Austin USDA – Electric Program FAQs

USDA Loans AustinCan I use a Rural Utillity Service (RUS) loan for the cost share required for Smart Grid grants?

The use of RUS loans will satisfy the Smart Grid program’s cost share requirement. Funds from any Federal direct loan or loan guarantee can be used to satisfy the cost share requirements for Smart Grid grants. This use is not prohibited by program statutes as found in Amendment 9

I have purchased land out of Austin city limits and would like to build a house there, however, the electric cooperative/utility is charging $20,000-$50,000 to get a line out to my land. Does USDA Rural Development have a program to help pay for this connection?

Unfortunately, the cost for the connection is an issue between the cooperative/utility and the individual. Try working with close neighbors and the utility concerned to resolve the issue with the connection. In many cases, if the individual can show the cooperative/utility the potential growth of the area, the cooperative/utility may be more willing to expand a line out for a more reasonable cost.
Is it true that I can only receive my capital credits (cooperative stock dividends) if I die?

This is not always true. Retirement policies regarding cooperative capital credit differ by cooperative. Generally, a cooperative establishes a 10 to 15 year retirement cycle for the retirement of capital credits. Because policies differ between cooperatives, it would be best to check with your cooperative’s management or check their bylaws to determine what the cooperatives policies are regarding retirement of capital credits.
Do you provide a program that helps me pay my electric/telephone/water bill if I cannot afford it?

Unfortunately, there is not a program offered to help pay utility bills. USDA Rural Development does not have the programs or authority to oversee this issue. All charges and bill payments are strictly between the individual and the utility provider.
Does the USDA Rural Development Electric Programs finance any start up costs?

The USDA Rural Development Electric Programs will not finance any start up costs. They are only responsible for financing construction of the infrastructure costs.
Does the USDA Rural Development Electric Programs finance merchant plants?

The USDA Rural Development Electric Program does not finance merchant plants because the power generated from merchant plants is not targeted to any particular group of rural consumers. The USDA Rural Development Electric Program only finances facilities that provide for rural consumers.
May I receive a loan to help finance the production of a wind generate system (or some other type of renewable energy source) that I intend to sell to my local utility?

Yes, USDA Rural Development Electric Programs will make renewable energy loans to rural electric providers. In order to be certain that your USDA Rural Development office provides individual loans, check with you state office.
Who can apply for a USDA Rural Development electric loan or loan guarantee?

If the project is feasible from both an engineering and financial perspective, any entity that provides electric service to rural consumers can qualify for an electric loan or loan guarantee.
What type of loan programs does the USDA Rural Development provide?

The USDA Rural Development Electric Programs has a loan guarantee program and three loan programs, including:

    • Hardship Rate- provides loans at 5%

 

    • Municipal Rate- provides funds at the municipal rate (changes quarterly)

 

  • Treasury Rate- provides funds at the Treasury rate (changes daily)

Does the USDA Rural Development provide 100% of the funding?

It depends on the loan program. The USDA Rural Development will provide 100% of the funding for the hardship and treasury rate loans. However, they require that for municipal rate loans, the entity obtains 10% to 30% of the financing from outside sources.
What is the loan guarantee program?

While, the loan guarantee program is primarily used to finance the construction and acquisition of generation and transmission projects, it can also be used to finance the construction and acquisition of distribution facilities.
Who provides the funds under the loan guarantee program?

The majority of the loan guarantee’s program funds (roughly 99%) are provided by the Federal Financing Bank.
Are the interest rates locked in at the time of the loan?

    • Hardship Rate Program– no, the interest rates under this program are set at 5%

 

    • Municipal Rate Program– no, the interest rates are established at the time of the adUSDAnce and change quarterly

 

    • Treasury Rate Program– no, the interest rates are established at the time of the adUSDAnce and change daily

 

  • Loan Guarantee Program– no, the interest rates are established at the time of the adUSDAnce and change daily

 

It is important to note that you could have multiple interest rates under one loan.
How do I find what the current interest rates are?

Current interest rates can be found on the Interest Rates page.
What type of security is required by the USDA Rural Development for loans and loan guarantees?

Usually, the current and future assets of the entity are guaranteed as security for the debt, and are protected by a loan contract and mortgage.

How do I get my electric product listed on the USDA Rural Development’s Electric Programs standard list of materials?

General information on this is provided by the Technical Standards Committees.
How long will it take to get my electric product listed on the list of standard materials?

If all necessary information is provided, the process should take between 2 and 3 months. Necessary information includes:

    • Test reports

 

    • Drawings, and

 

  • Certifications

What is an “eligible country”?

An “eligible country” is any country that applies with respect to the United States an agreement ensuring reciprocal access for United States products and services and United States suppliers to the markets of that country, as determined by the United States Trade Representative. A current list of eligible countries for the Electric Programs is provided by USDA.

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