Notwithstanding its pilot program for energy-efficient manufactured homes, the USDA Rural Development does not have designated energy-efficient mortgages (EEMs) as with the FHA or the VA. It does have several energy programs supporting enhancements and investments toward a cleaner and more cost-effective energy consumption in rural America. One such program is the Rural Energy Savings Program (RESP).
Find out the benefits of the Rural Energy Savings Program, what it does and how it works for rural homes. Get in touch with a USDA-approved lender today.
Rural Energy Savings Program
Just this May, the USDA awarded its first zero-interest loans totaling $14 million under the Rural Energy Savings Program. The program supports initiatives that enable rural families and small businesses to save on energy costs.
Retail electric utilities serving rural areas or those planning to provide such services, electric cooperatives, public utility districts, as well as current and former borrowers of Rural Utilities Service ( RUS), and entities owned or controlled by such RUS borrowers are eligible to apply for RESP loans/grants.
RUS programs center on financing projects to build and improve infrastructure for water and wastewater, electric, and telecommunications in rural communities.
To be clear, RESP loans are not for individual consumers. They are for entities as noted above who in turn will relend these loans to finance energy efficiency measures for families and businesses.
Loans under RESP have maximum repayment terms of 20 years with 0% interest rate. Other loans have up to 10 years with rates up to 3% if to be relent to other qualified entities. Then the program also notes that up to 4% of the loan amount may go toward startup costs.
If it’s a measure, project or initiative that implements energy efficiency thus reducing energy costs for rural families and businesses then it could be eligible for a RESP funding.
Applicants can check with the USDA whether their area is an eligible rural area. Basically, an area other than a town, city or an incorporated area with 20,000 inhabitants or fewer is considered rural by the USDA.
Program in Action
Take these loans awarded to two rural electric providers last May as examples.
- South Carolina-based KW Savings Co. has received $13 million that will fund Help My House, an initiative that reduces consumers’ energy bills by investing in behind-the-meter technologies and other building enhancements. The loan proceeds will be allocated among seven rural electric cooperatives in South Carolina.
- Northeast Ohio Public Energy Council (NOPEC) has received $1 million for its Savings Through Efficiency Program (STEP), a project that aims to reduce small businesses’ energy bills by 15%. NOPEC will relend these in the form of energy improvement loans to small businesses in 206 rural communities in northeast Ohio.
As of fiscal year (FY) 2016, $52 million is available under the Rural Energy Savings Program. The processing of applications, including the availability of funds, is on a first-come, first-served basis.
Energy Savings in Rural America
The RESP aims for a more sustainable and cleaner domestic energy sector, in this case, for rural communities, in furtherance of the previous administration’s Climate Action Plan.
Utility costs are an inevitable homeowner’s expense. But measures supported by the Rural Energy Savings Program demonstrate that rural homes can be cozy and warm at a lesser cost.