects, like libraries, child-care facilities, and schools. They can also fund small ones like curbs and gutters.

What’s important here?

The USDA Rural Development Loan & Grant Program provides zero-interest rural economic development loans to local utilities. These local utility organizations can then use these grants to establish revolving loan funds for projects that help boost and maintain employment in the community.