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What is a USDA Loan?

What is a USDA Loan?


The USDA offers government-backed loans to individual, lower-income homebuyers in rural areas. They also offer loans to certain municipalities for economic development.

Understanding USDA Loans

The United State Department of Agriculture (USDA) offers several different loan programs, including the USDA Rural Development Guaranteed Housing Loan Program, and the Single Family Housing Guaranteed Loan Program. These loans are what many people think of when they hear of a USDA loan. 

The USDA also offers loans to municipalities under the Rural Economic Development Loan & Grant Program. Under this program, it offers rural business development grants, community facilities loans and grants, and water and waste disposal loans and grants. 

These initiatives provide financing to eligible Rural Utilities Service electric or telecommunications borrowers to promote rural economic development and job creation initiatives. 


USDA Rural Economic Development Loan & Grant Program funds can go towards building large projects, like libraries, child-care facilities, and schools. They can also fund small projects like curbs and gutters.

What’s important here?

The USDA Rural Development Loan & Grant Program provides zero-interest rural economic development loans to local utilities. These local utility organizations can then use the grants to establish revolving loan funds for projects that help boost and maintain employment in the community.