With a mission of revitalizing rural communities, the U.S Department of Agriculture (USDA) Community Facilities (CF) Direct Loan program is an effective financing solution that can improve the health of communities and the bottom lines of health care providers. The USDA CF program provides direct loans and guaranteed loans made by eligible lenders with a primary purpose of creating employment and improving the economic and environmental climate in rural communities
Signifying its commitment to improving rural communities across the nation, the USDA recently announced it is investing $266 million to build and improve critical community facilities in 16 states and Puerto Rico. The funds are expected to benefit approximately three million rural residents, with $156 million dedicated specifically to healthcare-related improvements.
“USDA Rural Development programs and services are in a unique position to help rural communities facing challenges caused by the pandemic,” USDA Deputy Under Secretary for Rural Development Justin Maxson said in a statement. “The investments announced today will spur community development and build sound infrastructure like hospitals and medical facilities to help rural America build back better and stronger.”
Case in Point
One of the 41 projects funded during the current fiscal year is the new construction of Fieldstone of DeWitt, a 91-unit seniors housing and care campus in eastern Iowa. Ground broke on the project in late 2020 and funding was derived via a $19.33 million USDA CF direct loan and $2.5 million commercial bank loan. The USDA CF loan will serve as the primary permanent debt structure upon construction completion. The new community consists of a 70-bed replacement skilled nursing facility (SNF), of which 16 units will provide dementia care and 21 units will provide assisted living (AL) care. Previously, the community was attached to a hospital, and the new separate campus will be better positioned to serve area seniors.
The new SNF beds will be located in four cottages, each with its own common area, centralized dining, serving kitchen and family room. The cottages will be connected via a centralized area to the AL community. Services and amenities include outpatient therapy, a community room, botanical garden, spa, salon, wellness center, bistro, and administrative and support spaces.
“Key benefits of the USDA CF structure include the 40-year term and amortization, as well as the low, fixed interest rate,” said Quintin Harris, managing director at Lument, who led the transaction along with Lument’s Adam Walter.
“We appreciate being able to collaborate with USDA and Wellspire to obtain competitive construction period interest rates with no prepayment penalties at 100% loan-to-value (LTV),” added Walter, vice president.
The long-term, fixed interest rates and flexible terms offered by the USDA CF program make it appealing, affordable and attainable for many borrowers, provided they meet program requirements. Over 100 types of projects are eligible for CF funding, including nonprofits, municipalities, public bodies, and federally recognized Native American tribes. Rural communities with populations of 20,000 or less are eligible for direct loans and communities with populations of 50,000 or less are eligible for guaranteed loans. Interested borrowers should contact Harris or Walter for more information.