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Grants, Loans or Both: Which ReConnect Funding is Right for You?

Eric Freesmeier Mar 11, 2019

A broadband grant does not have to be repaid. That sounds ideal at first, but grants will not be best option in all circumstances. The $600 million ReConnect program from the Rural Utilities Service (RUS), will attract many rural broadband providers applying for grants, loans and 50/50 grant-loan combinations. As I noted in two earlier articles (here and here), there are factors to keep in mind when applying for funding and your specific circumstances will shape your ReConnect application. Likewise, there are also variables to consider when deciding what type of funding to seek.

Scoring: First, keep in mind that RUS will score grant and grant-loan combo applications based on nine criteria, including low population density, broadband speed, farms and businesses served and others. You will be able to assess whether your project is likely to get a high score under those criteria. For example, if you anticipate providing less than 100 Mbps downstream service; have high-density populations in your service area, or do not serve many farms or businesses, you could score low compared to other applicants. Consider applying for a ReConnect loan. RUS will not score loans, but will award them on a first-come, first-served basis.

10/1 Mbps Threshold: RUS will only award grants to Proposed Funded Service Areas (PFSAs) where 100 percent of households have no access to 10 Mbps downstream/1 Mbps upstream service. The threshold for loans and grant-loan combos is 90 percent of households in a PFSA without access to 10/1 service. Depending on your application’s PFSA, a loan or grant-loan combo may be more achievable.

25 Percent Match: Grants applicants must demonstrate, either on their own or working in concert with a local or state government, civic group or other entity, that they can match 25 percent of the grant amount. The larger the grant a provider seeks, the larger the amount of matching funds they must raise in order to qualify. In contrast, loans and grant-loans do not require this condition.

CAF Support: RUS will treat areas receiving support through the FCC’s Connect America Fund (CAF) Phase II program differently. Applicants with CAF II-funded areas within their PFSAs will be eligible to apply for loans only. CAF II areas appear in the ReConnect program’s Mapping Tool.

Each funding category has strong points. In the end, local conditions and the needs of your customers will determine the best fit. NRTC has experienced people on hand who can help you plan your network design and business case in a way that can maximize your chances of obtaining ReConnect funding. For more information, please call your regional business manager, or leave a note for me on our Contact page.

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Eric Freesmeier is president, NRTC Broadband Development.

 

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