Rural Telephone Loans and Loan Guarantees (10.851)
Program
10.851 Rural Telephone Loans and Loan Guarantees
Federal Agency
RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
Authorization
Rural Electrification Act of 1936, as amended, Titles II and III, 7 U.S.C. 921, 922-924, and 930-940.
Program Number
10.851
Last Known Status
Active
Objectives
To assure that people in eligible rural areas have access to telecommunications services comparable in reliability and quality to the rest of the Nation.
Types of Assistance
Direct Loans; Guaranteed/Insured Loans.
Uses and Use Restrictions
Long-term direct and guaranteed loans to qualified organizations for the purpose of financing the improvement, expansion, construction, acquisition, and operation of telephone lines, facilities, or systems to furnish and improve Telecommunications service in rural areas. "Rural area" is defined as any area of the United States, its territories and insular possessions (including any areas within the Federated States of Micronesia, the Republic of Palau) not included within the boundaries of any incorporated or unincorporated city, village, or borough having a population exceeding 5,000 inhabitants. The population figure is obtained from the most recent data available, such as from the Bureau of Census and Rand McNally and Company. For purposes of the "rural area" definition, the character of an area is determined at the time the initial loan for the system is made.
Eligibility Requirements
Applicant Eligibility
Telephone companies or cooperatives, nonprofit associations, limited dividend associations, mutual associations or public bodies including those located in the U.S. Territories and countries included in the Compact of Free Association Act of 1985, providing or proposing to provide telecommunications service to meet the needs of rural areas.
Beneficiary Eligibility
Residents of rural areas, and others who may also receive telephone service as a result of service provided to a rural area.
Credentials/Documentation
None. This program is excluded from coverage under OMB Circular No. A-87.
Application and Award Process
Preapplication Coordination
Applicants must supply environmental impact information to determine whether an environmental impact assessment or an environmental impact statement will be required. This program is excluded from coverage under E.O. 12372 and OMB Circular No. A-102.
Application Procedure
The completed loan application consists of four parts: an RUS Form 490; Application for Telephone Loan or Loan Guarantee; a market survey called Area Coverage Survey (ACS); the plan and associated costs for the proposed construction called the Loan Design (LD); and other various supplementary information specified in 7 CFR 1737.22. Detailed information on applying for an RUS telephone loan or loan guarantee is in 7 CFR Part 1737, available from RUS upon request. This program is excluded from coverage under OMB Circular No. A-110.
Award Procedure
Depending on the amount of the application, and loan committee(s) recommendation, the RUS Administrator, Assistant Administrator, or appropriate Area Director makes the final decision on approval of the loan or loan guarantee upon a finding that it is economically feasible and serves the purposes of the Rural Electrification Act. Borrowers and Members of Congress are notified of the approval of a loan or loan guarantee directly, and the public is notified through normal media communications.
Deadlines
Applications are processed on a first-come, first-serve basis through out the fiscal year ending September 30.
Range of Approval/Disapproval Time
Appeals
Not applicable.
Renewals
Not applicable.
Assistance Considerations
Formula and Matching Requirements
Under certain conditions, obtaining an RUS telephone loan will require obtaining a concurrent Rural Telephone Bank loan (see program 10.852). The statistical factor used for eligibility is any area of the United States; its territories or possessions, not within the boundaries of any city, village or borough having a population over 5,000 (farm and nonfarm). The source is the Department of Commerce's Bureau of the Census. The statistical factor used for fund allocation does not apply to this program.
Length and Time Phasing of Assistance
Direct and guaranteed loans can be made not to exceed the economic life of facilities and equipment. (average loan maturity is 18 yrs). Provision is normally made for advances to be completed within 5 years, but this period is subject to extension if required. Advances of funds are made as required by the borrower. The terms and conditions of guaranteed loans are negotiated between the borrower and the non-RUS lender, subject to RUS approval.
Post Assistance Requirements
Reports
RUS borrowers must submit to the Rural Utilities Service regularly scheduled operating reports showing financial condition and operating progress.
Audits
In accordance with the provisions of 7 CFR Part 3052, "Audits of States, Local Governments, and Non-Profit Organizations," which implement OMB Circular No.A-133 (Revised, June 24, 1997), "Audits of States, Local Governments, and Nonprofit Organizations," nonfederal entities that expend financial assistance of $300,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. All other RUS borrowers have their books audited annually by a Certified Public Accountant. Information on audits of RUS borrowers is contained in 7 CFR Part 1773.
Records
RUS borrowers keep the records prescribed for telephone companies by the State regulatory body having jurisdiction, or by the Federal Communications Commission if there is no such regulatory body.
Program Accomplishments
During fiscal year 2002, 36 borrowers received loans.
Financial Information
Account Identification
12-1230-0-1-271; 12-4230-0-3-271.
Obligations
(Hardship Loans) FY 02 $75,000,000; FY 03 est $74,835,000; and FY 04 est $75,000,000. (Cost of Money Loans) FY 02 $300,000,000; FY 03 est $300,000,000; and FY 04 est $300,000,000. (FFB Treasury Loans) FY 02 $120,000,000; FY 03 est $120,000,000; and FY 04 est $120,000,000.
Range and Average of Financial Assistance
For FY 2002, Direct loans: $289,000 to $61,567,000. Average: $9,375,000. Loan Guarantees: $4,476,000 to $59,389,000. Average: $13,333,333.
Regulations, Guidelines and Literature
7 CFR-XVII. RUS publishes and issues upon request technical operations manuals and bulletins covering financing, construction, operation and maintenance of rural telephone systems. Also available are annual statistical summaries; and Rural Electrification Act of 1936, as amended.
Related Programs
10.852, Rural Telephone Bank Loans.
Information Contacts
Regional or Local Office
None.
Headquarters Office
Assistant Administrator, Rural Utilities Service, Department of Agriculture, Washington, DC 20250. Telephone: (202) 720-9554. Use the same number for FTS.
Web Site Address
Examples of Funded Projects
Not applicable.
Criteria for Selecting Proposals
Not applicable.
