Telecommunications Program      
 

FAQs

Where can additional material be obtained?

  • The RUS and Telephone Bank rules and regulations are published in the Code of Federal Regulations (CFR) at Title 7, Parts 1600 and 1700.
  • Link to a complete listing of the Telephone Bank and RUS Telecommunications Program Regulations and Bulletins.

Who may borrow? (See 7 CFR 1735.14 Borrower eligibility)

  • Commercial or nonprofit corporations that are providing or propose to provide basic local exchange telecommunications service to rural areas.
  • The borrower generally must be incorporated.
  • The Telephone Bank does not make loans to individuals.

How may funds be used? (See §1735.17 Facilities financed)

  • RUS and the Telephone Bank make loans to finance the improvement, expansion, construction, or acquisition of telecommunications facilities in rural areas.

What type of financing is available? (See §1735.31 Concurrent RUS CoM and Telephone Bank Loans)

  • Cost-of-Money (CoM) loans are made concurrently with Telephone Bank loans; i.e., a borrower will receive financing in part from both the RUS CoM program and in part from the Telephone Bank program. The loan amount will be in the same proportions as the RUS CoM and Telephone Bank lending levels authorized by the Congress.

What are the eligibility requirements? (See §1735.31 Concurrent RUS CoM and Telephone Bank Loans)

  • Proposed subscriber density of 15 or less, or Projected TIER between 1.0 and 5.0; and
  • The borrower is participating in a State Telecommunications Modernization Plan.

What are the loan terms? (See §1735.43 Payments on loans)

  • Loans must be repaid within a period that approximates the expected useful life of the facilities financed, not to exceed 35 years. There are no commitment fees or charges.

What are the general loan policies? (See 7 CFR 1735, Subpart A)

  • Telecommunications service must be provided to the largest practical number of rural subscribers (i.e., area coverage).
  • Facilities being financed must not duplicate existing facilities of another telecommunications company already providing adequate service.
  • The loan must be financially feasible.
  • The loan must meet TIER and subscriber density requirements.
  • Rural areas are defined by RUS as any area that does not include a city with a population greater than 5,000.

What is the interest rate?

  • RUS CoM loans bear interest at a rate equal to the current cost of money to the Federal Government, but can not exceed 7 percent. (See §1735.31(c))
  • Telephone Bank loans bear interest at a rate equal to the cost of funds to RTB. (See §1610.10)

Is collateral required? (See §1735.46(a) Loan security documents)

  • The Telephone Bank and RUS generally obtain a first lien on all assets of the borrower. This lien shall be in the form of a mortgage by the borrower to the Government or a deed of trust made by and between the borrower and a trustee, satisfactory to the Administrator, together with such security agreements, financing statements, or other security documents as the Telephone Bank and RUS may deem necessary in a particular case.

Where should applications be filed?

  • The RUS field representative assists the borrower in assembling the loan application package. Borrowers are to submit all the required information to their field representatives, who will review and then forward the loan application package to RUS headquarters. (See §1737.21 The completed loan application)
  • Initial loan applicants seeking assistance should write the RUS, USDA, Washington, DC 20250. A field representative will be assigned by RUS to visit the applicant and discuss its financial needs and eligibility. Existing borrowers initiate the contact directly with their assigned field representative. (See §1737.10 Initial contact)
  • Link to RUS Telecommunications Program Contact Person--Washington Staff and GFR.

What should be included in an application? (See §1737.21 Loan application)

  1. The completed loan application consists of four parts:
  2. A completed RUS Form 490.
  3. A market survey called the Area Coverage Survey (ACS).
  4. The plan and associated costs for the proposed construction, called the Loan Design.
  5. Various supplementary information specified in 7 CFR 1737.22.