How much funding is available?

The table below summarizes funding made available for each round of the program. The USDA has previously awarded additional funding beyond what was originally stated as available Round five of the ReConnect Program will make at least $700 million in funding available, with awards likely to be made in the second half of 2024.

What are the program requirements and qualifying criteria?

ReConnect Program requirements and qualifying criteria have changed substantially for Round five. The definition of an unserved area changed from lacking access to 100/20 Megabits per second (Mbps) broadband — the threshold in Round four — to lacking access to 25/three Mbps broadband in Round five. To be eligible in Round 5, 90% of the proposed funded service area must lack access to fixed, terrestrial broadband service of 25/three Mbps. Broadband-speed levels made available through program funds remained the same as Round 4, requiring provision of at least 100/100 Mbps to all premises in a proposed funded service area at the same time.

How may ReConnect funds be used?

ReConnect Round five funds must be used for deploying broadband facilities capable of providing at least 100/100 Mbps broadband service. Funds may be used for qualifying preapplication costs associated with developing the application, such as: Engineering Financial forecasting Project management Environmental review All ReConnect Program funds must be drawn within five years of the date that funds are made available to the applicant.

What can applicants learn from previous rounds of the ReConnect program?

Among key lessons from previous rounds of the ReConnect Program was the significant demand for reliable high-speed internet in rural area, particularly the pressing need for continued investment in broadband infrastructure. The importance of collaboration between various stakeholders, including internet service providers, local governments, and community organizations, was also underscored. Successful projects often involved partnerships that combined resources and expertise to maximize the impact of funding. The importance of leveraging innovative technologies, such as fiber optics and licensed fixed wireless, to efficiently deploy broadband networks in rural regions was emphasized. Streamlined application processes and clear eligibility criteria to ensure that funds are allocated effectively and efficiently are also important.

How should applicants prepare for round five?

Data from previous rounds of the ReConnect Program can help applicants prepare for future rounds of funding. There are a few strategies applicants can implement to help boost their application, further detailed below.

What are the considerations of grants versus loans?

Applicants can consider how competitive their proposal might be within a grant program to determine if a grant or a loan is a better fit for their project.

Are there taxable income differences between grants and loans?

Grant funds are generally considered taxable, but taxability timing would depend on how records have been kept. If a company receives a loan instead of a grant, the amount received in loan proceeds wouldn’t be taxable. In both scenarios, the assets are recorded at their gross cost and allowed to be depreciated. The main consideration between grant or a loan is the overall cash flow impact, where loan proceeds will have to be paid back. A company that receives a $1 million loan must pay back that amount — plus any interest. If the amounts are received as grants, then a company will have to pay tax of approximately $210,000 to $300,000. While proceeds aren’t taxable in a loan scenario, the overall cash payout will be more than if the funds are received as a grant.

Article

Applying for rural broadband funding: Tips for ReConnect program round five

April 1, 2024 · Authored by Chad Duval, Camille Christiansen, Jordan Frederickson, Jennifer Hickerson

The U.S. Department of Agriculture’s (USDA) Rural Utilities Service (RUS) administers the ReConnect Loan and Grant Program, which is a series of federally funded loans and grants for deploying broadband networks in unserved and underserved rural areas of the United States and territories.

This program has received significant, growing interest and could play a vital role in funding broadband deployment in rural areas for years to come.

Get information and answers to the following questions and topics:

History of the USDA ReConnect program
How much funding is available?
What are the program requirements and qualifying criteria?
How may ReConnect funds be used?
What can applicants learn from previous rounds of the ReConnect program?
How should applicants prepare for round five?
What are the considerations of grants versus loans?
Are there taxable income differences between grants and loans?
Other important considerations for the ReConnect program

History of the USDA ReConnect program

The USDA's ReConnect Program was launched in December 2018, in response to the pressing need for improved rural broadband infrastructure in the United States. With an initial budget of $600 million, this program aimed to address the digital divide by providing funds for the expansion of high-speed internet access to underserved rural communities.

Chad Duval

Principal

Camille Christiansen

Principal

Related sections

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The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

Applying for rural broadband funding: Tips for ReConnect program round five

History of the USDA ReConnect program

Chad Duval

Camille Christiansen

Related sections

FCC releases enhanced a-CAM order

ReConnect program round five

How much funding is available?

ReConnect program funding

What are the program requirements and qualifying criteria?

ReConnect program requirements and qualifying criteria

Funding categories

Scoring criteria

Service area map

How may ReConnect funds be used?

What can applicants learn from previous rounds of the ReConnect program?

How should applicants prepare for round five?

Focus on high-scoring criteria

Example

Prepare early

Determine eligibility

Other factors to consider

What are the considerations of grants versus loans?

Example

Are there taxable income differences between grants and loans?

Other important considerations for the ReConnect program

Accounting for funds

Regulated projects

Nonregulated projects

Grant fund tax implications

Reductions to the cost of plant

Deferred revenue

Bonus depreciation

Have questions? Baker Tilly can help.