Heather Mills, Lead, CTC Funding Strategies Team

The USDA’s Rural Utilities Service last week released the final deadline dates for the upcoming ReConnect grant and loan funding cycles, in which $600 million will be awarded for rural broadband projects.[1] While the final application is not yet available, the new final deadline dates and the program rules (which were released late in December just before the government shutdown) give us a solid indication of how to prepare a grant or loan application and maximize scoring.

For those seeking the highest percentage of grant funding possible, applications for grants of up to 75 percent of eligible project costs will be due on May 31, 2019. For 50 percent grants with a 50 percent loan or other form of match, applications will be due June 21, 2019. And for 100 percent loans, applications will be due July 12, 2019.

The ReConnect program represents the most significant congressional appropriation of broadband funding since the Recovery Act in 2009. Rural communities should consider moving quickly to develop partnerships and strategies for preparing the most competitive possible funding applications.

We emphasize the need for partnerships because RUS has made clear that strong state and local support will be necessary for all applications, including those of the private sector—and that inexperienced or start-up entities are unlikely to be funded. If you are a public entity without extensive experience as an internet service provider (ISP), we recommend that you partner with an experienced public or private ISP to compete for these funds. And any experienced ISP, whether public or private, will require the strong collaboration and support of your local (and state) government to present a compelling case for funding.

As you map out the next three to four months for application preparation, the following are some of the steps we believe are critical to preparing a competitive ReConnect application:

1. 1. Develop a grant strategy. Your goal is to maximize your application’s scoring given USDA’s stated criteria.[2] Every element of your application should speak to those criteria. Start by developing a comprehensive strategy that aligns your approach (with respect to technology, partnerships, business plan, and service levels) with what USDA is seeking to fund.
   2. Gather the many types of information and support materials required. You’ll need a range of data and numbers—such as population statistics—to establish eligibility under the program rules and to provide content for the grant narrative. You’ll also need a wide range of supporting materials, ranging from letters from your governor to documents that demonstrate the support of the local government, prospective customers, and the business community. Our recommendation here is to go over and above; additional letters (such as from your congressional delegation, the Chamber of Commerce, and so on) can only help to demonstrate the breadth of support in the community for your initiative.
   3. Define and refine your proposed funded service area (PFSA). Define the PFSA with a count of the number of rural premises to be connected, including homes, farms, schools, libraries, healthcare facilities, and businesses (which are important because they confer additional points in the application). Then, document the engineering methodology used to demonstrate that the PFSA lacks service and is therefore eligible for funding. You’ll also need to verify that no Connect America Fund II award census blocks are included in the PFSA and that your project area is not located in what is known as a Protected Broadband Borrower Service Area (i.e., the service area of a borrower that has an RUS broadband loan).
   4. Develop and review your project’s engineering plans and cost estimates. The critical engineering task after you have defined the PFSA is to develop a conceptual design for your network—including project plan, buildout timeline, design, and diagram—and cost estimates for materials and construction. The cost estimates will become a critical input to your business plan and pro forma financials and will need to be certified by a licensed Professional Engineer under the RUS rules.
   5. Develop a financial pro forma and business plan. The pro forma is perhaps the most important part of your application—it should be prepared in the format provided by USDA (which will hopefully be available soon) and should include subscriber projections and descriptions of service and pricing. To support the pro forma revenue projections, you’ll need very compelling data, ideally in the form of statistically valid market research, as well as empirical data about your or your partner’s historical success in achieving comparable market share. This is possibly the most critical item in the application, given USDA’s interest in funding projects it considers sustainable and low-risk.
   6. Develop a market narrative, including discussion and data regarding service in the region. You’ll need to demonstrate that your services will be better and no more expensive than other services offered nearby—and present a narrative discussion of why the proposed services will be both marketable and affordable.
   7. Collect the appropriate forms from farms and businesses to demonstrate market interest and maximize points for that application item.[3] This is something that can be done through one-on-one conversations or by mailing the forms (with a cover letter and a stamped return envelope) to all the farms and businesses in the PFSA.
   8. Set up accounts and then navigate Sam.gov and Grants.gov, to be ready to input the grant application into the online grants system. (You may already have accounts in place, but we recommend that you check to be sure the accounts are current and that someone on your team is comfortable navigating the portals.)
   9. Commission the required legal opinion and reviews.
   10. Finally, but just as importantly, write compelling grant and budget narratives. These and other narrative elements of the application are an opportunity to truly make your case for funding.

Please don’t hesitate to contact me if you have questions. CTC’s grant-writing team and I are ready and able to assist with any of these and other tasks.

[1] “Program Overview,” ReConnect Loan and Grant Program, USDA, https://www.usda.gov/reconnect/program-overview. For deadlines and other details, see the Federal Register, https://www.federalregister.gov/documents/2019/02/25/2019-03163/broadband-pilot-program-reconnect-program

[2] “Evaluation Criteria,” ReConnect Loan and Grant Program, USDA, https://www.usda.gov/reconnect/evaluation-criteria

[3] “Broadband Pre-subscription Form for Farms and Other Businesses,” ReConnect Loan and Grant Program, USDA, https://www.rd.usda.gov/files/FarmorBusiness_Pre-subscription_Form_Final.pdf