The ReConnect Program offers unique federal financing and funding options in the form of loans, grants, and loan/grant combinations to facilitate broadband deployment in areas of rural America that don’t currently have sufficient access to broadband, as defined by the latest Funding Opportunity Announcement (FOA). The amount and types of funds available, as well as the maximum and minimum award amounts, will be determined by the latest FOA.
This program generates private sector investment to deploy broadband infrastructure that provides high-speed internet e-Connectivity to as many rural premises as possible, including homes, community facilities for healthcare and public safety, schools, libraries, farms, ranches, factories, and other production sites.
Who May Apply
The entities considered eligible to apply for assistance under the ReConnect Program include:
- Limited Liability Companies (LLCs) or Limited Liability Partnerships (LLPs)
- Cooperatives or mutual associations
- States, local governments, or any agency, subdivision, instrumentality, or political subdivision thereof
- A territory or possession of the United States
- An Indian tribe (as defined in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. § 450b)).
Eligible Cost Purposes
Award funds may be used to pay for the following costs:
- To fund the construction or improvement of facilities, including buildings and land, required to provide fixed terrestrial broadband service.
If other services will be provided over these facilities, then award funds may also be used to acquire the additional equipment. For example, award funds may be used to purchase equipment that is required to comply with the Communications Assistance for Law Enforcement Act, 47 U.S.C. § 1001 et seq (CALEA).
- To fund reasonable pre-application expenses.
Funding for pre-application expenses may not exceed five percent of the award amount. If the funding category applied for has a grant component, then grant funds will be used for this purpose; otherwise, loan funds may be applied. All pre-application expenses must be included in the first request for advance of award funds.
- To fund the acquisition and upgrade of an existing system that is not currently providing sufficient access to broadband service (eligible for 100 percent loan requests only).
Funding for the acquisition of an existing system may not exceed 40 percent of the award amount. After improvements are made, the upgraded system must meet the requirements of this regulation.
Financial and Technical Feasibility
Only projects that USDA determines to be financially and technically feasible will be eligible for an award. An eligible project must demonstrate to the satisfaction of RUS that it will be able to generate sufficient revenues to cover expenses; have sufficient cash flow to service all debts and obligations; have a positive ending cash balance as reflected on the cash flow statement for each year of the forecast period; and demonstrate positive cash flow from operations at the end of the forecast period. Eligible projects must also meet at least two of the following requirements by the end of the forecast period: a minimum Times Interest Earned Ratio (TIER) requirement of 1.20, a minimum Debt Service Coverage Ratio (DSCR) requirement of 1.20, and a minimum Current Ratio of 1.20.
Funding options that include grants will be evaluated according to criteria included in the FOA that opens an application window.
Technical feasibility will be determined by evaluating the project’s network design and other relevant information in the application.
ReConnect Program Background
Originally authorized in 2018, the ReConnect program is used to build infrastructure for essential internet eConnectivity services to rural areas without sufficient access to broadband, through loans and grants.
On March 23, 2018, Congress passed the Consolidated Appropriations Act, 2018, which established a new broadband loan and grant pilot program, now called the Rural eConnectivity Pilot Program (ReConnect Program). The 2018 Appropriations Act originally appropriated a budget authority of $600 million to be used on an expedited basis. Congress funded an additional $550 million for the pilot through the Consolidated Appropriations Act, 2019 and an additional $555 million in the Consolidated Appropriations Act, 2020. In addition, the Coronavirus Aid, Relief, and Economic Security Act provided another $100 million in grant funding for the program.
Since its establishment under the 2018 Appropriations Act, the ReConnect Program has been implemented by issuing Funding Opportunity Announcements (FOAs). On February 26, 2021, USDA published the ReConnect Program Regulation to codify the program’s policies and procedures.
During the first round of funding in Fiscal Year 2019, USDA received 146 applications requesting $1.4 billion in funding and awarded over $656 million to 76 projects in 33 states. To view the announcements made in FY 2019, visit the FY 2019 ReConnect Program Awardees page.
During the second round of funding in Fiscal Year 2020, USDA received 172 applications requesting $1.57 billion and awarded over $852 million to 105 projects in 37 states. To view the announcements made in FY 2020, visit the Service Area Eligibility Requirements FY 2020 ReConnect Program Awardees page.