Health Center Federal Policy, Uncategorized

FY12 USDA Budget Includes Major Changes in Rural Development Financing Programs

by Joe McKelvey, Capital Link; and Alex Sange, NACHC

As noted here, last week, President Obama signed a so-called FY12 “minibus” appropriations bill into law, which included funding for several less controversial FY12 Appropriations bills including the Agriculture Department (USDA).

Historically, health centers in rural areas have benefited from several programs within USDA Rural Development including grants, loan guarantees and direct loans for facility improvements and construction.  The new law will dramatically reprioritize these programs within USDA.  Specifically, the Direct Loan program, which provides extremely low interest loans for health centers and other community facilities, has been dramatically expanded from slightly less than $300 million in FY11 to $1.3 billion in FY12.  These loans are currently available at historically inexpensive rates – 3.75% for 40 year terms.  Health centers and other essential community facilities in towns or rural areas with populations up to 20,000 can apply, and loan funds can be used for construction, expansion, or improvement of a community facility.  This could even include costs to acquire land, to pay professional fees, to purchase equipment and, in some cases, to refinance existing debt.

Unfortunately, while the FY12 legislation increases the amount available for direct loans, it reduces the amount available for Rural Development loan guarantees and grants.  Effectively, this means USDA will be steering applicants toward their direct loan program and away from loan guarantees and grants.  More information about the USDA Rural Development Direct Loan and other financing assistance programs is here.