RCAP Revolving Loan Fund

The RCAP Water and Wastewater Revolving Loan Fund (RLF) was established with the  help of the U.S. Dept. of Agriculture’s Rural Utility Service (USDA RUS) to provide low-interest loans to eligible water and wastewater systems.

The funds available through RCAP’s Revolving Loan Fund can be used for: 

• pre-development expenses necessary to secure permanent financing for major capital improvements, or
• funding for small capital improvement projects to preserve, improve, or enhance the services of the system. Such improvement projects may include funding for water and/or wastewater treatment-plant improvements and upgrades, sewer-line extensions to existing unsewered properties, water-line extensions to unserved properties, water storage facility improvements, equipment purchases and much more.

• Public entities, including municipalities, counties, authorities, cooperatives, special-purpose districts, other political subdivisions of a state, territory or commonwealth, and other rural communities serving populations up to 10,000; or
• An organization operated on a not-for-profit basis, such as an association, cooperative, or private corporation. The organization must be an association controlled by a local public body or bodies, or have a broadly based ownership by or membership of people of the local community; or
• Native American Tribes and corporations not operated for profit

Eligible facilities financed by the RLF may be located in non-rural areas. However, loan funds may be used to finance only that portion of the facility serving rural areas, regardless of facility location.

What specific loan purposes are eligible for consideration?

1. Borrowers' predevelopment expenses that are necessary and essential to secure permanent financing for major water and wastewater capital improvements (projects that significantly exceed $100,000 in total cost) within a rural community. Such pre-development expenses may include but not necessarily be limited to:

• Payment for the reasonable expenses of engineering and legal services.
• The cost of acquiring interest in land and property rights, including water rights, leases, rights of way, easements, and site acquisition that is necessary for the construction of a major water and wastewater capital improvement project.
• Test wells and soil borings.
• Smoke testing of existing wastewater collection lines.
• Payment for the reasonable costs of completing environmental assessments, surveys, and studies.
• Other types of expenses that the applicant for an RLF loan can demonstrate are essential for securing financing for its major capital improvement project.

2. Short-term, small capital improvement projects that will serve to preserve, improve, or enhance water or wastewater disposal services of a water or wastewater system, and are not part of the regular operations and maintenance activities of a utility. Such small capital improvements may include, but not necessarily be limited to:

• Small-scale line-extension projects to acquire new customers in rural areas.
• Water or sewer line relocation projects.
• Rehabilitation costs of water-storage facilities and appurtenances.
• Rehabilitation costs of wastewater treatment and disposal facilities and appurtenances.
• Installation of new equipment to provide for enhanced operation of services in terms of water quantity and quality, and improved wastewater treatment and disposal (e.g. pumps, lift stations, aerators, chemical feed and disinfection systems, filter media, electrical control systems, flow meters, back-up generators).
• Replacement costs of existing critical system components and equipment, which are no longer functional and are adversely affecting the quality of service provided.
• Drilling of new well(s) or construction costs associated with connecting with another water supplier or system.
• Payment of reasonable costs of engineering and legal services necessary to complete small-scale improvement projects such as those mentioned above.

• Repayment of existing debt
• Ongoing operation and maintenance costs

What are the funding priorities of the RLF?

1. Loans that are needed to alleviate an emergency situation that may include a current or potential disruption of water supply or wastewater disposal service; correct unanticipated diminution or deterioration of a water supply; or correct inadequacies of a wastewater disposal system that create a danger to public health and sanitation.
2. Loans that are required to correct deficiencies that have led to non-compliance with state or federal health and sanitation laws and regulations, such as violations of the Federal Safe Drinking Water Act, and/or Clean Water Act.
3. Loans that will enlarge, extend, or otherwise modify existing facilities to provide service to additional rural areas, add new customers to existing utilities, or provide for increased system revenues.
4. Loans that will result in the merging of ownership, management, and operation of smaller facilities providing for more efficient management and economical service.
5. Loans that will serve to improve facilities in economically disadvantaged communities, particularly those that are identified as needing special assistance by Rural Development/RUS in order to preserve existing water and wastewater services for customers at an affordable and reasonable cost.

How does a community apply for an RCAP loan? 

• Complete and submit the application (currently you must submit it in hard copy only). Word version [2] | PDF version [3]
• Eligible recipients can submit an application at any time to the RCAP-RLF Program at

• Additional information can be obtained by calling the Loan Department at 800/709-4934.