The Cup Loan Program or Community Use of Public Facilities (CUPF) Loan Program, is a popular choice when it comes to getting financial assistance to public facilities in the United States’ rural areas. The eligible borrower can get easy funds for the purpose of construction, renovation, or improvement of their public facility.
If you are interested in applying for this loan program, then you must be aware of the requirements of the Cup Loan Program. It is very necessary for any borrower to fulfill all the requirements to qualify for this program. Therefore, with the help of this article, we are going to provide detailed instructions on Cup Loan Requirements. So, let’s get started….
Cup Loan Requirements
Like any other loan package, the CUP Loan program also requires a few obligations that need to be fulfilled if you want to qualify for the loan. Here are the requirements and criteria for a CUP Loan to qualify for this program:
Rural Area with a population of 20,000
The first and most important criteria to qualify for this loan program is that the project should be in a rural area that has a population of 20,000. It could be less than 20,000, but not more than that. In simple words, your project must serve an area that is specifically in the rural area and not part of an urbanized area, having a population of only or less than 20,000.
You can also go to the official website of USDA Rural Development to check the eligibility of your project location. Just go to https://eligibility.sc.egov.usda.gov/ and you will land on the homepage of their official website, please click on the “Property Eligibility” option to check if your project location qualifies for the CUP Loan as per USDA Rural Development guidelines.
Average Household Income
Other than your project location, there is another major criterion that needs to be fulfilled to qualify for the CUP Loan program and that is your Average Household Income. The median household income of the borrower must be less than 80% of the non-metropolitan median income of the state.
In other words, it means that your project should be planned in such a way that it benefits an area that has a low or moderate level of income as compared to the rest of the state. The HHS also known as Health and Human Services is the U.S. Department that is responsible for defining the poverty line in the country. It may vary depending on the state or the size of the family.
To check the current poverty guidelines, go to the official website of the U.S. Department of Health and Human Services. You can also directly click on this link here– https://aspe.hhs.gov/poverty-guidelines. Also, to find the current income limits set by the USDA Rural Development go to https://www.rd.usda.gov/
Once your project location and income qualify, you must move on to the third requirement of the CUP Loan program which is the financial ability of the borrower to pay back the loan. You also need to demonstrate the financial ability and sustainability to support your claim for the loan program. You must show them that you have enough financial stability or cash flow to repay the loan on time so that you can operate as well as maintain the facility throughout its functional life.
In order to prove your financial feasibility, you will have to provide a few reports such as your project costs, business plan, sources of funds, cash flow statement, and income statement (at least five years) of the operations of your public facility, including a few more. Your Debt Service Coverage Ratio (DSCR) should be at least 1.25, this means that you have 25 percent more income as compared to your debt payments.
Comply with Laws and Regulations
If your project does not comply with the rules and regulations set by federal, state, and local government then you will not be able to qualify for the CUP Loan Program. Therefore, you must make sure that your project is fulfilling all federal, state, and local laws and regulations. In order to qualify for this requirement, you must obtain all required approvals, permits, and licenses, along with essential certificates for your project. When it comes to your project design, construction, operation, and maintenance, you must also follow the required standards and guidelines to get the CUP Loan, these include:
- You must follow the guidelines set by the National Environmental Policy Act (NEPA), for this you will need an environmental review to demonstrate the potential impacts of your project on the environment and human health.
- You should also comply with the laws set by the Americans with Disabilities Act (ADA), which expects your facility to be available to people having disabilities.
- To demonstrate the impact of your project impacts on historic properties and cultural resources, you need to follow the rules and regulations set by the National Historic Preservation Act (NHPA).
- You should also comply with the laws set by the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA) so that you can provide rightful and impartial treatment to the public.
Frequently Asked Questions (FAQs)
Question 1: What public facilities are funded by the Cup Loan Program?
Answer: The Cup Loan Program offers funds to several public facilities, such as educational institutions, libraries, healthcare facilities, police stations, fire stations, community centers, parks, and more.
Question 2: Is there a limit to borrowing from the Cup Loan Program?
Answer: There is no maximum limit to borrow from the Cup Loan Program, however, there is a minimum loan amount which is $10,000. Other than that, you can borrow any amount from the Cup Loan Program depending on the cost of your project and your financial capability to pay back the loan.
Question 3: What are the interest rates and terms of the Cup Loan Program?
Answer: The interest rates of the Cup Loan Program vary from 4.25% to 6.5%, and the terms range from 10 to 40 years. The interest rates and terms also depend on a few factors such as median household income and the energy productivity of your project.
This was all about Cup Loan Requirements; We hope this will help you if you are considering applying for this loan program. The Cup Loan program not only improves the quality of life but the economic growth in rural areas across the country. It is a quick and straightforward process as compared to the traditional methods of getting a loan. Once you fulfill all the Cup Loan Requirements, please visit the official site or your local USDA Rural Development office to apply for the loan.