Application Guide

Farm Bill Rural Broadband
Access Loan Application
Guide Fiscal Year 2019

Rural Utilities Service
Telecommunications Program
November 2018

**BEFORE GETTING STARTED**
A.

Connect your resources. Documents are available on the Telecom website
at http://www.rd.usda.gov/programs-services/farm-bill-broadband-loans-loanguarantees.
1. Read 7 CFR Part 1738, the latest Notice of Solicitation of Applications
published in the Federal Register, and this Application Guide.
2. Review with your attorney the terms and conditions set forth in the standard
Broadband Loan documents.
3. Review the RUS Bulletin 1738-2, Advance and Construction Procedures
Guide.
4. Contact your area’s General Field Representative (GFR) on the USDA
website at http://www.rd.usda.gov/contact-us/telecom-gfr.

B.

Apply online.
1. Review the RD Apply Customer User’s Guide.
2. Fill out the required sections of RD Apply.
3. Review your application for completeness with your GFR.

C.

Wait for RUS to tell you whether or not your application is successful.
1. Receive a letter regarding your application.
2. Follow the instructions enclosed in the letter.

According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor,
and a person is not required to respond to, a collection of information unless it displays a valid
OMB control number. The valid OMB control number for this information collection is 05720130. The time required to complete this information collection is estimated to average 118
hours per response, including the time for reviewing instructions, searching existing data
sources, gathering and maintaining the data needed, and completing and reviewing the
collection of information
USDA is an equal opportunity provider and employer.
The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and
activities on the basis of race, color, national origin, age, dis ability, and where applicable, sex,
marital status, familial status, parental status, religion, sexual orientation, genetic information,
political beliefs, reprisal, or because all or a part of an individual's income is derived from any
public assistance program. (Not all prohibited bases apply to all programs.)
Persons with disabilities who require alternative means for communication of program
information (braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202)
720-2600 (voice and TDD).To file a complaint of discrimination, write to USDA, Director, Office
of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410 or call (800)
795-3272 (voice) or (202) 692-0097.

Table of Contents
Table of Contents ..................................................................................................................................... 4
Section I - General Information ............................................................................................................. 7
A.
About the Farm Bill Rural Access Broadband Loan Application Guide .......................... 7
B.
Definitions ......................................................................................................................... 7
C.
Program Summary ............................................................................................................. 8
D.
Eligible Loan Purposes ...................................................................................................... 9
E.
Ineligible Loan Purposes ................................................................................................... 9
F.
Applicant Eligibility Requirements ................................................................................. 10
G.
Eligible Service Areas ..................................................................................................... 11
H.
Substantially Underserved Trust Areas ........................................................................... 12
I.
Types of Broadband Loans .............................................................................................. 12
J.
Loan Terms, Security, and Amounts ............................................................................... 13
K.
Equity Requirement ......................................................................................................... 14
L.
Network Access Revenues .............................................................................................. 15
M.
Priority Consideration ...................................................................................................... 15
N.
Public Notice ................................................................................................................... 15
O.
Contact Information ......................................................................................................... 15
Section II – Application Submission and Processing.......................................................................... 17
A.
Application Resources ..................................................................................................... 17
B.
Application Submission ................................................................................................... 17
C.
Application Review and Notification .............................................................................. 17
D.
Loan Approval and Notification ...................................................................................... 18
E.
Post-Loan Approval ......................................................................................................... 18
Section III – Overview of the Online Application............................................................................... 19
A.
Summary .......................................................................................................................... 19
B.
Interview Tab ................................................................................................................... 19
C.
Customer Tab................................................................................................................... 23
D.
Loan Request Tab ............................................................................................................ 23
E.
Service Area(s) Tab ......................................................................................................... 24
F.
Construction Tab ............................................................................................................. 25

G.

1.

Buildout Timeline Subtab .................................................................................... 26

2.

Capital Investment Workbook Subtab ................................................................. 26

3.

Capital Investment Workbook Summary Subtab ................................................ 28

4.

Depreciation Schedule Subtab ............................................................................. 28

5.

Depreciation Prior Loans Subtab (if applicable) ................................................. 29

6.
Depreciation Non-Loans Subtab (if applicable) .................................................. 29
Acquisitions Tab (if applicable) ...................................................................................... 29
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H.

I.
J.
K.

L.

Financials Tab .................................................................................................................. 30
1.

Subscriber Projections Subtab ............................................................................. 31

2.

Non-Operating Revenue Subtab .......................................................................... 32

3.

Balance Sheet Subtab .......................................................................................... 33

4.

Income Statement Subtab .................................................................................... 35

5.

Statement of Cash Flows ..................................................................................... 37

6.
Debt and Equity Funding Subtab ......................................................................... 39
Competition Tab .............................................................................................................. 40
Environmental Tab .......................................................................................................... 41
Documents Tab ................................................................................................................ 43
1.

Attachments Subtab ............................................................................................. 43

2.

Certifications Subtab ........................................................................................... 56

3.
Licenses and Agreements Subtab ........................................................................ 57
Summary/Submit Tab ...................................................................................................... 59

Section IV-- Common Errors ............................................................................................................... 61
A.
Adjusted Financial Forecast Depicting 50 Percent Reduction in Revenues (“Revenue
Sensitivity Analysis”) with Assumptions (“Assumptions to Sensitivity Analysis”) ....... 61
B.
Ways to Satisfy the Additional Cash Requirement ......................................................... 61
C.
Investor Proposal with Bank/Financial Statements or a State/Government Bond with a
Legal Opinion .................................................................................................................. 62
D.
Current Market Survey .................................................................................................... 62
E.
Financial Assumptions..................................................................................................... 62
F.
Three Years of Audited Historical Financial Data OR Three Years of Unaudited
Financial Data with Tax Returns ..................................................................................... 62
G.
Supporting Documentation of Existing Debt .................................................................. 63
H.
Funded and Unfunded Service Areas. ............................................................................. 63
Section V – Frequently Asked Questions............................................................................................. 64
A.
What is Broadband Service? ............................................................................................ 64
B.
What are the terms of these loans? .................................................................................. 64
C.
Does Broadband Program provide loan funds for acquisitions? ..................................... 64
D.
What is the interest rate on these loans? .......................................................................... 64
E.
Do we have to use all of the loan funds? ......................................................................... 64
F.
Does the Broadband Program offer lines of credit? ........................................................ 64
G.
Does RUS wire 100 percent of the loan amount to the Borrower at loan closing? ......... 64
H.
Under what circumstances would I need to satisfy the additional cash requirement? .... 64
Appendix A - Templates and Samples ................................................................................................. 66
A.
Sample Legal Opinion ..................................................................................................... 66
B.
Sample Organizational Chart—Applicant Operations .................................................... 68
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C.
D.
E.
F.

Sample Organizational Chart—Parent/Subsidiary Operations ........................................ 69
Equity – Investor Proposal............................................................................................... 70
Equity – State/Local Government Bond .......................................................................... 70
Network Diagram Examples............................................................................................ 71

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Section I - General Information
A. About the Farm Bill Rural Access Broadband Loan Application Guide
1. Purpose
This guide outlines the application process by which eligible companies can prepare and submit funding
requests to the Rural Utilities Service (RUS) Telecommunications Farm Bill Rural Access Broadband
Loan Program (Broadband Program). This guide will cover the following topics:







Program regulations.
Application process.
Online application screens.
Required documents.
Common application flaws.
Frequently asked questions.

We encourage all parties involved in the preparation of a loan application to consult this guide.
2. Policy
The policy of RUS Telecommunications is to ensure that:



All eligible applicants submit applications that are complete and of adequate quality through RD
Apply, the Agency’s online application portal.
RUS field staff review the applications for completeness prior to submission to National Office.

B. Definitions
Broadband Service
The minimum bandwidth, or transmission capacity, that is currently providing telecommunications
service to subscribers in a selected area. In other words, if the existing transmission rates in an area are
slower than the minimum transmission rates designated by RUS, then that area will be determined as
having no Broadband Service. Broadband itself is any technology that the Administrator of RUS
identifies as having the capacity to transmit data at a rate that enables subscribers to receive the minimum
level of service.


Where do I find the minimum bandwidth, or transmission rates, that qualify as providing Broadband
Service?
The minimum level of service will be stated in the most recent Notice published in the Federal
Register. This Notice will identify the minimum downstream and upstream transmission rates for
both fixed and mobile wireless service. Please note that that the rates for fixed and mobile
broadband service may differ.



If the Agency is reviewing my application when a new Notice changing the definition of Broadband
Service is published, do I have to revise my application?
No. If a new minimum transmission capacity for broadband service is published in the Federal
Register while an application is pending, RUS will continue reviewing the submitted application
based on the requirements that were published in the Notice that prevailed when the application was
first received.
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Broadband Lending Speed
As published in the latest notice in the Federal Register, the Broadband Lending Speed is the minimum
bandwidth, or transmission capacity, that an applicant must propose to deliver to every customer in the
proposed funded service area in order for RUS to approve a Broadband Loan. This rate may be different
for fixed and mobile broadband service. As noted above, the Broadband Lending Speed may differ with
the minimum transmission capacity required to determine the availability of broadband service when
qualifying a service area.


If the Agency is reviewing my application when a new Notice changing the definition of the
Broadband Lending Speed is published, do I have to revise my application?
No. If a new Broadband Lending Speed is published in the Federal Register while an application is
pending, RUS will continue reviewing the submitted application based on the requirements that were
published in the Notice that prevailed when the application was first received.

Customer Premises Equipment (CPE)
In the context of network services, CPE means any network-related equipment used by a customer to
connect to a service provider's network.
Notice
The Agency will publish a Notice of Solicitation of Application (NOSA) or Notice of Funding
Availability (NOFA) in the Federal Register, depending on funding, which will announce the application
window and update any program information.
Proposed Funded Service Area (PFSA)
A PFSA outlines a geographic area in which an applicant proposes to offer service at the Broadband
Lending Speed using Broadband Loan funds.
Service Area
A service area is a geographic area in which a service provider offers general telecommunications service.
General Field Representative (GFR)
Field staff tasked with assisting borrowers develop and submit loan applications and supporting materials.
Contact information may be found at https://www.rd.usda.gov/contact-us/telecom-gfr.
Environmental Report (ER)
The environmental documentation that is required of applicants for proposed actions under 7 CFR 1970.

C. Program Summary
1. Background
Our partnership with rural America is long-standing. For over 60 years, the Telecommunications Program
has been at the forefront of providing the infrastructure financing that has brought advanced
telecommunications services to the most rural areas of our country. Today, Rural Development’s
Telecommunications Program continues to be an essential source of financing and technical assistance for
rural telecommunications systems.
2. Mission
The goal of the Broadband Program is to ensure that rural consumers enjoy the same quality and range of
services that are available in urban and suburban communities. Successful entities propose to offer
service at a level that keeps pace with technological innovations while meeting the demands of customers
in rural America.
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D. Eligible Loan Purposes
Under the Broadband Program, RUS will finance or fund the following:
1. Construction, improvement, and acquisition of all facilities required to provide service at the
Broadband Lending Speed in eligible rural areas, including facilities required for providing other services
over the same facilities.
2. Cost of leasing facilities that are required to provide service at the Broadband Lending Speed if the lease
qualifies as a capital lease under Generally Acceptable Accounting Procedures (GAAP). The financing of
such a lease will be limited to the first three years of the loan amortization period.
3. Acquisition of facilities, portions of an existing system, and/or another company by an eligible entity,
where acquisition is used in the applicant’s business plan for furnishing or improving service at the
Broadband Lending Speed. If a service area is to be acquired, please note the following:
3.1 The service area must meet the requirements for RUS funding.
3.2 The acquisition costs requested to be funded by RUS cannot exceed 50 percent of the requested loan
amount.
3.3 The purchase must provide the applicant with a controlling majority interest in the equity acquired.
4. Refinancing of an outstanding obligation on another telecommunications loan made under the Rural
Electrification Act of 1936, as long as refinancing the loan supports the construction, improvement, or
acquisition of facilities and equipment for the provision of service at the Broadband Lending Speed in
rural areas. The following conditions apply to requests that include refinancing:
4.1 No more than 40 percent of the Broadband Loan amount can be used to refinance the outstanding
telecommunications loan.
4.2 The applicant must be current with payments on the loan(s) to be refinanced.
4.3 The amortization period for the refinancing portion of the Broadband Loan cannot exceed the
remaining amortization period for the telecommunications loan(s) to be refinanced. If multiple notes
are being refinanced, an average remaining amortization period will be calculated based on the
weighted dollar average of the notes being refinanced.
5. Pre-loan expenses, e.g., any expenses associated with the preparation of a loan application, such as
obtaining market surveys, accountant/consultant costs for preparing the application and supporting
information. The following conditions apply to requests that include pre-loan expenses:
5.1 Funded pre-loan expenses cannot exceed 5 percent of the Broadband Loan excluding any amount
requested to refinance outstanding telecommunication loans.
5.2 Pre-loan expenses may be reimbursed only if they are incurred prior to the date on which notification
of a complete application is issued.

E. Ineligible Loan Purposes
Under the Broadband Program, RUS will NOT finance or fund the following:
1. Applicant operating expenses.
2. Construction and other project-related costs incurred prior to the date on which notification of a complete
application is issued (with the exception of eligible pre-loan expenses).
3. Acquisition of any stock of an affiliate of the applicant.
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4. Purchase or acquisition of any facilities or equipment of an affiliate, unless approved by RUS in writing
(such a purchase or acquisition may be approved if the applicant demonstrates that the purchase or
acquisition will involve an arms-length transaction, as defined in 7 CFR 1738.2, and that the cost is
advantageous for the applicant).
5. Purchase of Customer Premises Equipment (CPE) and the installation of associated inside wiring unless
the CPE is:
5.1 Owned by the applicant throughout its economic life.
5.2 Backed by acceptable collateral that is not currently owned by the applicant and that has a value at
least equal to the purchase price of the CPE (such collateral may not be purchased with RUS loan
funds).
5.3 Paid for through a revolving fund whereby the proceeds from CPE sold to the customer (at least the
applicant’s cost of the equipment) is returned to the fund and used to purchase additional CPE.
6. Purchase or lease of any vehicles not used primarily in construction or system improvements.
7. Cost of systems or facilities that have not been designed and constructed in accordance with the loan
contract and other applicable requirements.
8. Facilities leased under the terms of an operating lease.
9. Merger or consolidation of entities.

F. Applicant Eligibility Requirements
1. Entity eligibility. To be eligible for a Broadband Loan, an applicant may be either a nonprofit or forprofit organization with sufficient authority to enter into a contract with RUS. The organization must take
one of the following forms:
1.1 Corporation.
1.2 Limited Liability Company (LLC).
1.3 Cooperative or mutual organization.
1.4 Indian tribe or tribal organization, as defined in 25 U.S.C. 450b.
1.5 State or local unit of government, including any agency, subdivision, or instrumentality thereof.
2. Additional conditions for eligibility. The applicant must do the following:
2.1 Submit a complete loan application that meets the requirements set forth in 7 CFR 1738 as well as
any additional requirements published in the Federal Register.
2.2 Agree to complete the build-out of the broadband system described in the loan application within 3
years from the day the applicant is notified that loan funds are available. Under the terms of the loan
documents, this 3-year period will commence 120 days after the date of the loan contract. The loan
application must demonstrate that all proposed construction can be completed within the 3-year
period with the exception of CPE. CPE can be funded throughout the forecast period. Ensure that
the Buildout Timeline and Depreciation Subtabs reflect this requirement.
2.3 Demonstrate an ability to furnish, improve, or extend broadband facilities to provide service at the
Broadband Lending Speed in the proposed funded service area (PFSA).
9

2.4 Demonstrate an equity position equal to at least 10 percent of the amount of the loan requested in the
application (refer to 7 CFR 1738.207)
2.5 Provide additional security if it is necessary to ensure financial feasibility as determined by the
Administrator. If the Agency's financial analysis indicates that the applicant's entire operation
(existing operations and new operations combined) will show an inadequate cash balance at the end
of any year during the 5-year forecast period, the Agency will require the applicant to obtain
additional cash infusions necessary to maintain an appropriate cash balance throughout the 5-year
forecast period. This cash infusion would be in conjunction with the required 10 percent minimum
equity position (refer to 7 CFR 1738.208).
3. Ineligible applicants. The following entities are not eligible for Broadband Program financial assistance:
3.1 Individuals and partnerships.
3.2 Corporations that have been convicted of a Federal felony within the past 24 months. Any corporation
that has been assessed to have any unpaid federal tax liability, for which all judicial and
administrative remedies have been exhausted or have lapsed and is not being paid in a timely manner
pursuant to an agreement with the authority responsible for collecting the tax liability, is not eligible
for financial assistance.
Note: Current RUS borrowers that are in violation of their existing loan agreements are ineligible.

G. Eligible Service Areas
1. General Eligibility. Applicants must identify at least one section, called the PFSA, in which they propose
to use RUS funding to offer service to all premises at the Broadband Lending Speed. In order for the
Service Area to be eligible for the Broadband Program, the following criteria must be true:
1.1 The PFSA is completely contained within a Rural Area. Only PFSAs completely contained within a
single rural area or composed of multiple rural areas are eligible for a Broadband Loan. Under this
program, a rural area is any area, as confirmed by the latest decennial census of the Bureau of the
Census, which is not located within:
1.1.1

A city, town, or incorporated area that has a population of greater than 20,000 inhabitants.

1.1.2

An urbanized area1 contiguous and adjacent to a city or town that has a population of greater
than 50,000 inhabitants.

1.2 At least 15 percent of the households in the PFSA do not have access to Broadband Service
1.3 No part of the PFSA has three or more incumbent service providers.
1.4 No part of the PFSA overlaps the service area of current RUS Telecommunications Program
borrowers, nor the service areas of grantees that were funded by the RUS Telecommunications
Program.
2. Exceptions. There are three service area exceptions for broadband facility upgrades:
2.1 If a current broadband borrower applies to upgrade existing facilities in an existing service area, the
upgraded area is exempt from the 15 percent requirement regarding the number of unserved
households.

1

An urbanized area is a densely populated territory as defined in the latest decennial census of the U.S. Census Bureau.

10

2.2 Incumbent service providers, including borrowers and grantees, that apply to upgrade existing
broadband facilities in existing service areas are exempt from the requirement concerning the number
of incumbent service providers unless they are eligible for funding under Titles II and III of the RE
Act.
2.3 An applicant that is a borrower, grantee, or incumbent service provider may submit one application to
upgrade existing broadband facilities in existing service areas and expand into new service areas at
the Broadband Lending Speed, provided that the upgrade area and the expansion area are proposed as
two separate service areas, even if the upgrade and expansion areas are contiguous.
3. RUS Considerations. As stated above, an entity applying to the Broadband Program must plan to use
RUS funding to provide service at the Broadband Lending Speed in at least one eligible service area. An
applicant may also offer service to ineligible areas in order to achieve overall project financial feasibility;
however, the applicant may only use non-RUS funding for those areas.
Multiple service areas may be included in a single application. However, non-contiguous areas MUST be
treated as separate service areas for the purpose of determining service area eligibility. If non-contiguous
area(s) within the application are deemed ineligible, RUS may consider the remaining areas listed in the
application. If the applicant fails to remove, modify, or provide additional information regarding
ineligible areas as requested by RUS, the application will be returned.
Please note that after RUS receives the application, the Agency collects further information determining a
service area’s eligibility a Public Notice process. Therefore, applicants must thoroughly research the
area(s) in which they propose to provide service and carefully account for each of the area’s eligibility
criteria to the extent possible.

H. Substantially Underserved Trust Areas
If the Administrator determines that a community in ‘‘trust land’’ (as defined in section 3765 of title 38,
United States Code) has a high need for the benefits of the Broadband Program, he/she may designate the
community as a “substantially underserved trust area” (SUTA), as defined in section 306F of the RE Act.
To receive SUTA consideration, the applicant must attach all of the information requested in 7 CFR 1700,
Subpart D to the application and do both of the following:
1. Notify the Agency in writing that it seeks consideration as a substantially underserved trust area.
2. Identify the discretionary authorities of 7 CFR 1700, Subpart D that apply to the request.

I. Types of Broadband Loans
The Broadband Program provides three types of financial assistance: Cost of Money Loans, 4-percent,
and Guaranteed Loans. Applicants may request a combination of the direct loans, subject to eligibility and
availability of funds. Note: In recent years appropriations have been limited to Direct Cost-of-Money
Loans. Check with your GFR for funding types available.
1. Direct Cost-of-Money
Direct Cost-of-Money loans will bear interest at a rate equal to the cost of borrowing from the
Department of Treasury for obligations of comparable maturity. The applicable interest rate will be set at
the time of each advance. Department of Treasury interest rates are released daily and can be found in
Release H.15 at http://www.federalreserve.gov/releases/h15/update/. The applicable interest rate is found
below the heading “U.S. government securities” under the sub-heading “Treasury constant maturities.”

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2. Direct 4-Percent
Direct 4-Percent loans shall bear interest at 4 percent on each advance made to the borrower. Such loans
may be used by RUS, at its discretion, to assist applicants in meeting financial feasibility requirements for
applications serving unserved areas. Additional eligibility requirements for Direct 4-Percent Loans may
be published in the Federal Register. Direct 4-Percent Loans may be made simultaneously with a Direct
Cost-of-Money Loan.
3. Other Loan Guarantee
Other Guarantees are third party loans and are therefore not funded by RUS. This loan shall bear
interest at a rate set by the lender consistent with the current applicable market rate for a loan of
comparable maturity. RUS will guarantee up to 80 percent of the principal amount of the loan, excluding
any and all charges and fees.

J. Loan Terms, Security, and Amounts
1. Repayment Terms
The Broadband Loan term will be equal to or less than the expected composite economic life of the assets
to be financed by the loan, plus three (3) years. This term is rounded to the nearest whole year. The
expected composite economic life of the assets will be based upon acceptable depreciation rates.
Applicants may request a repayment period that is shorter; such requests will be granted only if RUS
determines that the loan would remain feasible.
2. Special Loan Terms and Conditions
If the applicant is proposing to serve an area(s) that includes at least 50 percent unserved households,
RUS may consider special terms and conditions. See 7 CFR 1738.155 for details. To receive
consideration, the applicant must submit as an additional attachment a request for any of the following:
2.1 A principal deferral period up to 4 years.
2.2 An extension of the loan term up to 35 years.
2.3 A modification to the security requirements, as long as the modifications are necessary to sustain the
operation and do not prejudice the government's security for the loan. The modification must ensure
that the proposed security arrangements are commensurate with the risk of the project.
3. Broadband Loan Security
3.1 The Broadband Loan must be secured by the assets purchased with the loan funds, as well as all other
assets of the applicant and any other signer of the loan documents except as provided in 7 CFR
1738.155.
3.2 The Agency must be given an exclusive first lien, in form and substance satisfactory to the Agency,
on all of the applicant's property and revenues and such additional security as the Agency may
require. The Agency may share its first lien position with another lender on a pari passu, prorated
basis if security arrangements are acceptable to the Agency.
3.3 Unless otherwise designated by the Agency, all property purchased with loan funds must be owned
by the applicant.

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4. Minimum and Maximum Loan Amounts
These amounts will be published in the Federal Register.
Please note that an applicant that provides telecommunications or broadband service to at least 20 percent
of the households in the United States is limited to a loan amount that is no more than 15 percent of the
funds available to the Broadband Program for the Federal fiscal year.

K. Equity Requirement
As a condition to financing, an applicant must demonstrate an equity contribution in an amount that is at
least 10 percent of the requested loan amount at the time of application submission. The equity
contribution must remain available at loan closing.
1. What determines the Equity Requirement?
RUS reviews the applicant’s Balance Sheet from the most recent fiscal year end (except for start-ups in
accordance with 1738.211) to determine if the organization’s current equity is equal to 10 percent of the
requested loan amount. As defined in 7 CFR 1738, equity means total assets minus total liabilities. In
addition to the 10 percent minimum equity requirement, RUS may require additional cash in support of
the loan.
2. What additional documentation must applicants attach to their applications if they do not demonstrate the
minimum 10 percent equity?
2.1 Investor’s Unconditional Legal Commitment with the Investor’s Bank or Financial Statements.
2.1.1

Applicants other than state or local government entities must submit an investor’s
unconditional legal commitment that covers the shortfall by providing additional equity. This
additional equity must be transferred to the applicant prior to loan closing. RUS will reject
applications that do not provide evidence acceptable to RUS regarding the investor’s
commitment.

2.1.2

Requirements: The document must clearly identify the amount, terms, conditions of the
investment, and the investor’s bank or financial statements that demonstrate its ability to
fulfill its commitment. The terms and conditions of the investment must also be acceptable to
RUS, but at a minimum cannot be secured by any assets of the applicant nor provide that the
investment will be available when certain requirements or other thresholds are met by the
applicant.

2.2 General Obligation Bond and Opinion from Legal Counsel
2.2.1

Applicants that are state or local government entities must submit two documents, the general
obligation bond that will be available to the applicant at closing and an opinion from legal
counsel. The Broadband Loan cannot be subordinate to the general obligation bond. Also,
revenue bonds supported by the operations to be funded cannot be used to satisfy the equity
requirement.

2.2.2

Requirements: The opinion from its legal counsel must state that the applicant has the
authority to issue a general obligation bond in an amount sufficient to meet the minimum
equity requirement.

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L. Network Access Revenues
Applicants which receive or expect to receive Network Access Revenues (Line 2 of the RD Apply
Income Statement), must include supporting analysis and explanation from a cost consultant or other
qualified individual(s) to support the projections.

M. Priority Consideration
Priority must be given to applicants that propose to offer broadband service to the greatest proportion of
households that, prior to the provision of the broadband service, had no incumbent service provider. The
Broadband Program deems households unserved if they do not have access at the level of service
specified in the program’s definition of broadband service, as published in the Federal Register.
Please note that for applications containing multiple PFSAs, the percentage will be calculated by
combining all of them. Once an application has been determined to be complete, it will be compared and
prioritized according to the criteria listed below:





100 percent of the households in the PFSA are unserved.
75 percent of the households in the PFSA are unserved.
50 percent of the households in the PFSA are unserved.
25 percent of the households in the PFSA are unserved.

For the eligible applications whose PFSAs do not meet the above thresholds but whose customer base is
at least 25 percent commercial, RUS will process the applications that propose to serve more households
first.

N. Public Notice
The Public Notice filing is a critical part in determining service area eligibility, especially in terms of
counting the number of incumbent service providers in a given area. The information supplied in the
Service Area(s) Tab provides the necessary detail for the 30-day public notice. RUS will post this public
notice, which announces an applicant’s intention to offer service at the Broadband Lending Speed, on the
Telecom website. Please refer to 1738.204 for details of the Public Notice Process.

O. Contact Information
RUS Telecommunications General Field Representatives (GFRs) are available to answer questions about
the application process and program requirements. A listing of the GFRs and Deputy Assistant
Administrators can be found on the website at http://www.rd.usda.gov/contact-us/telecom-gfr.
RUS also posts the latest developments in the Broadband Program, including an electronic copy of this
Guide, on the Telecom website at http://www.rd.usda.gov/programs-services/farm-bill-broadband-loansloan-guarantees.

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**NOTES ON SECTION I**
RUS does not make loans to individuals or partnerships.
At least 15 percent of the households within each PFSA must be unserved in order to be
eligible for Broadband Program funding.
Service Area eligibility is determined by rurality, percent unserved, number of incumbent
providers, and the public notice responses. However, there are exceptions to those rules.
Start-up companies and companies that show negative cash flow from operations in the
last two years must submit additional documents.
The minimum Equity Requirement means that the applicant’s total equity must be equal to
at least 10 percent of the requested loan amount. Applicants that do not have enough
equity must submit additional documents.
Successful applicants may use up to 5 percent of the loan amount to cover approved preloan expenses.

15

Section II – Application Submission and Processing
A. Application Resources
1. Telecom General Field Representative (GFR). We strongly recommend that all prospective Broadband
Loan applicants consult with the RUS Telecom GFR prior to submitting an application. The GFR will
serve as a guide throughout the loan application process. RUS Staff contact information can be accessed
on the website: http://www.rd.usda.gov/contact-us/telecom-gfr.
2. Consultants. The applicant may request to allocate a portion of the proposed loan funds to finance the
costs of hiring a consulting engineer. Consulting services should be obtained only from persons or firms
who are not affiliated with, and have not represented a contractor, vendor, or manufacturer who may
provide labor, materials, or equipment to the applicant for projects included in the loan application.

B. Application Submission
1. RUS acceptance of applications
RUS will publish a notice in the Federal Register with instructions for submitting applications.
Applicants must submit their applications through RD Apply, the Agency’s online application intake
system. In addition to completing the main application screens, each applicant is responsible for
attaching additional documents, certifications, and licenses and agreements as described in 7 CFR 1738,
the Notice published in the Federal Register, and this Application Guide.
2. Pre-submission review of application
It is recommended that your GFR perform a final review of your application before submission.

C. Application Review and Notification
Once an application has been received, it will be reviewed for eligibility and completeness.
1. Eligibility and Completeness Review
The completeness review will include an assessment of whether all required documents and information
have been submitted, and whether the information provided is of adequate quality to allow for further
analysis.
1.1 Application is eligible, complete, and of adequate quality. If the application is complete and of
adequate quality then the Public Notice process discussed in the regulation will be followed. If the
PFSA(s) is eligible, program staff will notify the applicant in writing that the application is complete.
A notification of completeness is not a commitment that the loan will be approved. RUS may still
request additional information to complete the financial and technical feasibility evaluations.
1.2 Application is ineligible, incomplete, and/or of inadequate quality. Program staff will notify the
applicant in writing that the application has been rejected. The rejection letter will include an
explanation of the reasons for rejection.
2. Engineering and Feasibility Studies Evaluation
After an applicant is notified that the application is complete, RUS will evaluate the application’s
financial and technical feasibility, as well as its compliance with statutory and regulatory requirements, as
follows:
2.1 Financial feasibility. Financial feasibility will be determined by evaluating the applicant’s equity,
16

market survey (if required), competitive analysis, financial information, and other relevant
information in the application.
2.2 Engineering review. Technical feasibility will be determined by evaluating the impact of the
facilities financed with the proceeds of the loan and the associated debt, the applicant’s network
design in conjunction with other relevant information in the application.

D. Loan Approval and Notification
If the application meets all statutory and regulatory requirements, the feasibility study demonstrates that
the TIER requirement can be satisfied, and the business plan is sustainable, the application will be
submitted to RUS’ credit committees for consideration. Submission of an application to the credit
committees does not guarantee that a loan will be approved. The applicant will be notified of RUS’
decision in writing as follows:
1. Approval. RUS will specify a date by which the applicant must officially accept and respond to the offer.
2. Rejection. RUS will send a rejection letter to the applicant and return the application with an explanation
of the reasons for the rejection.

E. Post-Loan Approval
After a loan is approved, RUS will prepare and send the Loan Documents to the awardee along with
instructions for execution, recording, and submittal. The borrower’s attorney should follow the enclosed
instructions and double-check the assembled items to ensure that all items are complete prior to returning
the package to RUS.

**NOTES ON SECTION II**
If a loan application is returned by RUS, the deficiencies may be corrected and the
application may be resubmitted at a later date in accordance with the procedures
outlined in the next Federal Register notice, the regulation, and this guide.
Applicants should consult with their assigned General Field Representative. Contact
information may be found at https://www.rd.usda.gov/contact-us/telecom-gfr.

17

Section III – Overview of the Online Application
A. Summary
While the system automatically checks for consistency across certain fields of data, typically in
related numerical data across tabs, it is the applicant’s responsibility to ensure that all data
throughout the main application and the attached documents are accurate and consistent.
Conflicting data will impede RUS’ analysis and will detract from the quality of the overall
application.
1. How can I best use this Guide?
This Guide is organized according to the Tabs and Subtabs that make up an electronic Broadband
Loan application. As we move through the screens, we address the user of this guide as if that
user is the one requesting RUS funding. If a consultant is the one completing the application,
please note that most personal pronouns refer to the entity that will undertake the proposed
project if selected. In instances in which we want to distinguish more generally among
applicants, we will use the third person.
2. Where can I find information on how to access RD Apply?
For information on the security steps and the technical aspects of RD Apply, please consult the
Telecom Customer User’s Guide, which can be found on the Telecom website at:
http://www.rd.usda.gov/programs-services/farm-bill-broadband-loans-loan-guarantees.

B. Interview Tab
1. Creating your application. Select “Add New Application” on the RD Apply home screen. A
series of questions will pop up in your browser. Each question is linked to another part of the
application, so take your time as you complete the questionnaire. These questions determine
the content listed on the following screens and identify the documents that you will be
required to upload. Refer to Table 2 for the list of questions and their impacts.
2. Changing your responses. If you need to change your answer, go to the “Interview” tab in the
main application and modify the response. Each response impacts another section of the
application. For example, if you remove “Acquisitions” from your response to the question
regarding the nature of network changes, then the Acquisitions Tab and any data that you had
entered on that screen will disappear from the application.
3. Exiting in the middle of the questionnaire. If you are interrupted in the midst of the
questionnaire, save your progress when you exit. Because an application is created only after
a complete questionnaire is submitted, you must click on “Add New Application” to resume
your half-finished questionnaire.
3. Submitting the questionnaire. When you have reached the end of the questionnaire, click
“Submit.” Once the dialog box closes, the system will direct you to a fully assembled
application, starting with the Customer Tab. Please note that you have the ability to change
your answers to the interview questions at any point in time prior to application submission.
Keep in mind that any changes made to the answers to your interview questions will have a
direct impact on other sections of your loan application.

18

Table 1: Application Questionnaire

Number
1

Question
Which Rural
Utilities Service
(RUS), Rural
Development (RD)
Program Area are
you requesting funds
from?

Guidance
Telecommunications

19

System Generated Required
documents
Added to the Attachments Subtab
Proposed Network Diagram
System Design
Assumptions Used to Support Financial
Forecast
Design Certification(s)
Executive Summary
Legal Opinion
Real Property ScheduleTab
Organizational Chart
Added to the Certifications (Cert)
Subtab
Cert Regarding Debarment, Suspension,
and Other Responsibility Matters
Cert Regarding Lobbying for Contracts,
Grants, Loans and Coop Agreements
Civil Rights Compliance
Uniform Relocation Assistance & Real
Property Acquisition Policies Act of
1970
Representations Regarding Felony
Conviction and Tax Delinquent Status
for Corporate Applicants (Form AD3030)
Added to the Licenses and Agreements
Subtab
Certificate of Public Convenience and
Necessity (CPCN)
Franchise Agreements
Internet Service Agreement (for ISP
Upstream capacity)
Internet Service Connection Backhaul
(transport to/from ISP)
Pole Attachment Agreement
Special Permits (Federal, highway,
bridge)
Spectrum Agreement(s)
Tower Attachment Agreement
Tower Site/Property Agreement
Video Carriage Agreement
Wireless Spectrum License for
backhaul or transport

2

3

4

5

6

7

8

Wireless Spectrum License for end user
access
Affiliate Agreement
No required documents generated as a
result of this choice

Please validate the
Legal Name is
correct for the
application you are
creating.
Is this your entity’s
first application with
RUS, RD?

Enter the legal name of the
applicant

(Dependent on 3)
Do you have a
previous RUS loan
for which you will
be completing
construction during
the 5-year forecast
period?
What type of
funding opportunity
are you applying
for?

Yes/No

Farm Bill Broadband Loan

Added to the Attachments Subtab
Competitor Strategic Plan
Management Experience and
Compensation
Applicant Historical Financials (if not a
start-up company)*If unaudited, you
must include a list of Assumptions in
support of historical financial data
included within the Financial subtabs.
Added to the Certifications Subtab
Cert Regarding Architectural Barriers
Cert Regarding Flood Hazard Area
Precautions

What type of Farm
Bill funds are you
applying for?
Are you using nonloan funds during
the forecast period?

Cost of Money, 4%, and/or
Other Guarantee

No required documents generated as a
result of this choice

Yes/No

IF YES (added in the Main
Application):
Depreciation Non Loan Subtab added
Non-RUS funding source added to the
Debt and Equity Subtab.

What is the nature of
network changes
being made?

Upgrade, Expand, Build,
Acquisition, and/or
Refinance

IF Acquisitions (added in the Main
Application):
Selected network changes appear on the

Yes/No

IF YES (Added to the Attachments
Subtab):
Articles of Incorporation or
Organization
Board of Directors or Managing
Members
Bylaws or Operating Agreements
IF YES (added in the Main
Application):
Depreciation Prior Loan Subtab

20

9

Loan Request Tab
Acquisitions Tab added
Added to the Attachments Subtab
Acquisition Agreement
IF YES (Added to the Attachments
Subtab):
Outstanding Federal Debt
IF YES (Added to the Attachments
Subtab):
SUTA Attachments

Are you delinquent
on any of your
federal debt?
Are you requesting
SUTA
consideration?

Yes/No

11

Does the applicant
have a parent
operation?

Yes/No

IF YES (Added to the Attachments
Subtab):
Parent Company Historical Financial
Statements
Organizational Chart – Parent
Operation

12

Does the applicant
have a subsidiary
operation?

Yes/No

13

Does the applicant
rely on services
provided by an
affiliate operation?
Is your company a
start-up company?

Yes/No

IF YES (Added to the Attachments
Subtab):
Subsidiary Historical Financial
Statements
Organizational Chart – Subsidiary
Operation
IF YES (Added to the Attachments
Subtab):
Affiliate Historical Financial Statements

Yes/No

IF YES (Added to the Attachments
Subtab):
Balance Sheet
Unaudited Financial Statements-Tax
Returns
Revenue Sensitivity Analysis (50%
Reduction in Revenues Financial
Forecast)
Assumptions to Sensitivity Analysis
(50% Reduction in Revenues)

15

Is your company
requesting interim
financing?

Yes/No

IF YES (Added to the Attachments
Subtab):
Interim Financing Request

16

Are you requesting
Yes/No
special consideration
to complete this
project?
Does your
Yes/No
organization have
more than 100

IF YES (Added to the Attachments
Subtab):
Special Consideration Request

10

14

17

Yes/No

IF YES
GFR must confirm that the company
has filed its EEO-1 report prior to loan

21

people?

approval.

C. Customer Tab
Purpose: To describe your organizational information and contact details
Follow the instructions to fill out each field. All items with a red asterisk (*) are required fields.
1. *Legal Name – Prefilled based on the questionnaire. This should be the name your organization
used when registering with the System for Award Management (SAM). For information on
registering, go to https://www.sam.gov/.
2. Primary Borrower ID – Do not populate this field. The Primary Borrower ID is assigned by
USDA.
3. *Organizational Description – Enter the name of the primary department, division, or office that
will undertake the assistance activity (e.g., Telecommunications).
4. Tax ID Number (TIN) – Enter your TIN in the space provided. If an existing borrower, this field
is prefilled. If your TIN is prefilled, please validate the number in the box.
5. Organizational Type – Select the choice that best describes your organization’s legal structure.
6. RUS ID – If your company has not submitted an RUS loan or grant application before, leave this
field blank. If you have several RUS IDs, please include your Farm Bill or BIP RUS ID.
7. *Civil Rights – Check all of the boxes that apply to your business ownership.
8. *DUNS NBR – Enter the organization’s Dun and Bradstreet (DUNS) number. For information
on obtaining a DUNS numbers, go to http://fedgov.dnb.com/webform/.
9. Comments – Enter any information about your company currently not captured in any part of the
application, but is important for RUS to know.
10. CAGE Code – The Commercial and Government Entity Code (CAGE) is your organization’s
SAM number.
11. *Address – Identify your mailing address and congressional district. If the mailing address
differs from the street address, select “Add New +” and enter the street address as well.
12. *Key Contacts –Enter the name of the person responsible for answering questions about this
application. Under “Type,” select the role that best fits the contact listed. Add additional
contacts as needed.
13. Aliases – Identify all of the organization’s aliases (e.g. “Common name” and “Doing Business
As”); otherwise, leave blank.

D. Loan Request Tab
Purpose: To provide information on the proposed project and requested loan amount.
Related Screens: Construction Tab; Capital Investments Workbook Subtab; Financials Tab;
Documents Tab
Follow the instructions to fill out each field. All items with a red asterisk (*) are required fields.
1. *Project Title – Enter the name for the proposed project (e.g., [Name] Fiber Network Buildout).
2. Purpose – Describe the purpose of the funding request in one or two sentences.
3. *Technology Type – Check all of the boxes that apply to your proposed project.

22

4. Executive Summary – Provide a high level overview of the organization and the proposed
project. All applicants must also submit a detailed Executive Summary Attachment, as described
in this section of the Guide.
5. *Loan Maturity Requested in Years – Enter the loan term requested. The standard term is
composite economic life plus 3 years, but you may request less or more, up to 35 years. Include a
narrative/quantitative explanation within the Executive Summary that demonstrates how you
arrived at the maturity date.
6. *Loan Amount – Enter the requested loan amount for each loan type, as applicable. The
available loan types correspond with the boxes selected during the questionnaire. For applicants
that select Direct Loan, please note that RUS may choose to offer a cost-of-money loan or a 4
percent loan, or a combination thereof, at its discretion.
7. Total Loan Request – Automatically calculated according to the amounts entered for each loan
type. Check to ensure the total request is within the minimum and maximum amounts stated in
the most recent publication of the Federal Register.
8. *Nature of Network Changes – Indicate the proposed funding amounts for each of the proposed
network changes. These items correspond with the boxes selected during the questionnaire. To
make changes to this section, open the Interview Tab and modify your response to the question,
“What is the Nature of the Network changes being made?” The total amount for this section must
equal the total requested loan amount and the project budget total on the Capital Investment
Workbook.

E. Service Area(s) Tab
Purpose: To provide maps and demographic information on the Proposed Funded Service Areas
(PFSA) and Non-Funded Service Areas. These maps will be used to determine service area eligibility
and provide information for the 30-day public notice.
Related Screens: Construction Tab; Subscriber Projections Subtab; Competition Tab; Environmental
Tab
1. To complete this tab, begin by adding maps of each of your proposed funded and non-funded
service areas. Each map must identify the rural area boundaries and the unserved areas within the
service area. An unserved area indicates an area that is not offered Broadband Service as
published in the Federal Register. Non-funded areas are areas in which you provide service or
plan to build out during the forecast period, but do not intend to use RUS funding. Please review
the following guidelines before submitting your maps:
1.1

1.2

1.3

A service area is defined as the geographic area in which a service provider offers
telecommunications services. You must submit a map for all existing and new service areas
as they apply to your company. Therefore, an application may include one or many service
areas. Please draw or upload a shape file of each service area as a separate map. To view
the individual service areas or the comprehensive service area map, click “Edit/View Map”
or “View All” on the Service Area(s) Tab.
Each non-contiguous geographic area should be treated as separate service area.
Remember, if you want to upgrade existing broadband facilities in existing service areas
and expand into new service areas at the Broadband Lending Speed, you must draw the
upgraded and expansion areas as two separate service areas, even if they are contiguous.
Each and every PFSA in an application must be entirely rural. It cannot overlap with any
portion of a non-rural area.

2. Follow the instructions when completing the “Add New Service Area” dialog box.

23

2.1
2.2
2.3
2.4
2.5
2.6

2.7

*Program Type – Prefilled with “Telecommunications,” based on the questionnaire.
*Funding Type – Prefilled with “Farm Bill Broadband Loan,” based on the questionnaire.
*Area Name – Enter a unique name for this area.
*Service Area will be “Funded” or Unfunded” – Identify whether you intend to use RUS
funding in this area.
Check the box if at least 15 percent of the households in this area are considered unserved.
*Check all services to be provided within the service area – In areas that will be “Funded,”
data service will automatically be selected. Check all other services that will apply to this
area. For areas that are “Non-Funded,” check all services that apply.
Comments – Enter any information about this service area that is important for RUS to
know.

3. Selecting Draw/Upload will open a screen labeled “USDA RD RUS Intake” in a new tab. Wait
for the map to center on the United States. In the Search bar, you can type an address or a zip
code to bring up the general geographic location of your service area. You can either draw or
upload a map in this section. If you want to draw your service area using this mapping tool,
please note the following instructions.
3.1

3.2

3.3

Area Type: Base. First, use the Editing/Select Tools to draw the entire geographic “Base”
of this service area. This area should match the description you entered on the previous
screen. This area can be either a proposed funded service area (PFSA) or it can be a nonfunded service area.
Area Type: Unserved. Second, use the Tools to draw the “Unserved” sections within the
base service area. A base service area can feature more than one unserved location.
Multiple unserved areas can be noncontiguous and drawn throughout the map. The
program will automatically calculate the total percent unserved for this service area, based
on the 2010 U.S. Census.
Additional instructions: For step-by-step technical instructions on drawing or uploading
service area maps, click on “Instructions” in the tool bar at the top of the screen.

4. Once you have saved and exited this section, you may return to your main application. The new
service area will appear in the table accompanied with general demographic data derived from the
2010 U.S. Census. If any of the decennial census data is incorrect or outdated, open the
Edit/View Data button. In this dialog box, provide Alternate data for those categories. If you
provide Alternate data for any category, you must also provide an explanation that supports and
justifies the new data. Please input your justification for inputting alternate data in the
‘Explanation for changes in detail’ text box. If additional explanation is required, you may upload
a supporting attachment on the Attachments Subtab under the Category Type “Other – Misc.
Support Docs.”

F. Construction Tab
Purpose: To provide information about the construction timeline and break down project costs
related to capital investments, depreciation schedules, and funding sources.
Related Screens/Subtabs: Buildout Timeline Subtab; Capital Investments Workbook and
Summary Subtabs; Depreciation Schedule Subtab; Depreciation Non Loans Subtab (if
applicable); Depreciation Prior Loans Subtab (if applicable); Loan Request Tab; Financials Tab;
Documents Tab

24

1. Buildout Timeline Subtab
This subtab allows you to list chronologically the major network build-out phases and milestones
that demonstrate that your entire project will have all construction complete by the end of Year 3,
except for potential customer installs in Years 4 and 5. Please provide details for each PFSA
when considering your phases and milestones.
The milestones, which describe major network buildout phases, should correspond with the
information provided in the Capital Investments Workbook Summary and Depreciation
Schedules.
1.1

Time Period – Select the year in which the project milestone is anticipated to occur. Insert
more rows as needed by clicking on Add New+.

1.2

List All Relevant Milestones – Consider such project areas as:











Network design.
Acquisition of all relevant licenses and agreements.
Site preparation.
Equipment procurement.
Inside plant deployment.
Outside plant deployment.
Equipment deployment.
Network testing.
Network both complete and operational.
Any other milestones that showcase progress.

1.3

Support for Reasonableness/Data Points – Explain how the milestones lead to eventual
project completion. Provide data that demonstrate the reasonableness of these milestones
and substantiate the ability to reach the milestones by the time periods indicated. In this
section, you should also describe the key challenges, if any, to a timely completion of the
project, and describe your mitigation plans.

1.4

Supplementary Data: If you need more space for any reason, you can upload an additional
attachment in the Documents Tab. Scroll down to the Additional Attachments bar and
click “Upload.” For Category, select “Construction.” For Document Type, select
“Buildout Timeline and Milestones.” Enter a short description of this additional attachment
and upload the file.

2. Capital Investment Workbook Subtab
The Capital Investment Workbook (CIW) subtab allows you to list your project costs in detail.
The purpose of this subtab is to break down the specific costs involved in your project and
categorize them. This includes all proposed construction costs using RUS funds and non-RUS
funds. A CIW must be completed for each funded and/or unfunded service area in which you are
proposing system improvements or additions. Associate common network elements with the
Service Area in which they will be physically located. Use the Unit Cost and Number of Units
fields to further break down the costs. You may round the Unit Cost to the nearest $1.00. When
multiple items are included in one “unit,” use the description column to provide enough detail

25

that the reviewers can easily see how you arrived at that unit cost (you should also provide
supplemental attachments to support the costs).
Use the following as a guide to the budget categories:
Project Assets
Network & Access Equipment
Outside Plant
Building & Land
Customer Premises Equipment
Billing & Operational Support
Systems
Operating Equipment
Professional Services
Testing
Other Upfront Costs
2.1

Drop-down Examples
Switching, Routing, Transport, Access, Other, Optical
Network Terminal
Cables, Conduits, Ducts, Poles, Towers, Repeaters, Other
New Construction, Pre-fab Huts, Improvements and
Renovations, Other
Modems, Set Top Boxes, Inside Wiring, Other
Billing Support, Customer Care, Other
Vehicles, Other Equipment/Furniture, Other
Engineering Design, Project Management, Consulting, Other
Network Elements, IT System Elements, User Devices, Test
Generators, Servers/Computers
Site Preparation, Other

Complete items 2.1.1 – 2.1.10 for each applicable category. Save the Workbook, then add
other Project Workbooks as needed. Each service area must have a corresponding
completed workbook.
2.1.1
2.1.2
2.1.3
2.1.4
2.1.5
2.1.6

For each category, as needed, add new rows to capture all relevant Project Assets.
Project Assets: Specify the asset in the drop-down list.
Description: Enter a descriptive name for each capital item or group of items.
Common Network Facility: Yes/No
Unit Cost: Enter the cost per unit of the specified asset.
No. of Units: Enter the number of units that will be constructed and/or installed for
the project.
2.1.7 Total: Automatically calculated by multiplying unit cost and number of units.
2.1.8 RUS Funded Costs: Enter the portion of the Total that will be drawn from the
requested loan.
2.1.9 Non-RUS Funded Costs: Enter the portion of the Total that will be drawn from
other funding sources.
2.1.10 Totals: Automatically summed for each category.
2.2

Telecommunications Plant Retired
For each prefilled category, enter the original cost or estimated salvage value for years 1-5.
The retired plant must include all outside plant facilities and electronics to be retired
whether or not the route is abandoned. For instance, proposed Fiber-to-the-Premises
(FTTP) overbuilds will have little or no use for existing copper routes and associated
equipment.

2.3

Service Miles
Please provide the net system mileage. For this purpose, a route may include one or more
types of facilities, such as aerial and buried plant, and may include facilities for

26

distribution, toll service, and EAS. The facilities along both sides of a road are generally
considered to be along the same route. An exception to this would be a case in which there
are limited access highways or other streets where separate facilities are installed to serve
on each side because crossings are prohibited or undesirable. Microwave or radio links are
considered separate routes. Service drops off the main route are considered as additional
route mileage. See below for descriptions of each mile type.
2.3.1

2.3.2

2.3.3
2.3.4
2.3.5

2.4

Route Miles. Route miles of facilities are automatically calculated based on the
information that you manually enter in the rows that follow. The net total in the
upper right hand column is the sum of the existing, modified, and new route miles,
minus the route miles to be relinquished.
Existing Miles. Route miles are considered “existing” only for miles of facilities
in place at the time that the report is prepared. Do not include modified miles in
this calculation.
Modified Miles. Route miles are considered “modified” when existing plant is
reinforced or replaced with new facilities along the same route.
New Miles. Route miles are considered “new” when facilities will be built along
routes that you have not formerly established.
Route Miles Relinquished. Route miles are considered “relinquished” when all
the facilities along the route are no longer used. This also applies to plant that has
been retired-in-place due to high removal costs.

Tower Sites
2.4.1

2.4.2

Existing Tower Sites: Enter the number of tower sites present at the time of
application. If any tower sites will be removed from service in a given year, reflect
this as a negative number.
New Tower Sites: Enter the number of tower sites constructed for years 1-3. Only
enter the number of additional towers constructed for the specified year. Do not
enter aggregate data.

3. Capital Investment Workbook Summary Subtab
This subtab automatically aggregates the CIWs created in the previous subtab to summarize the
costs for the total system. Please review the data after the CIWs for each service area are
complete.

4. Depreciation Schedule Subtab
This subtab must include all of the depreciable CIW equipment and facilities that are funded by
RUS. Do not include Non-RUS Funded Costs on this Depreciation subtab. You will be able to
provide that information on the next subtab, if applicable.
Use the following as a guide for the depreciable equipment and facilities:
Project Assets
Equipment
Outside Plant

Drop-down Examples
Switching, Routing, Transport, Access, Video, Power,
Satellite, Engineering, Other, Optical Network Terminal
Copper, Coaxial, Fiber, Submarine Cable, Conduit Systems,
Engineering, Other

27

Building
Towers
Customer Premises Equipment
Operating Equipment

4.1

Depreciation Rate. Use the manufacturers’ recommended useful life of asset to determine
the percentage to enter into the Depreciation Rate field. RUS will determine whether the
applicant’s asset depreciation rates are acceptable.

4.2

Composite Economic Life. RUS will calculate the expected composite economic life of
Broadband Loan Project-funded assets based on the acceptable depreciation rates.
Applicants cannot generally request a loan term that exceeds the composite economic life
of project assets funded by a Broadband Loan. Additionally, the Pro Forma Financial
Forecast must reflect a loan amortization which is less than or equal to the composite
economic life of the Broadband Loan-financed assets.

4.3

All Project Assets are organized into six categories. The Grand Totals section
automatically calculates the total costs for each year of the project buildout. For each
category, add new rows to capture all relevant Project Assets, as needed.
4.3.1
4.3.2
4.3.3

5.

New Construction, Pre-fab Huts, Improvements,
Renovations, Engineering, Other
Guyed, Lattice, Monopole, Site Preparation, Engineering,
Other
Video Set Top Boxes, Modems, Inside Wiring, MultiTerminal Adaptor, Engineering, Other
Vehicles, Other Equipment/Furniture, Billing System, Test
Equipment, Generators, Engineering, Other

Project Assets: Specify the asset in the drop-down list.
Depreciation Rate: Enter the rate you are proposing to use by plant category.
Years 1-5: Enter the cost of the Project Asset in the construction process as it
applies to each year.

Depreciation Prior Loans Subtab (if applicable)
If you answered yes to the question in the Interview Tab about completing construction for a
previous RUS loan during the 5-year forecast period, please include all of the Project Assets and
associated costs that are being funded for that project. The same guidance listed for the
Depreciation Schedule applies, but is specific to the Project Assets funded by these prior loans.

6. Depreciation Non-Loans Subtab (if applicable)
If you answered yes to the question in the Interview Tab about the use of non-loan funds during
the 5-year forecast period and identified non-RUS funded costs in the CIW Summary, then you
must include all of the CIW Project Assets that are NOT funded with RUS-Funds in this subtab.
Do not include RUS Funded Costs on the Depreciation Non-Loans Schedule. The same guidance
listed for the Depreciation Schedule applies, but is specific to the Project Assets funded by nonRUS loans.

G. Acquisitions Tab (if applicable)
Purpose: To provide contact and cost information related to the selling company and the assets to
be acquired.

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Related Screens: Interview Tab; Loan Request Tab; Service Area(s) Tab; Construction Tab;
Financials Tab; Documents Tab
If you selected “Acquisition” as a component in the Nature of Network Changes on the Interview
Tab, identify whether you are planning to acquire more than one Company and/or Physical Asset.
If you answer yes, the screen will double to provide spaces for the second acquisition. All items
with a red asterisk (*) are required fields.
1. *Selling Company Name: Enter the name of company that you are buying or from which you are
purchasing an asset.
2. *Company Address: Provide the seller’s address.
3. *Organization Type: Select the choice that best describes the legal structure of the selling
company, as applicable.
4. *Proposed Purchase Price: Enter the specified amount.
5. *Acquisition Type: Select the choice that best describes the acquisition.
6. System Description – Respond to items relevant to the acquisition using quantitative data.
7. List of All Counties Served Area to Be Acquired – If the acquired service area covers more than
one county, click on “Add New +” to add fields. Type in one county per field.

H. Financials Tab
Purpose: To provide information on the applicant’s subscribers, services, and financial outlook,
so that RUS can determine financial feasibility.
Related Screens: Subscriber Projections Subtab; Non-Operating Revenue Subtab; Balance Sheet
Subtab; Income Statement Subtab; Cash Flows Subtab; Debt and Equity Funding Subtab; Loan
Request Tab; Service Area(s) Tab; Construction Tab; Documents Tab
This tab reviews your financial data and 5-year business plan, or the pro forma financial forecast.
The Subscriber Projections Subtab focuses on the revenue that you expect to gain, whereas the
remaining subtabs determine whether you can maintain financial solvency while paying back the
loan according to the original terms and conditions.
The financial forecast must cover 5 years and be inclusive of ALL operations, both existing and
proposed. This information will be used by RUS to determine whether the loan can be repaid on
its terms, whether the proposed project is financially feasible and sustainable, and whether this is
a viable operation. The projections should be detailed, taking into account your best estimates for
start-up costs (if any), revenues, expenses, profitability, and all financial data related to any
subsidiaries. The financial forecast includes 5 subtabs:






Non-Operating Revenue.
Balance Sheet.
Income Statement.
Statement of Cash Flows.
Debt & Equity Funding.

Key financial ratios that are automatically calculated in RD Apply are Times Interest Earned
Ratio (TIER) and Debt Service Coverage Ratio (DSCR). Both ratios are calculated by the
system on the Income Statement.

29



TIER = (Total Net Income + Total Fixed Charges) ÷ (Total Fixed Charges)



DSCR = (Total Net Income + Total Fixed Charges + Depreciation Expense + Amortization
Expense) ÷ (Interest on Funded Debt + Other Interest Expense + Principal Payments on
Long-Term Debt and Capital Leases)*
*Be sure to enter data for Principal Payments on Long-Term Debt and Capital Leases on the
Income Statement for each year that Principal Payments have been made. Otherwise, the
DSCR will be skewed.

1. Subscriber Projections Subtab
On this subtab, provide the number of existing and proposed subscribers and all existing and
proposed service packages and rates for each of the service areas you submitted via the Service
Area(s) Tab. The total service offerings included on the Subscriber Projections should tie to what
is included under the Local Network Service Revenues on the Income Statement. Do not include
subscriber numbers or service offerings that are actually associated with or being offered by an
affiliate or subsidiary. Those revenues should be included on the Non-Operating Revenue Subtab.
1.1

If your application features more than one kind of service offering, click the ‘Add New+’
button. Complete the following steps for each service package.
1.1.1
1.1.2
1.1.3

1.1.4
1.1.5
1.1.6

Select Area(s): Check one or more service areas that you want to describe.
Service Offering: Select the choice that best describes the type of service that is or
will be provided in the selected service area(s).
Service Level Offering: For voice, enter the type offered, e.g., VOIP; for video,
enter the package offered, e.g., bronze, silver, or whatever names your company
uses to identify its service packages; for data, enter the speed offered, e.g., X Mbps
down/Y Mbps up.
Residential or Business: Select the choice that best describes the end user.
Current Subscribers: Enter the number of existing subscribers that currently receive
this service offering in the selected service area(s).
Years 1-5: Enter the number of subscribers that you expect to sign-up on an
aggregated basis. For example, if a company has a hundred (100) current
subscribers and expects to acquire twenty (20) additional subscribers each year for
the next five years, the numbers should be entered like this:

Table 3: How to Enter Cumulative Subscriber Data

1.1.7
1.1.8

1.2

Price/Month: Enter the monthly cost of this service package in this service area.
Totals by Service Offering: Automatically calculates revenue estimates based on
the data above.

Market Survey Requirement
If, by the end of the 5-year forecast period, you are projecting a penetration rate that is less
than 20 percent in a given service area for any service offering, you are not required to

30

complete a market survey for that service area for that service offering. For example, if you
are projecting a penetration rate of 30 percent for data services and 15 percent for video
services in a particular service area, you only have to complete a market survey for the data
services in that service area.
However, if your proposed penetration rate requires that you conduct a market survey, RUS
recommends that your survey include questions about all service offerings. Please note that
proposed prices for those services with projected penetration rates that are less than 20
percent must be affordable, as determined by RUS. The Administrator may modify the
requirements of the market survey for loans in service areas that are “unserved” when it is
in the best interest of the Agency.
1.3

Market Survey Timing
You must complete the Market Surveys within the 6 months preceding your application
submission date. For example, if you submit your application on Dec. 1, 2016, the Market
Survey must be clearly dated as having taken place between June 1, 2016 and November
30, 2016. Additionally, if the demographics of the proposed service area have significantly
changed since the survey was completed, RUS may require an updated market survey.

2. Non-Operating Revenue Subtab
In recent years, we have seen many of our applicants generate a significant portion of their net
income from non-operating and non-regulated income. Although we ask you to enter data from
these other income streams in your 5-year financial forecast, we also want to see these nonoperating and non-regulated income streams further broken down into their components. As a
result, separate 5-year forecasts for these other incomes must be included in the loan application
and submitted to RUS. With as much detail as possible, explain the types of incomes, the basis
for the projections, and all assumptions used for the projections.
2.1

If these incomes are from affiliated companies, then you must do the following:
2.1.1
2.1.2
2.1.3

Provide as much information as possible about the affiliated companies.
Explain any significant increases or decreases in income in detail.
Include all leases and/or agreements with affiliated companies that are related to
these revenues on the Attachments Subtab.

2.2

If these incomes are subscriber driven, such as video, phone, or internet, then you must
provide a projection of subscriber numbers along with revenue per unit to substantiate the
forecast.

2.3

If you have non-operating revenues or expenses to report, mark “Yes” and complete the
revenue and expense schedules. Select the ‘Add New+’ button to add additional rows to the
schedules. Sample item descriptions to include in this subtab could be “Capital Gains
(Losses)” or “Gain (Loss) Sale of Equipment.” The subtab will automatically calculate the
totals for the Non-Operating Net Income. These annual totals will carry over to Line #16:
Non-Operating Net Income on the Income Statement.

2.4

If you have no non-operating revenues or expense to report, mark “No.” Zeros will
automatically populate each field.

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3. Balance Sheet Subtab
The “Year of Application” refers to the year that you anticipate implementing the proposed
project. If you are submitting your application during the first three quarters of the calendar year
(January-September), select the current year as the “Year of Application.” If you are submitting
the application in the fourth quarter of the calendar year (October-December), select the
succeeding year as the “Year of Application.” For instance, if your application submission date
is September 30, 2018, your Year of Application is 2018. If your application submission date is
October 1, 2018, your Year of Application is 2019.
Using the example in which you submit your application in the fourth quarter of calendar year
2018, note that the columns labeled “Previous Year” now display years 2015-2018. Since 2018
is now considered the first “Previous Year,” use your most current financial information and
annualize the data to model your best estimate for 2018 year end data. Under the Attachments
Subtab, you would still submit your financial statements for the three most recent fiscal years,
which in this case would be years 2015, 2016, and 2017. If submitting unaudited data, you must
also attach the tax returns corresponding with those years. According to this scenario, you must
submit the 2018 financial information to RUS as soon as the statements are available. Please
note that you may only modify the “Year of Application” twice before the selected year is
locked in the system.
If you are submitting information that includes both historical data and forecast data for portions
of the Year of Application, please note this information in the Financial Assumptions and provide
a breakdown between actual and forecast data.
Equity. In order to meet the minimum equity requirement, the amount entered on the Total
Equity line item for Previous Year 1 on the Balance Sheet Subtab must be equal to at least 10
percent of the requested loan amount. Be sure to check that the amount of total equity listed here
is the same as the amount listed on the historical financial statements that you are submitting as
attachments. If the total equity is less than 10 percent, you must submit an Investor Proposal or a
State/Local Government Bond, as detailed in this section of the Guide.
The pro forma Balance Sheets must comply with basic GAAP requirements, in which Total
Assets equals Total Liabilities plus Total Equity. Loans must be reflected with current and longterm positions for each pro forma year. Use the following as a guide to the pre-populated balance
sheet categories contained on the Balance Sheet Subtab.
Table: RD Apply Line items and Contents explanation

Assets
Cash and Equivalents
Cash - RUS Construction Fund
Accounts Receivable - Affiliates
Accounts Receivable - NonAffiliates
Notes Receivable - Affiliates

Current Assets
Includes all restricted and non-restricted cash balances.
Consists of amounts owed by Affiliated Companies from
the provision of services or the sale of equipment.
Consists of amounts owed by customers and subscribers
from the provision of services or the sale of equipment.
Debt owed to Applicant by Affiliated companies and
repayable within one year. Be sure to provide detail such

32

as repayment terms in the Assumptions.
Notes Receivable - Non-Affiliates
Interest and Dividends Receivable
Materials and Inventory
Other Current Assets
Total Current Assets

Consists of equipment available for project deployment
or for sale to customers.
Consists of all other current assets not included above,
including, but not limited to, Prepaid Expenses.
Automatically calculated.
Non-Current Assets

Investment in Affiliated
Companies - Rural Development
Investment in Affiliated
Companies - Non-Rural
Development
Other Noncurrent Assets

Total Noncurrent Assets
Telecom, Plant-in-Service

Consists of all other Non-Telecom Plant Property &
Equipment related long term assets, including, but not
limited to Investments in Non-Affiliated Companies.
Automatically calculated.
Plant, Property, & Equipment
Contains all the property and equipment at cost including
plant associated with the proposed Broadband Loan
project. Annual changes to this category should relate to
the Net Capital Expenditures category included on the
Statement of Cash Flows.

Plant Under Construction
Plant Adj., Nonop Plant &
Goodwill
Less Accumulated Depreciation
Net Plant
Total Assets

Automatically calculated.
Automatically calculated.

Liabilities and Equity
Accounts Payable - Affiliates
Accounts Payable - Non-Affiliates
Notes Payable-Affiliates
Notes Payable - Non-Affiliates
Current Mat. L/T Debt RUS, RTB
and FFB Notes
Current Mat. L/T Debt-Other
Current Mat. L/T Debt-Rural
Develop. Loan
Current Mat.- Capital Leases
Lines of Credit
Other Current Liabilities
Total Current Liabilities

Current Liabilities
Consists of the amounts owed to trade vendors providing
good and services who are affiliated companies.
Consists of the amounts owed to trade vendors.
Loans from affiliated companies due within one year.

Consists of all other current liabilities not included
above.
Automatically calculated.
Long Term Debt

33

Funded Debt - RUS, RTB, and
FFB Notes
Funded Debt - Other

Consists of the total outstanding principal balance of all
other loans less the Current Portion - Other Debt
category.

Funded Debt - Rural Develop.
Loan
Obligations Under Capital Lease
Other Long-Term Debt
Include Advances from Affiliates.
Total Long Term Debt
Automatically calculated.
Other Liabilities & Deferred Credits
Other Long-Term Liabilities and
Deferred Credits
Automatically calculated.
Total Liabilities
Equity
Capital Stock Outstanding &
Consists of the par value of capital stock.
Subscribed
Additional Paid-in Capital
Consists of all other capital stock transactions, less the
amounts in Capital Stock.
Membership and Cap. Certificates
Patronage Capital Credits
Represents earnings that have been designated for
distribution to cooperative owners.
Retained Earnings
Represents after-tax profits in the company. The changes
from year to year must reconcile with the Net Income
category included on the Income Statement.
Automatically calculated.
Total Equity
Automatically calculated.
Total Liabilities & Equity
Automatically calculated.
Total Equity % of Total Assets
Automatically calculated.
Current Ratio

4. Income Statement Subtab
Use the following as a guide to the pre-populated revenue and expense categories contained on
this subtab.

Revenue Items
Local Network Services Revenues
Broadband

Automatically calculated.
Revenues are derived from the provision of
broadband data services to customers. Broadband
data service revenues should relate to the number of
subscribers and price per subscriber information
contained on the Subscriber Projections Subtab.

34

Voice

Video

Other
Network Access Services Revenues

Federal Subscriber Line Charges
Federal Access Recovery Charges
Federal High Cost Loop Support
/Model Based Support
Federal Interstate Common Line
Support/CAF-BLS
State Support
Connect America Fund Intercarrier
Compensation
Interstate Switched Access Revenue
Intrastate Switched Access Revenue
Interstate Special Access Revenue
Intrastate Special Access Revenue
Long Distance Network Services
Revenues
Carrier Billing and Collection
Revenues
Other Operating Revenue
Uncollectable Revenues
Net Operating Revenues

Revenues are derived from the provision of local
voice services to customers. Local voice service
revenues should relate to the number of local voice
service subscribers and price per subscriber
information contained on the Subscriber Projections
Subtab. This should include revenue from
residential, single-line businesses, multi-line
businesses, and optional features.
Revenues are derived from the provision of video
services to customers. Video service revenues should
relate to the number of video service subscribers and
price per subscriber information contained on the
Subscriber Projections Subtab. This should include
basic, expanded basic, and digital subscribers; set-top
box revenue; and premium channel packs and video
on demand.
Includes Installation revenues.
If you receive or expect to receive Network Access
Revenues, then you must include the revenue figures
here.

Modified Legacy or Model Based Support.
Connect America Fund-Broadband Loop Support
(CAF-BLS).

Revenues are derived from the provision of toll/long
distance services and should relate the minutes of
usage applied against average rates per minute.

All other revenues derived from sources other than
those described above.
The estimated amounts of revenue that you will not
be able to collect.
Automatically calculated.
Expense Items

Plant Specific Operations Expense

35

Plant Nonspecific Operations Expense
(Excluding Depreciation &
Amortization)
Depreciation Expense
Amortization Expense

Amortization expense associated with intangible
assets.

Customer Operations and Corporate
Operations Expenses

Total expenses of personnel, related costs of
providing customer care operations to customers and
subscribers, occupancy, insurance, billing and
collections, and other general and administrative
expenses.

Other Operating Expense
Total Operating Expenses
Operating Income or Margins
Non-operating Net Income
Interest on Funded Debt
Other Interest Expense
Allowance for Funds Used During
Construction
Total Fixed Charges
Taxes

All other operating expenses not included above.
Automatically calculated.
Automatically calculated.
Automatically calculated.
Includes RUS funded debt.
Includes Capital Lease and interest paid to Affiliates.

Extraordinary Items
Total Net Income or Margins

Automatically calculated.
Total expenses incurred for state and local property
taxes, plus the provision or benefit for Federal and
state income taxes related to a for-profit applicant.

EBITDA
EBIT
Principal Payments on Long-Term
Debt and Capital Leases

Automatically calculated.
Other
Automatically calculated.
Automatically calculated.
Principal payments made on debt obligations plus
capital leases during the subject year.

TIER
DSCR

Automatically calculated.
Automatically calculated.

5. Statement of Cash Flows
The pro forma statement of cash flows must reflect the proposed Broadband Loan project funding
and investments. This statement also reflects any additional funding for working capital and
other capital expenditures you intend to use, even if they are not related to the Loan project. The
Cash Flow statement corresponds with the Balance Sheet and Income Statement in RD Apply.
Therefore, you may only manually input values for the following line items: Net Capital
Expenditures, Other Long-Term Investments, Less: Distributions, and Other Financing, Investing,
and/or Operating Activities. Use the following as a guide to the pre-populated cash flow
categories contained on this subtab.

36

Cash Flow Statement Items
Beginning Cash (Cash & Cash
Automatically calculated.
Equivalents plus RUS Const. Fund)
Ending Cash from the Prior Year Cash Flow
Statement.
Cash Flow from Operating Activities
Automatically calculated.
Net Income (Loss)
Obtained from the Net Income (Loss) category on the
Pro Forma Income Statement for the specified years.
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating
Activities
Add Depreciation
Automatically calculated.
Obtained from the Depreciation category on the
Income Statement.
Add Amortization
Automatically calculated.
Obtained from the Amortization category on the
Income Statement.
Other (Explain)
Manual Input.
Include other adjustments for non-cash revenue (such
as Amortized Grant Revenue) or non-cash expenses.
Changes in Operating Assets & Liabilities
Decrease/(Increase) in Accounts
Automatically calculated.
Receivable
(PRIOR YEAR Balance Sheet Lines 3 + 4 ) - (END
OF PERIOD Balance Sheet Lines 3 + 4).
Decrease/(Increase) in Materials and
Automatically calculated.
Inventory
(PRIOR YEAR Balance Sheet Line 8) - (END OF
PERIOD Balance Sheet Line 8).
Decrease/(Increase) in Other Current
Automatically calculated.
Assets, Interest, and Dividend
(PRIOR YEAR Balance Sheet Lines 7 + 9) - (END
Receivable
OF PERIOD Balance Sheet Line 7 + 9).
Increase/(Decrease) in Accounts
Automatically calculated.
Payable
(PRIOR YEAR Balance Sheet Lines 21 + 22) (END OF PERIOD Balance Sheet Lines 21 +22).
Increase/(Decrease) in Other Current
Automatically calculated.
Liabilities
(PRIOR YEAR Balance Sheet Line 30) – (END OF
PERIOD Balance Sheet Line 30).
Automatically calculated.
Net Cash Provided/(Used) by
Sum of Operating Activities.
Operations
Net Capital Expenditures

Cash Flow from Investing Activities
Manual Input.

Other Long-Term Investments

Manual Input.

Other Noncurrent Assets

Automatically calculated.
(PRIOR YEAR Balance Sheet Line 13) - (END OF
PERIOD Balance Sheet Line 13).
Manual Input.

Other (Explain)

37

Net Cash Provided/(Used) by
Investing Activities

Automatically calculated.
Sum of Investing Activities.

Cash Flow from Financial Activities
Decrease/(Increase) in Notes
Automatically calculated.
Receivable
(PRIOR YEAR Balance Sheet Lines 5 + 6) - (END
OF PERIOD Balance Sheet Lines 5 + 6).
Increase/(Decrease) in Notes Payable
& Lines of Credit

Net Increase/(Decrease) in Long Term
Debt (Including Current Maturities)

Increase/(Decrease) in Other
Liabilities & Deferred Credits
Increase/(Decrease) in Capital Stock,
Paid-in-Capital, Membership and
Capital Certificates, & Other Capital
Less: Distributions (Payment of
Dividends, Patronage Capital Credits
Retired, or any other Distribution)
Other (Explain)
Net Cash Provided/(Used) by
Financial Activities
Net Increase/(Decrease) in Cash
Ending Cash

Automatically calculated.
(PRIOR YEAR Balance Sheet Lines 23 + 24 + 29) (END OF PERIOD Balance Sheet Lines 23 +24 +
29).
Automatically calculated.
(PRIOR YEAR Balance Sheet 25 + 26 + 27 + 28 +
32 +33 +34 + 35 + 36) - (END OF PERIOD Balance
Sheet Lines 25 + 26 + 27 + 28 + 32 +33 +34 + 35 +
36).
Automatically calculated.
(PRIOR YEAR Balance Sheet Line 38) – (END OF
PERIOD Balance Sheet Line 38).
Automatically calculated.
(PRIOR YEAR Balance Sheet Lines 40 + 41 + 42) (END OF PERIOD Balance Sheet Lines 40 + 41 +
42).
Manual Input.

Manual Input.
Automatically calculated.
Sum of Financial Activities.
Automatically calculated.
Automatically calculated.
Ending Cash represents cash balances at the end
of the period and should agree with the Cash
category of the Balance Sheet.

6. Debt and Equity Funding Subtab
This subtab records all existing long-term liabilities, loans, and capital leases as well as any new
non-RUS funding sources that will be needed to fund the Broadband Loan project, working
capital, and any other capital projects planned during the forecast period. Complete this subtab
along with all of the required documentation, as listed below. If you need to make any
modifications, you must attach an explanation. Use this subtab as a checklist to confirm that you
have submitted all the supporting documentation needed for each source of external funding.
For each long-term debt or obligation, include a description of the loan, principal amount, annual
interest rate, term, number of payments, annual payment amount, and start date. You must also
include the total amount of Advances and Repayments for each year of the pro forma that loan
funds are disbursed and/or repaid. This allows the system to calculate the total Change in Long
Term Debt which must now match line item 19 on the Cash Flow Statement: Net

38

Increase/(Decrease) in Long Term Debt (Including Current Maturities). Additionally, the Total
Advances of the Proposed Loan Request Section must match the Total Loan Amount Requested
on the Loan Request Tab.
6.1

The subtab is broken into five Long-Term Debt sections and one Equity section:
6.1.1

Long-Term Debt
Long-term Debt Obligations – USDA Rural Development
Long-term Debt Obligations – Existing USDA RUS
Long-term Debt Obligations – Proposed Loan Request
Long-term Capital Lease Obligations
Funded Debt – Other

6.1.2

Equity
Equity Contributions

6.2

Proposed Non-RUS Funding Sources. Enter other funding anticipated to support your
application's pro forma financial statements. Non-Broadband Loan funding for the capital
budget and working capital should include documentation of equity, debt, or other
contributions (such as in-kind contributions), including a list of the committed sources of
capital funding. A brief description of each should be included. Do not list the requested
Broadband Loan here. For other contributions, you must provide documentation supporting
the cash valuation of each contribution.

6.3

Required Documentation. You must submit documentation substantiating any funds listed
in the Schedule of Debt and Equity Funding for all existing debt and obligations and all
forms of external non-Broadband Loan funding used to fund the proposed project. The
documentation must substantiate the outstanding debt, obligations, and external nonBroadband Loan funding for your organization, not other entities, such as parents or
affiliates. Please note that the source documentation must also reflect any co-applicants.
To provide evidence of existing debt, include copies of existing notes, loan and security
agreements, guarantees, and capital leases. To provide evidence of external funding,
include copies of all formal commitments from your parent company, investors, and/or
third parties, such as commitments of funding from banks, evidence of loan agreements,
and signed agreements from the board of directors. If a parent company is providing
funding or any other support, proof of such support is required.

I. Competition Tab
Purpose: To identify all existing service providers and resellers competing in the applicant’s
service areas and their service offerings and pricing.
Related Screens/Subtabs: Subscriber Projections Subtab; Service Area(s) Tab; Documents Tab
This subtab requires a market analysis of all existing service providers, including cable TV
operators, regardless of the existing provider’s market share of the applicant’s service area, for
each type of service the applicant proposes to provide. Complete the following steps for each
competitor and relevant service offering(s).
1. Select Area(s): Check one or more service areas that the specified service offering covers.

39

2. Competitor Name: Enter the name of the competing entity.
3. Service Offering: Select the choice that best describes the type of service that your competitor
provides in the selected service area(s).
4. Service Level Offering: For voice, enter the type offered, e.g., VOIP; for video, enter the
package offered, e.g., bronze, silver, or whatever names the company uses to identify its service
packages; for data, enter the speed offered, e.g., 10 MB/1MB, download/upload speed,
respectively.
5. Residential or Business: Select the choice that best describes the end user.
6. Price/Month: Enter the monthly cost of this service package in this service area.

J. Environmental Tab
Purpose: To ensure project compliance with 7 CFR 1970, Environmental Policies and
Procedures.
Related Screen: Documents Tab
You must complete a workbook for each funded/unfunded service area that has a corresponding
CIW. Note the facilities that are to be deployed and their status under 7 CFR 1970. Please refer
to the below table to help determine when additional information, including agency contacts, is
required. Describe the projects in the workbook for each service area and upload any required
supplemental information. Even if the projects contemplated in the application do not require an
Environmental Report per 7 CFR 1970.53, the applicant must still provide at attachment in the
Documents Tab giving a description and stating why it feels the conditions of 7 CFR 1970.53 are
met.
Table : RD Apply Line Items and Requirements
RD Apply Line Items
1. Outside Plant
a. Buried cable

b. Aerial cable – existing cable,
possibly with new poles

c. Underground cable

2. Towers
a. New construction

Requirements
1970.53(d)(2); 1970.54(b)(4) depending on if new or replacement.
If using 1970.53(d)(2), no further action for NHPA is required.
If using 1970.54(b)(4), need to contact SHPO and tribes for S106
review.
Need to avoid wetlands or identify why project must be in a
wetland.
1970.53(d)(1); 1970.54(b)(4) depending on if new or replacement.
If using 1970.53(d)(2), no further action for NHPA is required.
If using 1970.54(b)(4), need to contact SHPO and tribes for S106
review.
1970.53(d)(2); 1970.54(b)(4) depending on if new or replacement
If using 1970.53(d)(2), no further action for NHPA is required.
If using 1970.54(b)(4), need to contact SHPO and tribes for S106
review.
Need to avoid wetlands or identify why project must be in a
wetland.
1970.54(a)(6), if under 450 feet and not visible from areas of
documented scenic value.

40

b. Existing towers, equipment
collocation only
c. Equipment put on building instead
of tower
3. Buildings
a. New building

b. Modular building

c. Renovating existing building

4. Equipment
a. Within existing building
b. Outside in a field

Will need to consider impacts to prime farmland and listed species.
Maps regarding floodplains and wetlands are generally needed.
Need to contact SHPO and tribes for S106 review.
1970.53(d)(5), no further action for NHPA is required
1970.53(d)(5), no further action for NHPA is required
1970.54(a)(3) – if it meets other requirements of the categorical
exclusion.
Will need to consider impacts to prime farmland and listed species.
Maps regarding floodplains and wetlands are generally needed.
Need to contact SHPO and tribes for S106 review.
1970.54(a)(3)
Need to contact SHPO and tribes for S106 review.
Will need to consider impacts to prime farmland and listed species.
Maps regarding floodplains and wetlands are generally needed.
1970.53(c)(2)
Need to contact SHPO and tribes for S106 review.
Impacts of siting project in floodplain may need to be addressed.
1970.53(c)(2)
Need to contact SHPO and tribes for S106 review.
1970.54(b)(4)
Need to contact SHPO and tribes for S106 review.
Will need to consider impacts to prime farmland and listed species.
Maps regarding floodplains and wetlands are generally needed.

Additional Environmental Guidance
Any activity categorized under 7 CFR 1970.54 is a Categorical Exclusion with an Environmental
Report. This means all potential extraordinary circumstances must be discussed to some degree,
including wetlands and floodplains. For example, applicants should not merely state “no
floodplain or wetlands” and end the discussion there. Applications should include supporting
information, such as a map. If a resource is present, applicants should describe and support how
the project will not have an adverse impact to the resource. For example, if the project is in a
floodplain, but there are no above ground structures to be impacted by any floods or there is a
wetland in the project area, but the line will be directionally bored under the wetland to avoid any
impact, please identify this in your application.
Section 106 review information regarding the National Historic Preservation Act can be found in
subpart H of 7 CFR 1970, and does require coordination with the State Historic Preservation
Office and notification to any federally recognized tribes that have an interest in the area (details
and template letters can be found in subpart H).
Endangered Species Act (ESA) review is also generally needed for each project.
Depending on the type of project, a simple commitment may be enough to alleviate any concern.
The following steps should be taken to expedite the review:

41

1. Go to IPaC (link below) and print off an official species list for the area your project impacts. If
no species are on the list, include the list and continue.
2. If any species are on the list but based on the type of project, they would NOT be impacted, write
a short explanation, include it in your report, and move on. This is often the case if you are in an
already maintained ROW.
3. If a species is present and COULD be affected, such as any species of bat and you are doing tree
clearing, more commitments, limitations, or coordination with US Fish & Wildlife Service
(USFWS) may be required in order to conclude that the action is “not likely to adversely affect”
the species. IPaC may assist you in concluding any consultation with USFWS. Subpart N has
more details on ESA requirements.
Bat and beetle species are the two most likely to be impacted by any of these actions. USFWS has
extensive information on what should be done to avoid any adverse impacts and to conclude
consultation.

Environmental Guidance on 7 CFR 1970 Subparts
Subpart B

Categorical Exclusions

Subpart H
Subpart L

Historic and Cultural Resources
Land Use and Formally Classified Land, for more details regarding
prime farmland

Subpart N
IPaC

Biological Resources
Assistance for ESA coordination and determinations

K. Documents Tab
Purpose: To upload all required and additional attachments, certifications, and licenses and
agreements needed for a complete application.
Related Screens: Interview Tab; Attachments Subtab; Certifications Subtab; Licenses &
Agreements Subtab

1. Attachments Subtab
On this subtab, upload the required attachments that correspond with the Document Type. In
the Description field, type in the same title listed under the Document Type, unless an additional
descriptor is needed.
You may upload optional attachments if you need to provide any clarifying or supporting
material. For example, if you want to add notes to the data entered on the Capital Investments
Workbook, you can upload an additional descriptive file in this section. For any documents
uploaded under “Other – Misc. Support Document,” please include a short, but very clear title in
the Description field.
1.1 Legal Opinion.

42

Prepare the legal opinion according to the sample format available in the Appendix. The legal
opinion should address your ability to execute legal documents, and describe all pending
litigation matters. Your legal counsel must submit an executed opinion on the counsel’s
letterhead.
1.2 Real Property Schedule.
Prepare a real property schedule. The real property schedule should include the legal
descriptions of all the real property owned by the applicant and should be in a format suitable
for inclusion in a security instrument. It should be categorized into real property, leasedproperty, easements, and rights-of-way. An attorney practicing in the state where the property is
located must prepare this schedule.
1.3 Organizational Charts (Applicant, Parent, Subsidiary).
Depending on whether the applicant is connected to parent and/or subsidiary companies, the
number of required organizational charts will vary. Sample organizational charts for both
conditions are provided in the Appendix. These are only samples and should be tailored to
reflect your organization. Review the instructions below to determine the number of charts to
submit.
1.3.1

All applicants, regardless of their relationships, must submit a chart(s) that shows
the key personnel who manage or will manage the company and/or this project, and
the number of employees in each division or department managed by those
personnel. An applicant’s organizational chart(s) should reflect both the company
structure and key staff. You may need to submit more than one charts.

1.3.2

Applicants with parent and/or subsidiary relationships must submit additional
charts that show all the other entities (parent/subsidiaries) that are affiliated with
the applicant and clearly indicate the relationships between these entities and the
applicant. An accompanying narrative should briefly indicate any services that the
affiliate will be providing to the applicant or that the applicant will be providing to
the affiliate.

1.4 Board Resolution (First time applicant only).
This document, which authorizes the funding request, should have already been submitted as
part of the Authorized Representative Request (ARR). Sample Board Resolutions for
corporations and LLCs are available under the Help link in the top right hand corner of the RD
Apply application.
1.5 Articles of Incorporation or Organization (First time applicant only).
Submit a certified copy of the Articles of Incorporation or Organization.
1.6 Bylaws or Operating Agreements (First time applicant only).
If the applicant is an LLC, or any of the applicant’s members are LLCs, the applicant must submit
either of the following:
1.6.1

LLC agreements for all members of the applicant’s LLC.

43

1.6.2

An opinion of counsel which certifies that the applicant’s agreement does not conflict
with any of the LLC agreements of the applicant’s members.

1.7 Board of Directors or Managing Members.
In this document, include a list of your board members and a brief biography that highlights each
member’s experience within your industry and community.
1.8 Management Experience.
This document must include information on the key personnel who manage or will manage the
company and this project. At a minimum, the following information shall be provided for each
member of the management team:
1.8.1
1.8.2

1.8.3
1.8.4

Duties and responsibilities related to this project and to any other project.
Detailed description of qualifications, which focuses on how each person’s previous
10 years of work experience directly relates to his or her ability to perform the duties
and responsibilities described above.
Resume for each team member detailing positions held during the last 10 years.
Description of the extent to which this management team has worked together.
Name particular initiatives or projects, if any, that the team has previously
undertaken. Additionally, explain how the management team’s skills complement
each other.

1.9 Executive Summary.
The Executive Summary should consist of a general discussion indicating the purpose and
amount of the proposed construction. It should also include a discussion of immediate and longrange plans for upgrading existing services, providing new types of subscriber services, and any
other plans relating to the development of telecommunications service in the area. You must also
include a narrative/quantitative explanation that demonstrates how you arrived at the maturity
date listed on the Loan Request Tab.
1.10 System Design.
The System Design is an engineering study that includes all the technical information on the
existing and proposed systems. Each part should discuss the construction plans in sufficient
detail to provide a clear and logical picture of the broadband system. It should give the
considerations for utilizing existing network and access equipment and outside plant in the
proposed system, plans for reinforcing and expanding existing equipment and plant, and the
justifications for the proposed removals and retirements of existing equipment and plant. The
narrative must indicate that the project will be complete within 3 years from the day that RUS
notifies the applicant that loan funds are available.
To ensure that you do not leave out critical information, we recommend that you follow the
heading format identified under each part.
1.10.1 Existing System (if applicable). Provide a synopsis of the current network
infrastructure, including:
 The current service area(s).
 The types of services offered.

44







The number of subscribers per service offered (voice, data, video etc.).
The types of technologies utilized in the infrastructure (standards-based vs.
proprietary) and a discussion of the equipment deployed (switching, transport, and
access).
The total number of establishments served:
 Wireline establishments passed, if applicable, and a description of the existing
outside plant facilities including mileages and plant type(s).
 Wireless establishments covered, if applicable, and a discussion of the
technology used and tower sites deployed.
A narrative describing current connectivity to your ISPs, video providers, and
telephony providers.

1.10.2 Proposed System. Provide a synopsis of the proposed network infrastructure,
describing the types of technology to be deployed in the funded service area and
how the technology will facilitate the offering of service at the Broadband Lending
Speed. The synopsis should include:
 The entire service area(s) that will be provided new or improved service as part of the
loan, including how any new services area(s), if applicable, will be incorporated into
the existing system and what upgrades that will be made to the existing
infrastructure.
 The types of services to be offered.
 The types of technologies utilized in the infrastructure (standards-based vs.
proprietary) and a discussion of the equipment to be deployed (switching, transport,
and access).
 The total number of establishments served. Detail must be provided showing the
system deployed will have the ability to offer each household within the PFSAs
service at the Broadband Lending Speed or higher. Provide information on the
following:
 Wireline establishments passed, if applicable, and a description of the outside
plant facilities to be deployed including mileages and plant type(s), the
amount of existing miles modified, if applicable, and the amount of new
construction.
 Wireless establishments covered, if applicable, and a discussion of the
technology used and tower sites deployed or upgraded.
 Wireless establishments to be covered.
 A narrative describing proposed connectivity to ISPs, video providers, telephony
providers, and other content providers including any changes to the existing system,
if any.
 A description of the design parameters used in engineering the system. Examples
include oversubscription percentage, consumption of bandwidth per user, penetration
rates, link loss, availability targets, redundancy requirements, and criteria for
candidate vendors.
 Address any other subject areas necessary to make as thorough a disclosure as
possible, so that network capacity, performance, user loading, technology strengths
and weaknesses, etc. can be fairly assessed.
1.11 Network Diagram(s).
Network diagrams are block diagrams that clearly show how the traffic flows through the
network from the interconnection points with the backbone service providers to the end user.

45

RUS is familiar with the technologies associated with “last mile” connectivity options to the
customer premises. Therefore, in developing diagrams for the proposed network, focus should be
on the core network (common network facilities) components.
The diagram(s) must clearly show:
1.11.1

1.11.2
1.11.3
1.11.4

1.11.5

1.11.6

1.11.7

All physical locations where the major network elements are or will be located to
the highest known level of detail. This may take the form of postal addresses or
latitude and longitude.
The route miles between each network element.
The bandwidth capacity between the network elements.
The types of facilities (fiber, copper, microwave, etc.) that are or will be used for
establishing the connection between the network elements and the points-ofconnection with the backbone service providers.
The proposed facilities that will provide the interconnection point(s) from the
broadband backbone network to the networks of the selected ISP(s), telephony
and/or VOIP provider(s), and any other value-added services that may be provided
in the new infrastructure.
Any leased facilities, along with the location of the leased facilities (postal
addresses or latitude and longitude) and the providers from which the facilities are
being leased.
For Network Diagrams where the level of factual detail to be provided will inhibit
the overall understanding of the diagram, applicants may provide a table at the
bottom of the diagram providing the remaining technical details to the extent
currently known.

In the Appendix are examples of Network Diagrams for the following technologies: Passive
Optic Networks (PON), DSL, Hybrid Fiber-Coaxial (HFC), and Terrestrial Wireless. Note that
the sample Network Diagrams do not display every home or premises passed but will indicate the
typical number of connections reaching to each node (as represented with the letter n). These
sample diagrams are for illustrative purposes only, and are not intended to construe or imply any
design characteristics or requirements for a proposed system.
1.12 Acquisition Agreement (if applicable).
This contract governs the terms and conditions that bind the parties in an acquisition. For
applications that propose to acquire facilities, provide satisfactory evidence for RUS to determine
that the acquisition is necessary and incidental to furnishing or improving service at the
Broadband Lending Speed in rural areas.
1.13 Research Data (if applicable).
You must conduct a market survey in each service area in which you are projecting a penetration
rate that is greater than or equal to 20 percent for any service offering by the end of the 5-year
forecast period. Non-contiguous service areas must be treated separately. We recommend that
you list all of the service offerings that you intend to provide in the applicable service areas on
the surveys, even if the projected penetration rates for the other service offerings are less than 20
percent.
All market surveys must take place within the 6 months preceding the date of application

45

submission. Clearly identify the dates on which you conducted the surveys.
You must capture a representative sample of the residential and business sectors of each service
area included in the application, both RUS-Funded and Non-Funded areas. RUS will review your
research in conjunction with the feasibility studies and strategic planning goals. This document
contains three sections:
1.13.1 Methodology for conducting the market survey. You can conduct your survey through
the following media:
 Direct mail.
 Telephone.
 Door-to-door interviews.
 Town Meetings by coordinating with local government officials, the Chamber of
Commerce, and/or local TV, radio, and newspapers.
1.13.2 Tabulated results for each service area. Since the market survey collects data from
potential subscribers, both residential and business, on the service offerings and the
respective rates, your results must include all of the following:
 Total number of surveys sent.
 Total number of respondents.
 Number and percent of responses to each questions.
 Cross-tabulations for income levels, computer ownership, and Internet usage.
1.13.3 Questionnaire used in the market survey. The Market Survey must demonstrate the
need for services at the Broadband Lending Speed as well as any other service being
offered, support the projected penetration rates and price points for the services to be
offered, and support the feasibility analysis. The market survey must address all
services (i.e. voice, data, video, etc.) that the Broadband Program will funding. The
survey questionnaire used for conducting the market survey should capture the
following information:








Ownership of computers and Internet usage (including time online).
Existing service provider, types of services offered, rate plans (both price and
transmission rates), satisfaction with current provider.
Proposed services offered by applicant, the respective rate plans (including any onetime fees), and the timeline for providing those services.
Incentive/introductory packages offered by the applicant.
Interest in switching service providers and reasons for switching (price, service level,
customer service/local presence).
Economic and social demographics including age, income level, and
family/household members.
Types of broadband services desired by the customer, including data (internet
access), voice services, streaming video, interactive video, peer-to-peer, and online
gaming. If other, please specify.

1.14 Market Analysis (if applicable).
Based on the information provided in the Research Data attachment, you must provide your
analysis of the market survey(s). Your analysis should directly support the numbers you entered
on the Subscriber Projections Subtab. The analysis must include the following:

47

1.14.1 Well-organized conclusions that support the projected subscriber levels across the
different service levels/rates for each service area for each year of the financial
forecast. The results should clearly differentiate business subscribers from residential
subscribers. The results should take into account each service area’s individual
circumstances. The results must be based on the number of households/businesses in
each service area, not on the population of the service area.
1.14.2 Clear explanation of the methodology that links the market survey to the final
subscriber projections. Projections must be supported by the Research Data provided
in this section. While subscriber projections based on population numbers and
national/state statistics are not acceptable on their own, you may also draw on any
market data gathered with respect to existing and potential competition and the U.S.
Census demographics from the Service Area(s) Tab.
1.15 Historical Financial Statements (Applicant, Parent, and/or Subsidiary Operations).
As applicable, attach the following items:
1.15.1 Audited Financial Statements of the applicant for the three most recent fiscal years,
or for as long as the applicant has been in business, if less than three years.
Historical financial statements for the last three years must also be supplied for each
co-applicant. The financial statements must include the balance sheet, income
statement, and statement of cash flows, as well as the accountant’s letter and the
notes to the financial statements. Audited financial statements are preferred. Please
note that an Audited Financial Statement refers to a full and complete report of the
applicant’s financial condition, operations, and cash flows, audited and certified by
an independent certified public accountant (CPA). Other reports prepared by
accounting firms including Compilation Reports or Review Reports cannot be
submitted in satisfaction of an audited financial statement; such reports will be
considered as company-prepared.
1.15.2 Alternatives to Audited Financial Statements. If audited statements are not
available for the last three years, the applicant must submit un-audited financial
statements including explanations and tax returns for those years. Applications
from start-up entities must, at a minimum, provide an opening balance sheet dated
within 30 days of the application submission date. A startup entity may also choose
to submit a tax return if audited statements are not available, in addition to the
opening balance sheet.
1.15.3 Parent Companies, Subsidiaries, Affiliates and Others. If the applicant has a parent
company and/or one or more subsidiaries, the historical financial statements for the
preceding fiscal year of those entities are also required. If another affiliated or
unaffiliated company is providing operations and management services to the
applicant, that company’s historical financial statements should also be included.
Audited financial statements are preferred; however, see the preceding item for
acceptable alternatives if audited financial statements are not available.
1.16 Financial Assumptions.
You are required to submit a detailed written narrative that documents the various pro forma

48

financial assumptions used to prepare the Pro Forma 5-year Financial Forecasts. To determine if
you are required to submit more than one forecast, review this section.
You must provide a detailed explanation for each of the line items in the pro forma with clear
details so that RUS may review and understand the basis for the financial projections. This
should include a discussion of any historical trends or anomalies and their impact on the
assumptions for the 5-year forecast. Include any calculations or percentage changes in the
assumptions and the reasons for choosing any multipliers or percentage increases/decreases
for the forecast. If the financial forecast is not fully supported by a detailed narrative for every
category, it may affect the final decision on the application.
Historical Financial Reconciliation
If there are any gaps or discrepancies between the submitted historical financial statements and
the historical data provided in the Pro Forma, then include detailed explanations in the
Assumptions.
Guidance Related to the Pro Forma Financial Assumptions
While you are not required to utilize all of the categories in the Pro Forma Financial Statements,
you must include a sufficient level of detail to provide a reasonable understanding of existing and
proposed operations, including the proposed Broadband Loan project.
1.16.1 Balance Sheet Assumptions. You must provide assumptions for ALL of the
categories on the Balance Sheet. Guidance for several specific categories is provided
below.

BALANCE SHEET
CATEGORY

GUIDANCE

Cash and Equivalents

Cash should tie to the Ending Cash category from the Existing and
Project Cash Flow worksheet. Describe any restricted portions of cash
balances. Document the nature of the marketable securities and discuss
liquidity of these.

Accounts ReceivableAffiliates

Provide detail on nature of goods or services provided to Affiliated
Companies and the terms of payment.

Accounts Receivable- Non Document the calculations used to determine accounts receivable, during
Affiliates
the forecast period, including the number of days of outstanding
revenue.
Notes Receivable –
Provide breakdown by Affiliated Entity and terms such as interest rate
Affiliates
and repayment schedule.
Notes Receivable- Non
Affiliates
Material and Inventory

Identify types of inventory, detail inventory balance and assumptions for
how many days inventory will be maintained.

Investments in Affiliated Provide description of investments and method of valuation.
Companies – Rural
Development

49

Investments in Affiliated Provide description of investments and method of valuation.
Companies –non- Rural
Development
Accounts PayableProvide description of the goods and services provided by the Affiliated
Affiliates
Company.
Accounts Payable-Non
Affiliates

Document the calculations used to determine accounts payable during
the forecast period, including the number of days of outstanding
expenses.
Notes Payable- Affiliates Provide detail of loans from Affiliates including interest rate and
repayment terms.
Funded Debt- Other

Amounts should be as described in D/E tab and supported by copies of
loan documents for all non-RUS, RTB & FFB debt.

Other Long Term
Liabilities & Deferred
Credits
Capital Stock and
Additional Paid in Capital

Disclose amounts of Deferred Taxes and description of transactions that
give rise to this tax treatment.
These should consist of the contributed equity of the applicant plus any
Proceeds from Sale of Equity from the Existing and Project Cash Flow
worksheet.

1.16.2 Income Statement Assumptions. You must provide assumptions for ALL of the
categories on the Income Statement. Guidance for documenting assumptions about
most specific categories is provided on the following pages.

REVENUES

GUIDANCE

Broadband Data Service Document the number of broadband data subscribers and average revenue
per subscriber (ARPU) information used in determining broadband data
revenue.
Local Voice Service
Document the number of local voice service subscribers and ARPU
information used in determining local service revenue.
Video Service
Document the number of video service subscribers and ARPU
information used in determining video services revenue.
Other
Document the related gross subscriber additions and proposed installation
fees.
Network Access Service Applicants which receive or expect to receive Network Access Revenues,
Revenues
must include the revenue figures here.
Long Distance Network Document the historical and projected long distance minutes of use by
Services Revenue
category and the proposed /long distance rates.
Other Operating
Revenues

Note any material amounts and explain the source of this revenue.
Document assumptions related to these revenue sources with justification
to support the projected revenues.
Uncollectible Revenues Document the rate used to estimate uncollectible revenues, with
justification to support the projection.

50

EXPENSES
Plant Specific Operations
Expense
Plant Non-Specific Operations
Expense
Customer and corporate
Operations Expenses

GUIDANCE
Document how these expenses are calculated and projected
through the forecast period and relate to the proposed project
buildout.

Document how these expenses are calculated and projected.
Please disclose if these expenses are being paid to Affiliated
Companies and describe allocation method if facilities and staff
are being shared. Arrangements should be supported by written
agreements between related entities.

Other Operating Expense

Describe major/material components of this line item and
document in detail any assumptions related to these operating
expenses.

Non-Operating Net Income

Describe sources of income and expense in the Non-Operating tab
and provide assumptions and explanations for forecast trends.
Explain any non-recurring or extraordinary items.

Interest on Funded Debt

Ensure that this figure includes all debt included on the Debt and
Equity Funding Subtab and document the interest rate(s) assumed
for all other existing and proposed debt incurred by the Applicant.

Other Interest Expense –

Describe other interest expenses and disclose amounts paid to
Affiliates.

1.16.3 Statement of Cash Flows Assumptions. The Cash Flow statement should tie to the
net change in the various categories from the Balance Sheet. Net Income in each year
should come directly from the Income Statement. Guidance concerning what should
be included in the assumptions is outlined below.
CASH FLOWS FROM
OPERATIONS
Cash Flow from Operations- Other

GUIDANCE
Provide breakdown of major/material components in this
line items and explain any adjustments.

CASH FLOWS FROM INVESTING
GUIDANCE
ACTIVITIES
Net Capital Expenditures
Ensure that proposed Broadband Loan project expenditures
match the network build-out schedule and Capital
Investment Workbook tab. Document the assumptions
regarding capital expenditures for assets other than those
being funded with the proposed Broadband Loan.
Other

Provide breakdown of major/material components in this
line items.

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CASH FLOWS FROM
GUIDANCE
FINANCING ACTIVITIES
Net Increase/(Decrease) in Long Term Ensure that proposed Broadband Loan project draws match
Debt
the network build-out schedule and Capital Investment
Workbook tab. Also ensure that amounts listed here relate to
those advances and/or repayments in the Debt and Equity
Funding Subtab and additional cash requirement, if
applicable.
Increase/(Decrease) in Capital Stock,
Paid-in-Capital, Membership and
Capital Certificates & Other Capital
Payment of Dividends, Patronage
Capital Credits Retired, or any other
Distribution)
Ending Cash

Ensure that amounts listed here relate to those in the Debt and
Equity Funding Subtab and additional cash requirement, if
applicable.
Document the planned annual payments of patronage capital
credits and planned dividends.
Ending cash represents the applicant’s cash balances at the
end of the period and should agree with the Cash category of
the Balance Sheet.

1.16.4 Additional Financial Assumption Considerations
Customer Premises Equipment (CPE): One of the eligible Broadband Loan project
costs is for the acquisition of CPE (and associated installation costs), as long as the
CPE is owned by the applicant throughout its economic life.
If you do not intend to retain ownership of CPE, you must select one of the following
alternatives allowed under 7 CFR 1738.52(e) in order to secure Broadband Loan
funding for CPE:


Pledge Additional Collateral: Provide a complete description and supporting
information, sufficient for RUS to determine the value and to prepare
documentation to secure RUS‟s collateral interest. This collateral cannot be
assets purchased with the loan funds and it must have a value at least equal to the
amount being used for the CPE and associated installation costs.



Describe Revolving Fund: Provide a description of how the applicant will
administer a revolving fund for the purchase of the CPE and the sale of CPE to
the customer. The description should provide a quarterly estimate of advances
used for purchases, sales/collections used for revolving fund reductions, and the
resulting balance on a quarterly basis.

1.17 Refinancing Documentation (if applicable).
For Broadband Loans that include proceeds to refinance an outstanding telecommunications loan
made under the Rural Electrification Act of 1936, provide satisfactory evidence for RUS to
determine that the benefits realized from the refinancing will further enhance services at the
Broadband Lending Speed in rural areas. The amount requested for refinancing cannot exceed 40
percent of the requested loan amount. The applicant should also include the details of the notes
that are being proposed to be refinanced. See 7 CFR 1738.51(d) for more information on eligible
refinancing conditions.

52

1.18 Investor Proposal (if applicable).
A sample of this proposal is available in the Appendix. The document must include, at a
minimum:


A letter from the investor indicating the investor’s unconditional legal commitment, the
timing for providing the investment, the amount of investment, and all terms and conditions
associated with the investment (RUS may reject investments that do not prohibit redemption
of the investment until such time as stated requirements and financial thresholds are achieved
by the applicant).



Bank or financial statements from the investor that demonstrate the investor’s ability to meet
its commitment to the applicant. If this option is selected and supporting information is not
included, the application will be rejected. Note that the financial statements must document
that the funds are titled in the name of and owned by the investor

1.19 State or Local Government Bond (if applicable).
State and local governments may satisfy the equity requirement with a general obligation bond
that is not senior to the Broadband Loan (in practice, this generally means that the bond is pari
passu with the Broadband Loan). A sample of the information needed is in the Appendix.
The applicant must submit an opinion from its legal counsel, acceptable to RUS, that the
applicant has the authority and capacity to issue a general obligation bond in an amount sufficient
to meet the minimum equity requirement. With receipt of an acceptable opinion, RUS can
proceed with its review of the application.
If RUS extends a loan offer to the applicant, the general obligation bond must be issued and the
applicant must have the cash deposited in its bank account before the loan closing can occur. The
Broadband Loan will not be subordinate to the general obligation bond.
Revenue bonds supported by the operations to be funded cannot be used to satisfy the equity
requirement.
1.20 Fifty (50) Percent Reduction in Revenues Financial Forecast (if applicable).
In addition to the initial financial projections required to demonstrate financial feasibility, such
applicants must complete adjusted financial projections using the reduced revenue projections in
order to identify the amount of additional cash that will be required. For more information,
review this section.
1.21 Assumptions to 50 Percent Reduction in Revenue Financial Forecast.
The 50 Percent Reduction in Revenues financial forecast must be fully supported with
assumptions acceptable to the Agency. The applicant may present evidence in its loan application
that projected revenues or a portion of projected revenues are based on binding commitments and
request that more than 50 percent of the projected revenues be considered for the purpose of
identifying the additional cash requirement.
1.22 Unaudited Historical Financial Statements, including Assumptions (required for start-ups
and companies without audited information).

53

1.23 Tax Returns (required for start-ups and companies without audited information).
1.24 Competitor Strategic Plan.
In this narrative, you will present your comprehensive and well-researched strategy for
successfully competing against existing service providers. The competitive analysis should
demonstrate that you have detailed knowledge of your competitors; an understanding of your
competitor’s strategies, investments and capabilities; and a strategy for successfully competing
against these competitors. Informal or casual knowledge about existing service providers is
generally inadequate to develop an effective strategy for an applicant to successfully compete in a
market.
Use the guidance below to develop your Strategic Plan.
1.24.1

Answer the following questions when you describe your strategic plan:
a. How do your service offerings compare with those of your competition?
b. How will you win new customers, including those of your competitors?
c. What incentives, marketing and pricing strategies will you use?
d. What strategies will you use to counteract any advantages or strategies used by
the competition?

1.24.2

Describe your primary market:
a. Geographic area to be served should agree with the service areas detailed on
the Service Area(s) Tab. Factors affecting market growth should be described
including how they will impact your plans, and how you will mitigate risks and
penetrate the current markets.
b. The current status, prospects, and trends influencing the industry in your target
areas.
c. A description of targeted customers including the key factors that influence
their service selection decisions. This should be substantiated from a market
analysis, if required.
d. A description of your pricing strategy and pricing goals for the short- and longterm, including ramp-up and market share.
e. A description of your approach to advertisement and promotion of services,
e.g., how you will reach the most customers and deter competitors. Include a
description of the advertisement and promotions strategy, marketing plan, the
cost to execute the marketing plan, and the messages you will provide to the
target markets. It should compare the marketing approach to the current
marketing programs competitors are pursuing or are likely to pursue.

1.24.3

If broadband service is proposed to be offered in an area where there are no
households (“green field” area), the application must include information that
justifies the subscriber penetration rates since no market information is available.
This information might include:
a. Subscriber penetration rates from comparable rural areas.
b. Census data on income levels compared to other rural areas.
c. Census data on age levels compared to other rural areas.
d. Census data on computer ownership compared to other rural areas.
e. Permits, plans, plats, or other documentation submitted to or approved by local
authorities that supports your projections of population growth in the area to be

54

f.
g.
h.
i.

served.
Subscriber penetration by satellite service providers.
Letters of support from residents and community leaders in the rural area.
Minutes of “town hall” meetings held in the rural area.
Any other information that supports your projections.

1.25 Substantially Underserved Trust Area (SUTA) Attachments.
If you are serving a community that has a SUTA designation and you are requesting SUTA
consideration in relation to your application, then you must upload as attachments all of the
information requested in 7 CFR 1700, Subpart D.
Please identify the discretionary authorities of 7 CFR 1700, Subpart D that you seek to have
applied to its application. Note, however, that given the prohibition on funding operating
expenses in the Broadband Program, requests for waiver of the equity or the additional cash
requirements cannot be considered.

2. Certifications Subtab
On this subtab, the authorized member from your team can certify each document by opening the
link, reviewing the content, and checking the electronic signature box. That person may also
upload any additional certifications that are applicable to the application.
2.1 Certification Regarding Architectural Barriers.
2.2 Certification Regarding Debarment, Suspension, and other Responsibility Matters – Primary
Covered Transactions.
2.3 Certification Regarding Flood Hazard Area Precautions.
2.4 Certification Regarding Lobbying for Contracts, Grants, Loans, and Cooperative
Agreements.
2.5 Civil Rights Compliance Certification.
2.6 Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970
Certification.
2.7 Representation Regarding Felony Conviction and Tax Delinquent Status for Corporate
Applicants – AD-3030.
2.8 Design Certification.
Download this certification from the Certifications Subtab under the Documents Tab. After
signing the certificate, you must upload it on the Attachments Subtab. Submitting a signed
Design Certification asserts that the System Design was prepared by qualified personnel on
the applicant’s staff or by consultants.
If prepared by the applicant’s staff, then copies of the staff’s qualifications must also be
uploaded to the Attachments Subtab. To be considered qualified, staff must have at least
three years of experience in designing the type of broadband system proposed in the

55

application.
If prepared by a consultant that was not a registered engineer licensed in the state in which
the facilities will be constructed, then a registered engineer that is licensed in the applicable
state must certify that the proposed System Design will be capable of delivering service at
the Broadband Lending Speed.

3. Licenses and Agreements Subtab
On this subtab, upload the documents that correspond with the Document Type. Select the
appropriate status and enter any relevant comments. For all Existing/In Hand licenses and
agreements, attach the sections that indicate the terms, including capacity and cost. You must
provide a status report for all licenses, agreements, approvals, and authorizations that may be
required to construct the broadband network.
You may add as many rows as is necessary to depict the full range of licenses, agreements,
approvals, and authorizations involved in your project. Please upload any additional licenses and
agreements. Select the relevant Document Type. After the document has uploaded successfully,
select the appropriate status and enter any comments.
Use the following as a guide for the status indicators available:
Status
Not Required – RUS already
has a copy on file
Not Required

Draft
Existing/In-Hand - No
Modifications Needed

Existing/In-Hand Modifications Needed
Applied, but Pending
Contingent Upon Award
Not Available Until Project Is
Funded

Example
Select if the document is required for the project, but not
required for submission because RUS already has it.
Select if the project will not, at any point, require this license.
For example, FCC Spectrum Licenses will never be required
for a wireline provider.
Select if the agreement has been written, but has not been
signed.
Select if the agreement is completed, in-hand, and ready for
action. For example, for most wireline incumbents with
existing operations in a proposed funded service area, their
Certificate of Public Convenience and Necessity will already
be in hand.
Select if the existing agreement that will require
modifications, such as backhaul agreements for an incumbent
that need to be increased in capacity.
Select if you have applied for the license, and are now
awaiting confirmation and/or approval.
Select if the agreement may exist and be finalized, but will be
valid only if you receive an award.
Select if the agreement cannot be completed until you either
have confirmation of winning the government award or have
received the first disbursement.
In the comments box, add contextual information that is
relevant to the ownership and availability of the license or
agreement. For example, indicate whether an asset is owned
or will be owned by a parent company or organization, if (in

56

the case of spectrum) it is being leased to the applicant, and
on what basis (exclusive, non-exclusive, time-limited) this
lease is being made.
3.1

Certificate of Public Convenience and Necessity (CPCN).
CPCN is an authorization issued by the State Public Service Commission (PSC) for the
delivery and/or provision of a public service to a designated area or parcel of land. A CPCN
is generally needed to permit building facilities in public rights of way and for certain types
of commerce. CPCN rules and regulations vary by State.

3.2

Franchise Agreements.
An agreement that grants a network operator the right to construct in rights of way
governed by the local franchise, usually the local municipality, and market for sale video
services to paying subscribers in that local district.

3.3

Internet Service Agreement.
An agreement between an Internet Service Provider (“ISP”) and a retail reseller of Internet
services (usually the applicant). This generally includes details regarding facilitating,
provisioning, transporting, and maintaining a fixed or variable amount of payload traffic
(a.k.a., bandwidth) from one or more locations to an ISP's portal.

3.4

Internet Service Connection Backhaul Agreement.
The agreement governing the physical link connecting an applicant’s network to the ISPs
facilities. In some cases, this agreement will be part of the Internet Service Agreement, and
in other cases, it will be separate.

3.5

Pole Attachment Agreement.
An arrangement between the owner of the pole, usually a power or phone company, and an
operator who wants to lease the right to attach fiber strand (for example) so that they may
construct infrastructure more cost effectively than performing underground construction.

3.6

Special Permits (federal, highway, bridge, etc.).
Certain protected Federal Lands like National Parks, Historic Districts, or other protected
or Federal government owned land require the following of a particular protocol in order to
obtain permission to construct fiber optic infrastructure. Railroad Crossings or Bridge
Crossings typically need to be coordinated with the State Department of Transportation.

3.7

Spectrum Agreements.
Spectrum agreements must show both capacity and cost.

3.8

Tower Attachment Agreements.
Agreements governing the terms under which an applicant can attach and operate its
equipment.

57

3.9

Tower-Site/Property Agreements.
Agreements governing the terms of use of any tower sites where an applicant intends to use
or build its own facilities.

3.10 Video Carriage Agreements.
A contract that authorizes a network operator to [re]transmit content. These can be obtained
from content aggregators who offer entire channel lineups, or from individual broadcasters,
production companies, etc.
3.11 Wireless Spectrum Licenses (for backhaul transport).
3.12 Wireless Spectrum Licenses (end-user access).
The legal right to transmit on a specific frequency to CPE devices for the transport of
communication services.
3.13 Affiliate Agreement.
Agreement containing the terms and conditions of services offered by an affiliate.

L. Summary/Submit Tab
This tab lists each part of the application and identifies whether you have completed the item.
The system checks for consistent data across certain tabs and fields. Therefore, if you see any red
X’s, please complete that item or correct the data entered there. You can expand the
Construction, Financials, and Documents Tabs to view information on the subtabs. Once all red
X’s have been replaced with green checkmarks (), you are ready to do the following:
1. Contact your General Field Representative. Your GFR, with whom you have been in contact
throughout the application experience, will now conduct an additional completeness review. RD
Apply can only identify that an applicant has entered data in a required field or uploaded a
document under the required heading. The system cannot review the data or document for quality
of completeness. Additionally, applicants may be required to submit additional information
based on their circumstances that RD Apply may not request. Your GFR will help ensure that
you submit the most complete application possible.
2. Click Submit! Once RD Apply has recognized that all required headings have been addressed,
the Submit button will appear.

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**NOTES ON SECTION III**
Remember to SAVE your work in RD Apply. The Save button is at the bottom of
each Tab and Subtab.
Market surveys will only be accepted if they were conducted within six months
preceding the date of application submission to RUS.
All projected market penetration rates must be supported with evidence whether or
not they exceed 20 percent for any one offering in a given area.
RD Apply only confirms that the applicant has addressed the required components.
The system does not check for quality or applicant-based special requirements.
Applicants should consult with their assigned General Field Representative.
If audited statements are not available for the three most recent fiscal years, the
applicant must submit unaudited financial statements including explanations and
tax returns for those years.
You may only modify the “Year of Application” twice before the selected year is
locked in the system.

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Section IV-- Common Errors
Below are common errors that RUS reviewers encounter with loan applications. Please review the list
carefully and make sure that your loan application package is error-free.
The following documents are often incomplete or missing:

A. Adjusted Financial Forecast Depicting 50 Percent Reduction in Revenues (“Revenue
Sensitivity Analysis”) with Assumptions (“Assumptions to Sensitivity Analysis”)
What is it? An additional forecast with corresponding assumptions, in which the revenues are
reduced by 50 percent for each year of the pro forma financial forecast. If any year in the forecast
indicates a negative cash balance, the applicant must also submit documentation that satisfies the
additional cash requirement, which is described in the following section.
Who submits? Applicants that are start-up companies or have negative cash flow from
operations in the two fiscal years prior to the submission date of the application must submit this
documentation.
Where can I find more information? Review 7 CFR 1738.208(a)(2).

B. Ways to Satisfy the Additional Cash Requirement
What is it? An applicant must provide evidence of additional cash infusions if the Agency’s
financial analysis identifies a negative end of year cash balance at any point in the adjusted or
unadjusted financial forecast periods. An applicant can satisfy the additional cash requirement
through one of the following ways:





Cash Infusion. Applicant and its investors can submit financial documentation that they will
be able to deposit enough cash to cover the projected deficits for Future Years 1-2 at loan
closing and provide legal documentation that commits them to providing enough cash to
sustain a positive cash position on a quarterly basis for Future Years 3-5.
Other Debt. Applicant can submit documentation that it is incurring other debt to cover the
project cash deficits. This debt must take a subordinate lien position to the Agency debt and
must be at terms acceptable to the Agency.
Letter of Credit. Applicant can submit documentation issued by a bank that firmly commits
the bank to issue an irrevocable Letter of Credit (LOC) if the applicant is awarded a Farm Bill
loan. If the loan is awarded, the applicant must immediately submit the bank-issued LOC,
which must state the dollar amount and the terms and conditions, and identify both the
applicant and the Agency as payees. The LOC must be in place prior to loan closing and
remain in effect throughout the forecast period. All payment conditions and language must be
acceptable to the Agency.

Who submits? Applicants whose statements of cash flows show negative cash flow from
operations in the two fiscal years prior to application submission and/or any applicants,
including start-up companies, whose adjusted or unadjusted 5-year financial forecasts indicate
an inadequate cash balance at the end of any future year must submit documentation according
to one of the ways described above.

60

Where can I find more information? Review 7 CFR 1738.208.

C. Investor Proposal with Bank/Financial Statements or a State/Government Bond
with a Legal Opinion
What is it? Legal documents that demonstrate that the applicant will be able to satisfy the equity
requirement prior to loan closing.
Who submits? Applicants that do not demonstrate an equity position that is at least 10 percent of
the requested loan amount at the time of loan submission must submit these additional
documents. If an applicant submits more than one application, then the equity requirement will
be calculated based on the sum of the requested loan amounts, as if all applications will be
successful.
Where can I find more information? Review 7 CFR 1738.207 and this section of this Guide.

D. Current Market Survey
What is it? Survey(s) that the applicant conducts as evidence of support for their projected
penetration rates. These surveys must be conducted within the 6 months preceding the
submission date.
Who submits? Applicants that are projecting a penetration rate of 20 percent or more for any
service offering in any service area must submit this documentation.
Where can I find more information? Review 7 CFR 1738.209 and this section of this Guide.

E. Financial Assumptions
What is it? The financial assumptions, which are required for the 5-year financial forecast and
for the adjusted forecast in which 50 percent of revenues are reduced (if applicable), must
adequately address every category in the pro forma financial statements. This narrative(s)
should include a discussion of any historical trends or anomalies and their impact on the
assumptions for the 5-year forecast(s). The applicant should not only include any calculations or
percentage changes in the assumptions, but also discuss the reasons for choosing any multipliers
or percentage increases/decreases for the forecast.
Who submits? ALL applicants must submit this documentation. Only applicants that are also
submitting an adjusted financial forecast must submit adjusted financial assumptions.
Where can I find more information? Review 7 CFR 1738.211(b)(2)(i) and this section of this
Guide.

F. Three Years of Audited Historical Financial Data OR Three Years of Unaudited
Financial Data with Tax Returns
What is it? The audited financial statements for the three preceding fiscal years must be
accompanied by an auditor’s notes confirming that the statements have been audited and are not
compilations or reviews.

61

If the applicant cannot submit audited statements, the applicant must submit its unaudited
financial statements and tax returns for those years. Start-up companies must, at a minimum,
provide an opening balance sheet dated within 30 days of the final submission of all application
material.
Who submits? ALL applicants must submit this documentation. Please note that start-up
companies must, at a minimum, provide an opening balance sheet dated within 30 days of the
final submission of all application material, since they will not have three years of historical
financial data available.
Where can I find more information? Review 7 CFR 1738.211(a)(1) and this section of this
Guide.

G. Supporting Documentation of Existing Debt
What is it? If applicants indicate that they have existing debt, RUS requires submission of the
legal documents associated with the existing debt. On the Attachments Subtab, in the Additional
Attachments section, click on the Upload button. For Category, select “Financial.” For
Document Type, select “Copies of Mortgages, Notes and Other Security Agreements for Existing
Non-RUS Debt” or “Outstanding Federal Debt.” In the Description text box, enter a brief
summary on the file content (e.g., “Company A Promissory Note”).
Who submits? ALL applicants with existing RUS or non-RUS debt must submit this
documentation.
Where can I find more information? See this section of this Guide.

H. Funded and Unfunded Service Areas.
What is it? Applicant must include service areas and corresponding capital investment
workbooks for both funded and unfunded service areas in which network changes are being
made.
Who submits? ALL applicants must submit this documentation.
Where can I find more information? See this section of this Guide.

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Section V – Frequently Asked Questions
A. What is Broadband Service?
Broadband service is any technology identified by the Administrator as having the capacity to
transmit data at a specified rate to enable a subscriber to originate and receive high-quality voice,
data, graphics, and video. From time to time, the Agency will publish a Notice in the Federal
Register that updates the transmission speed that qualifies as broadband service. For more
information, see this section of this Guide or the most recent Notice for the Broadband Program.
B. What are the terms of these loans?
Loans are to be repaid with interest within a period that equals the expected economic life of the
facilities to be financed, as calculated by the Broadband Program. The expected composite
economic life is the depreciated life plus three years.
Principal payments on the loans are scheduled to begin two years from the date of the first
advance of loan funds. Borrowers may request an earlier their principal payment start date. For
more information, review 7 CFR 1738.153 and this section of this Guide
C. Does Broadband Program provide loan funds for acquisitions?
Yes. RUS will finance the acquisition by a borrower of another system, lines, or facilities only
when the acquisition is necessary and incidental to furnishing or improving broadband service.
For more information, review 7 CFR 1738.51 and this section of this Guide
D. What is the interest rate on these loans?
The RUS Cost-of-Money Loans will bear interest at a rate equal to the current cost of money to
the Federal Government for loans of a similar maturity. For more information, review 7 CFR
1738.152 and this section of this Guide
E. Do we have to use all of the loan funds?
No. Any funds not needed may be rescinded and a rescission can be requested at any time by the
borrower.
F. Does the Broadband Program offer lines of credit?
No.
G. Does RUS wire 100 percent of the loan amount to the Borrower at loan closing?
No. Loan funds are requested as needed based on invoices and/or executed standard RUS
contract forms as discussed in Bulletin 1738-2.
H. Under what circumstances would I need to satisfy the additional cash requirement?
An applicant would need to attach documentation that satisfies the additional cash requirement by
loan closing if either of the following circumstances applies:

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1. The applicant’s equity position is equal to less than 10 percent of the requested loan amount. If
the applicant has insufficient equity, only an attached Investor Proposal and Investor bank or
financial statements or a general obligation bond with a legal opinion will satisfy the cash
requirement. For more on the Equity Requirement, see 7 CFR 1738.207 or this section of the
Guide.
2. The applicant is unable to demonstrate a positive cash position for all five years indicated on the
financial forecast. For more on the Additional Cash Requirement, see 7 CFR 1738.208.
•

If the statement of cash flows shows negative cash flow from operations in either of the two
fiscal years prior to application submission, then the applicant is required to submit an
adjusted financial forecast with new assumptions, depicting a 50 percent reduction in
revenues. If any year in either the adjusted or unadjusted financial forecast shows a
negative ending cash balance, then the applicant must attach an irrevocable and
unconditional Letter of Credit from an acceptable financial institution.

•

If a company is a start-up, then the applicant must also submit an adjusted financial forecast
with new assumptions, depicting a 50 percent reduction in revenues. As in the scenario
above, if any year in either the adjusted or unadjusted financial forecast shows a negative
ending cash balance, then the applicant must attach an irrevocable and unconditional Letter
of Credit from an acceptable financial institution.

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Appendix A - Templates and Samples
A. Sample Legal Opinion
[Attorney Letterhead]
Date
Administrator
Rural Utilities Service
United States Department of Agriculture
Stop 1500
Washington, D.C. 20250-1500 Subject: (Company Name)
Ladies and Gentlemen:
We are counsel to
(the “Company”) in connection with the Company’s
application (Application) for a loan or loan guarantee from the Rural Utilities Service (RUS) to provide
telephone service. We have examined or caused to be examined by competent and trustworthy persons
such corporate records and files and such other records, indexes, and files as we have deemed necessary
to permit us to render the opinions expressed herein.
We are of the opinion that:

1. The Company is a (corporation, cooperative, limited liability company, etc.) duly formed, validly
existing and in good standing under the laws of the State of

2. The Company operates in the State(s) of

.
and is duly licensed
, authorized to do business

and qualified and in good standing as a foreign
and own property in such State(s).

3. The Company has full legal right, power and authority to own its property and carry on its business as
now conducted.

4. The execution, delivery and performance by the Company of the Application and the consummation of
the transactions contemplated thereby are within the powers of the Company.

5. The Application has been duly executed by the Company.
6. The Company owns the real property described on Schedule A attached hereto (in both a paper
format and an electronic copy on appropriate media) and such property is in the counties of
in the State(s) of
.

7. The Company has the power to grant a security interest in the property described in paragraph 6 to the
RUS as collateral for the loan described in the Application.

8. Schedule A contains complete and accurate descriptions of all the real property owned or leased by
the Company, excluding easements and rights-of-way, which are sufficient, in form and substance,
for inclusion in the granting clause of a mortgage creating a lien on such property.

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9. The Company owns telecommunications facilities, including central office facilities, lines, and other
outside plant, in the counties of
State(s) of

in the
.

10. For purposes of Article 9 of the Uniform Commercial Code in the State
of

, the Company is a “transmitting utility” (or is not a “transmitting utility.”)

11. The execution, delivery and performance by the Company of the loan documents will not require the
consent, permission or authorization of any governmental authority.
-OR11. The execution, delivery and performance by the Company of the loan documents will require the
consent, permission or authorization of
.

We have also verified the following information:

1. The Company’s organizational number is

.

2. The exact true and correct legal name of the Company, as stated in its organization documents, is
.

3. The Company’s corporate debt limit is

.

4. The Company’s taxpayer identification number is
5. The Company’s D-U-N-S number is

.
.

6. The pending claims or litigation against the Company are described in the attached Schedule B.
-OR-

6. There are no pending claims or litigation against the Company.
7. The Company has no subsidiaries.
-OR-

7. The Company’s subsidiaries are listed on the attached Schedule C.
8. The titles of the officials of the Company with the proper authority to execute all loan documents on
behalf of the Company, and attest to the execution where required, are __________________ .
Sincerely,

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B. Sample Organizational Chart—Applicant Operations

67

C. Sample Organizational Chart—Parent/Subsidiary Operations

68

D. Equity – Investor Proposal
If the Balance Sheet indicates that the applicant does NOT have a minimum equity position
equal to 10 percent of the requested loan amount, the applicant must submit an investor
proposal indicating how the equity requirement will be met before loan closing.

Name of Investor: ___________________________
Point of Contact: ____________________________
Address: __________________________________
Phone: ____________________________________
Email: ____________________________________

Amount of Commitment: _____________________
Date when funds are available: _________________

Attach:
a.

Investor letter of commitment

b.

Investor’s bank or financial statement

E. Equity – State/Local Government Bond
A. For State and local government applicants intending to satisfy the equity requirement
with a general obligation bond, submit an opinion from its legal counsel that the applicant
has the authority to issue a general obligation bond in an amount sufficient to meet the
minimum equity requirement. If the equity requirement is satisfied with a general
obligation bond, the general obligation bond must be pari passu with the Broadband
Loan.

Amount of General Obligation Bond: ___________
Date when funds are available: _________________
Attach:
Legal counsel opinion

69

F. Network Diagram Examples

Example: EPON / GPON
Fiber Point-to-Multipoint Access Architecture
PON Service Area [Name Z]
Internet
Provider

PON Service Area [Name Z]

Optical
Line
Terminal
(Name)

PON Service Area [Name X]
Optical Network
Unit 1

OLT Details
Name
Interconnect Port Speed
Interconnect Port Payload

Shared
Access
Fiber

Facility Name
Location (Addr, Lat / Long)
# OLT’s into Interconnect

PON Service Area Name

Number of
OLT Access
Ports

OLT Access
Port Speed
(Mbps)

Optical Splitting
Network

Interconnect Type
Circuit Name
Provider (if leased)
Payload/Port speeds

o- r
t-t
in ibe
Po nt F
i
Po

1…N
ONU’s

Optical Network
Unit N

OLT Access
Port Payload
(Mbps)

70

Optical Split Cabinet
Location
(Lat / Long)

Optical Splitting
Ratio

Longest PTP
Path (Kft)

Number of
Premises per
ONU

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