The United State Department of Agriculture (“USDA”) has announced that it will begin accepting applications for the next round of funding through its Rural Development Broadband ReConnect Program (“ReConnect 4”) beginning September 6, 2022. The application window closes on November 2, 2022. Reconnect 4 provides loans, grants, and loan/grant combinations to facilitate broadband deployment in rural areas.

Eligibility

Many different entities are eligible to receive funding through ReConnect 4, including for-profit or nonprofit organizations. The following entities may apply for funding:

1. Corporations;
2. Limited Liability Companies and Limited Liability Partnerships;
3. Cooperative or mutual organizations;
4. States or local governments, including any agency thereof;
5. Territories or possessions of the United States; or
6. Indian tribes.

To be eligible for funding assistance an applicant must provide, among other things, the following documentation and information in its application:

• Audited financial statements for the previous year from the date the application is submitted;
• Demonstrate that the project can be completely built out within five years from the date funds are first made available;
• Demonstrate that the project is technically feasible as described in the USDA’s rules.
• Show that all project costs can be fully funded or accounted for as detailed in the USDA’s rules;
• Submit documentation which enables USDA to determine that the project is financially feasible and sustainable as delineated in its rules; and
• Demonstrate that the following service requirements will be met:
  • Facilities funded by grants will provide broadband service proposed in the application for the composite economic life of the facilities, as approved by USDA, or as provided in the award documents; and
  • Facilities funded with loan funds must provide broadband service through the amortization period of the loan.

Funding Categories

100 Percent Loan. Applications will be processed and awarded on a rolling basis. When two or more applications are received for the same eligible area, the application submitted first will be considered first. The interest rate for a 100 percent loan will be set at a fixed 2 percent. Principal and interest payments will be deferred for three years. The amortization period will be based on the composite economic life of the assets funded plus three years. The maximum amount that can be requested is $50,000,000. The minimum amount is $100,000.

50 Percent Loan/50 Percent Grant Combination. The interest rate for the 50 percent loan component will be set at the Treasury rate for the remaining amortization period at the time of each advance of funds. The maximum amount that can be requested is $25,000,000 for the loan and $25,000,000 for the grant. Loan and grant amounts will always be equal. The minimum amount is $100,000.

100 Percent Grant. An applicant must provide a matching contribution equal to at least 25 percent of the cost of the overall project. The applicant must clearly identify the source of the matching funds even if it is to be provided from the applicant’s operating accounts. All matching funds must be deposited into the applicant’s operating accounts. The maximum amount that can be requested is $25,000,000. The minimum amount is $100,000.

100 Percent Grant for Alaska Native Corporations, Tribal Governments, Colonias, Persistent Poverty Areas and Socially Vulnerable Communities. No matching funds are required if an application meets certain criteria contained in the USDA’s rules. The maximum amount that can be requested is $35,000,000. The minimum amount is $100,000.

Projects serving areas where 90% of households lack sufficient access to broadband. “Sufficient access to broadband” is defined as any rural area in which households have fixed, terrestrial broadband service defined as 100 megabits per second (Mbps) downstream and 20 Mbps upstream. The maximum amount that can be requested is $25,000,000. The minimum amount is $100,000.

Eligible Service Areas & Projects

In general, applicants must demonstrate that they proposed to provide broadband service (at speeds listed above) to areas where at least 50 percent of the households lack sufficient access to broadband. This includes submitting evidence of the lack of sufficient access to broadband, identifying all existing providers in the area, and indicate what level of service is being provided. Certain specified community broadband projects, cybersecurity risk management, and pole attachment fees are also eligible for funding.

Application Evaluation

USDA reviews and scores funding applications on a point system. Points are awarded based on criteria such as (but not limited to): (a) proposing service to the least populous areas; (b) lowest level of existing broadband service in the proposed service area; (c) a proposed service area’s poverty level; (d) proposing service to tribal areas; and (e) affordability of service proposed.

The CommLaw Group Can Help!

The Reconnect 4 application process is very complex. This alert provides a high-level overview of the program and application process, but potential applicants need to be aware of a lot of details and provide the requisite information in order for their applications to be seriously considered by USDA. We can assist. Please feel free to contact Ron Quirk at req@commlawgroup.com our the attorney assigned to your account to guide your company’s funding application efforts.