USDA Rural Utility Service
Zero Interest Loan

R.U.S. makes the loan or grant to the local R.U.S. borrower, who in turn may re-lend money at 0% interest or transfer the grant to the third-party business.

SOURCES OF FUNDS

Interest differential credits to Rural Economic Development Sub-account. Repayment of zero-interest loan into Subaccount.

ELIGIBILITY FOR FUNDS

Zero-interest loans and grants may be made to any R.U.S. borrower, and then can be made directly to a business.

PURPOSE OF THE PROGRAM

Used to promote rural economic development projects, including but not limited to: Project feasibility studies. Start-up costs. Incubator projects. Other reasonable expenses.

The promissory note covering the repayment of the zero-interest loan is between R.U.S. and the local R.U.S. borrower. The loan payments the R.U.S. borrower makes to R.U.S. are not tied to the repayments the R.U.S. borrower receives from a third party.

SELECTION OF RECIPIENTS

At discretion of R.U.S. Administrator, who considers specific selection factors, including: Supplemental funds. Unemployment rates. Per capita personal income levels, jobs, improvement of marketable skills. "Demonstration Projects" Location in or provision of greater benefits to a rural area, i.e., an area with population of less than 1,500. Endorsements and sponsorships. Not-for-profit or employee-owned. Probability of long-term success of the project. R.U.S. borrowers' pre-payments. Management and financial situation of R.U.S. borrower.

AMOUNT OF LOANS AND GRANTS

$10,000 - $400,000

LOAN TERMS

Term (including principal repayment deferment period) shall not exceed 10 years. First principal repayment may be deferred up to two years or until the project generates sufficient cash to begin repaying loan to R.U.S. borrower.