RUS Telecom - DLT Resources

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DLT Frequently Asked Questions

What resources are available for assistance in preparation of an application?

The RUS DLT website (http://www.usda.gov/rus/telecom/dlt/dlt.htm) contains information on Fiscal Year 2003 opportunities, past awards demonstrating the types of projects we are looking to fund and other resources available on the Internet.
RUS has created a comprehensive grant application guide as well as a loan and combination loan-grant application guide on the financial assistance available through the DLT program. These guides were created to ensure that even the most inexperienced grant writer or loan applicant could prepare a high quality application. It includes eligibility requirements, descriptive narratives, required forms, etc., and can be downloaded from the Internet (http://www.usda.gov/rus/telecom/dlt/dlt.htm.)
RUS General Field Representatives with specific knowledge in local rural areas and Washington DC staff are available to answer questions and provide guidance to applicants. Contact information is available on the Internet (http://www.usda.gov/rus/telecom/staff/index_staff.htm).
USDA State Directors are also available to answer questions and provide guidance specific to the DLT program as well as any other USDA program of interest. An updated list of USDA State Directors is available on the Internet (http://www.rurdev.usda.gov/recd_map.html).

Who is eligible for DLT financing?

To be eligible to receive a financing under the DLT Program, the applicant must be organized in one of the following corporate structures:

Be delivering or proposing to deliver distance learning or telemedicine services;
Be legally organized as an incorporated organization or partnership; an Indian tribe or tribal organization, as defined in 25 U.S.C. 450b (b) and (c); a state or local unit of government, a consortium, as defined in § 1703.102; or other legal entity, including a private corporation organized on a for profit or not-for profit basis; and
Be operating a rural community facility or be delivering distance learning or telemedicine services to entities that operate a rural community facility or to residents of rural areas at rates calculated to ensure that the benefit of the financial assistance is passed through to such entities or to residents of rural areas.

Note: RUS electric or telecommunications borrowers are not eligible for grants.

What characteristics make up a successful Distance Learning or Telemedicine Project?

Need and Benefit of the Technology - Fulfilling community needs must be the driving factor when employing distance learning or telemedicine technology. Many projects are developed out of necessity in areas without adequate educational or medical services. The best projects are typically initiated from the grassroots with enthusiastic and motivated educators and healthcare providers as project leaders. Successful projects produce tangible and intangible benefits such as reduced costs to individuals and participating institutions, the saving of lives, and increased numbers of students attending college. In most cases, the benefits more than justify the costs.
Need for RUS Funding -The applicant should explore every practicable funding option to sustain the project for at least 10 years. Grant funding is targeted at applicants that are unable to implement the proposed project without assistance from RUS. RUS combination financial assistance and loan financial assistance should be explored as an alternative to grant funding. Local institutional support in the form of cash, in-kind matching funds, knowledge, and participation are an essential part of a successful project.
System Sustainability - The project must generate sufficient revenue to cover operating expenses, depreciation, and all other costs, without the need for further grant funding. For loans, projects must show ability to service the debt. The ability of the project participants to manage and utilize advanced technology is critical to a sustainable project (e.g., supplying written agreements among hubs and end user sites for operating procedures and cost sharing).
Cost Effectiveness of Technology - Understanding the costs of implementing advanced technology (e.g., operating expenses, maintenance costs, network tolls and access charges, training, depreciation and/or replacement costs, technical support) to support the proposed distance learning or telemedicine project is essential. Applicants should research alternative designs during the development of a cost-effective project. RUS will consider interoperability with state and regional networks.

What is the deadline for FY 2003 DLT Grant Applications?

Applications funded through this provision will be selected based on a competitive process (points will be awarded based on 7 CFR 1703.126). We expect competition to be stiff. RUS encourages early submission of grant applications to determine whether all required items specified in CFR 1703.125 are identifiable and complete. For applications submitted by Wednesday, April 2, 2003 , RUS will examine, provide comment, and return for modification applications that include items that would disqualify them from further consideration. All revised and final applications for grants must be postmarked no later than Friday, May 2, 2003, to be eligible for FY 2003 grant funding. All ineligible or incomplete applications will be returned at this time.

What are the eligibility requirements for Grants?

RUS has determined the maximum amount of an application for a grant that will be considered for funding in FY 2003 to be $500,000.
The proposed project must meet the educational and health care requirements of predominately rural areas. Applicants must meet the minimum eligibility of 20 points based on its Rurality calculation determining the extent to which the project serves rural areas.
Allowable funding is limited to those costs "inside the door" of the rural medical or educational institution (see CFR 1703.121). These eligible purposes are limited to the capital costs of setting up the project, including the following: equipment, software and some technical assistance. Grants may be used at an urban site for the purpose of delivering educational or medical services to rural areas. Keep in mind that although there is no repayment requirement for a grant, projects must show sustainability (i.e. the ability to pay operating and telecommunications expenses over a 10-year period).
Grants also require matching funds in the form of cash or in-kind eligible equipment from non-federal sources of at least 15% of the amount designated for approved purposes. These funds cannot be used to fund operating costs (including salaries or administrative expenses) or for transmission facilities (i.e., those facilities that connect sites).

What is the deadline for DLT Combination and Loan financing?

Applications for FY 2003 loans or combination loans-grants may be submitted at anytime up to July 31, 2003, and will be processed on a non-competitive first-come, first-serve basis.

What are the eligibility requirements for Combination and Loan financing?

Generally, the maximum amount for a loan that will be considered for funding during FY 2003 is $10,000,000. However, RUS may fund a project greater than $10,000,000 subject to the project's feasibility and the availability of loan funds. Combination financial assistance will generally consist of a fixed proportion of $10 in loans for each $1 in grant (i.e., approximately 91% loan and 9% grant).
The proposed project must meet the educational and health care requirements of predominately rural areas. Applicants must meet the minimum eligibility of 20 points based on its Rurality calculation determining the extent to which the project serves rural areas.
The allowable purposes for combination loan-grant and loan financing expand beyond the narrow range of equipment, software and technical assistance allowed with grant funding; particularly with regard to physical facilities, e.g., "bricks and mortar", transmission facilities, and project start-up costs.
There is no matching fund requirement.

What are the expanded eligible purposes under Combination Loan-Grant financing?

In addition to the items that can be funded under grant financial assistance provisions, combination loan-grant financial assistance can be used for purposes in 1703.131 reflecting expanded funding opportunities including:

Purchasing medical and educational equipment (in addition to telecommunications equipment that directly encodes or decodes data) shown to be necessary to implement the project;
Providing links between teachers and students or medical professionals located at the same facility as long as the facility is part of a distance learning and telemedicine network (formerly, single sites could not be funded in this manner);
Providing for site development and alteration of buildings necessary for the project but not reflecting a major portion of the financial assistance;
Purchasing of land and/or buildings, or building construction necessary but not reflecting a major portion of the financial assistance (the applicant must demonstrate that the financial assistance for this purpose is not available elsewhere at an economic cost); and,
Acquiring telecommunications transmission facilities where such facilities cannot be obtained at a cost that does not impact the economic viability of the project.

What are the expanded eligible purposes under Loan financing?

In addition to the items that can be funded under the combination financial assistance provisions, loan financial assistance can be used for purposes in 1703.141 reflecting expanded funding opportunities including:

Operations costs incurred during the first two years of operation of the project provided they are shown to be necessary, financing is not available elsewhere, and such costs do not exceed 20 percent of the loan financial assistance provided. Salaries and administrative expenses are not eligible for funding; and,
Costs needed to provide distance learning broadcasting to rural areas subject to the requirements in the regulation.

What kind of interest rate is available with Loans or the Loan portion of Combination financial assistance?

The interest rate for the loan (portion) is based on the cost of money to the United States Treasury at the time of draw down of funds. The maximum amortization period for the loan (portion) is up to 10 years or the economic life of the facilities being financed, whichever is less. The interest rate is based on "Yields on Treasury Securities" at "constant maturity" defined by the following:

Yields on Treasury securities at "constant maturity" are interpolated by the U.S. Treasury from the daily yield curve. This curve, which relates the yield on a security to its time to maturity, is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. These market yields are calculated from composites of quotations obtained by the Federal Reserve Bank of New York. The constant maturity yield values are read from the yield curve at fixed maturities, currently 3 and 6 months and 1, 2, 3, 5, 7, 10, 20, and 30 years. This method provides a yield for a 10-year maturity, for example, even if no outstanding security has exactly 10 years remaining to maturity. In estimating the 20-year constant maturity, the Treasury incorporates the prevailing market yield on an outstanding Treasury bond with approximately 20 years remaining to maturity.

Applicants can access the appropriate rate for a given loan term under the heading "Treasury constant maturities" at the following web site: (http://www.federalreserve.gov/releases/H15/update). For purposes of budgeting for feasibility analysis, applicants should use the most up to date rate based on the above criteria for amortization.