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Understanding
USDA Direct Loans.

Designed to support the growth and enhancement of essential community facilities in underserved areas, USDA Direct Loans are a vital financing option for rural development projects.

These loans offer competitive interest rates and flexible terms, making them an attractive choice for many organizations. Fostering sustainable development, USDA Direct Loans play a crucial role in expanding access to quality healthcare in rural communities.

Current USDA Direct Loan Rate

4.125%

Eligibility

Eligible borrowers include public bodies, community-based non-profit corporations, and federally recognized tribes. Rural areas with no more than 20,000 residents, according to the latest U.S. Census Data, are eligible.

Terms

The terms for a direct loan as set by the USDA are:

  • Permanent financing only. Construction financing must be sourced separately.
  • The loan repayment terms are a maximum of 40 years.
  • Interest rates are set by Rural Development quarterly.
  • The interest rate is fixed for the entire term of the loan at the lower of the rate in effect at the time of approval or when the loan is funded.
  • There are no prepayment penalties.

Additional Requirements

Additionally, the USDA requires that:

  • Applicants must have legal authority to borrow money, obtain security, repay loans, construct, operate, and maintain the proposed facilities
  • Facilities must serve the rural area where they are/will be located
  • Project must demonstrate substantial community support
A woman stands on a fence overlooking over a field.

Getting Started

Find out if you’re eligible for USDA funding.

View Eligibility Map

Rates Through the Years

The USDA Direct Loan program was established as part of 1949’s Housing Act.

Putting today’s rate in context, this timeline demonstrates how the program has evolved over time.

The USDA Direct Loan program is established as part of the Housing Act

2011-2024

USDA Direct Loan Rate Q2 at 4.75%, Q3 at 4.25%, Q4 at 3.75%

2011

USDA Direct Loan Rate Q1 at 3.75%, Q2 at 3.38%, Q3 at 3.50%, Q4 at 3.50%

2012

USDA Direct Loan Rate Q1 at 3.13%, Q2 at 3.50%, Q3 at 3.50%, Q4 at 4.63%

2013

USDA Direct Loan Rate Q1 at 4.38%, Q2 at 4.13%, Q3 at 4.00%, Q4 at 4.00%

2014

USDA Direct Loan Rate Q1 at 3.75%, Q2 at 3.50%, Q3 at 3.63%, Q4 at 3.25%

2015

USDA Direct Loan Rate Q1 at 3.13%, Q2 at 2.88%, Q3 at 2.75%, Q4 at 2.38%

2016

USDA Direct Loan Rate Q1 at 3.38%, Q2 at 3.38%, Q3 at 3.25%, Q4 at 3.50%

2017

USDA Direct Loan Rate Q1 at 3.50%, Q2 at 3.88%, Q3 at 3.88%, Q4 at 4.00%

2018

USDA Direct Loan Rate Q1 at 4.25%, Q2 at 4.25%, Q3 at 3.50%, Q4 at 3.00%

2019

USDA Direct Loan Rate Q1 at 2.75%, Q2 at 2.38%, Q3 at 2.25%, Q4 at 2.125%

2020

USDA Direct Loan Rate Q1 at 2.125%, Q2 at 2.25%, Q3 at 2.25%, Q4 at 2.125%

2021

USDA Direct Loan Rate Q1 at 2.125%, Q2 at 3.50%, Q3 at 3.50%, Q4 at 3.50%

2022

USDA Direct Loan Rate Q1 at 3.75%, Q2 at 3.75%, Q3 at 3.625%, Q4 at 3.875%

2023

USDA Direct Loan Rate Q1 at 3.75%, Q2 at 3.5%, Q3 at 4%, Q4 at 3.875%

2024

USDA Direct Loan Rate Q1 at 4.125%

2025

Direct Loan Rate timeline graph

Stay Informed

Note that rates are subject to change based on market conditions and other factors. Be sure to refer to this page or USDA Rural Development often for the most up-to-date information.

Work with Us

Stroudwater Capital Partners can help prepare your organization for the USDA Direct Loan application process, from confirming loan requirements to understanding current market conditions.

Contact Us