On December 11, 2025, the U.S. Department of Agriculture's Rural Business-Cooperative Service, Rural Housing Service, and Rural Utilities Service published technical amendments to the OneRD Guaranteed Loan Regulation in the Federal Register. These corrections address issues identified after the implementation of a final rule issued on September 30, 2024, which aimed to strengthen oversight and management of guaranteed loan programs for community facilities, water and waste disposal, business and industry, and rural energy initiatives. Effective immediately upon publication, the amendments revise definitions and eligibility criteria to prevent inconsistencies in program administration. This development underscores the agencies' commitment to precise regulatory frameworks that support rural economic development while maintaining fiscal integrity.
Background on the OneRD Program
The OneRD Guaranteed Loan Program, codified under 7 CFR Part 5001, consolidates guaranteed loan initiatives across USDA Rural Development agencies. Launched to streamline access to financing for rural projects, it encompasses the Business and Industry (B&I) Guaranteed Loan Program, Community Facilities Guaranteed Loan Program, Water and Waste Disposal Guaranteed Loan Program, and Rural Energy for America Program (REAP). The original final rule from September 30, 2024, introduced revisions to enhance portfolio management amid growing loan volumes. However, post-implementation reviews revealed errors, including an inaccurate definition and inadvertently removed provisions, prompting these technical amendments. As stated in the Federal Register notice, 'the Agency found that corrections were necessary due to an incorrect definition of affiliate, and a section and sentence that were removed erroneously.' This context highlights the program's role in fostering rural infrastructure and business growth, with over $10 billion in guaranteed loans issued in recent years according to USDA data.
Key Amendments to Definitions
The amendments primarily target Sec. 5001.3, revising the definition of 'affiliate' and reinstating the definition of 'commercially available.' The updated 'affiliate' definition specifies it as 'a person or entity that is closely attached or connected to another person or entity,' with program eligibility guided by principles in 13 CFR 121.301(f) or any successor regulation. This clarification aims to standardize affiliation assessments, which are critical for determining borrower eligibility and preventing undue concentrations of risk in loan guarantees. Previously, the definition may have led to ambiguous interpretations, potentially affecting small business classifications under USDA programs.
Additionally, the definition of 'commercially available' was restored after its erroneous removal. It now describes a system that either has a proven operating history, established installation practices, and available support services, or is certified by a recognized industry organization. This term is particularly relevant for REAP projects, ensuring that funded renewable energy systems meet reliability standards. The reinstatement addresses a gap that could have complicated evaluations of technology eligibility, drawing on precedents from prior USDA energy efficiency guidelines.
Revisions to Eligible Projects
Significant changes appear in Sec. 5001.105(b)(7), which governs eligible B&I projects involving agricultural production. The revised paragraph limits such production to cases not eligible for Farm Service Agency assistance and integrated with processing operations. It caps the agricultural portion at 50 percent of the total loan or $5 million, whichever is less, with exemptions for activities like commercial nurseries, forestry, mushroom growing, hydroponics, animal boarding, commercial fishing, and aquaculture. These provisions ensure that guaranteed loans prioritize value-added processing while accommodating specific rural enterprises. The amendment restores language that aligns with historical USDA policies, such as those in the Consolidated Farm and Rural Development Act (7 U.S.C. 1926(a)), to maintain program focus on economic diversification.
Sec. 5001.106's introductory paragraph was also revised for REAP Renewable Energy System (RES) projects. It now explicitly requires projects to meet criteria in Sec. 5001.102(a) through (c), borrower eligibility under Sec. 5001.126, and, if involving taxable bonds, provisions in Sec. 5001.105(b)(19). This update reinforces compliance with broader program standards, including environmental and financial requirements, to mitigate risks in energy lending.
Implications and Perspectives
These amendments have short-term implications for ongoing loan applications, requiring lenders and borrowers to align with the corrected definitions and eligibility rules. For instance, the clarified 'affiliate' definition could influence how businesses structure ownership to qualify, potentially reducing disputes in application reviews. In the long term, they may enhance program efficiency by minimizing administrative errors, supporting USDA's goal of robust oversight as loan portfolios expand. Stakeholders, including rural lenders, view these changes as procedural refinements that bolster confidence in the programs without altering core objectives.
Different perspectives emerge among key players. Rural advocacy groups, such as the National Rural Lenders Association, emphasize the need for clarity to facilitate access to capital, arguing that precise definitions prevent delays in funding critical projects. Conversely, fiscal watchdogs highlight the importance of strict affiliation rules to avoid subsidizing large entities, aligning with congressional intent in rural development legislation. Legal experts note parallels to Small Business Administration precedents in 13 CFR 121, suggesting these amendments reduce litigation risks by harmonizing federal standards. No single viewpoint dominates, but the consensus leans toward improved regulatory precision.
In summary, these technical amendments refine the OneRD program's framework, ensuring accurate implementation of guaranteed loan policies. Potential next steps include monitoring compliance through USDA audits and possible future rulemaking to address emerging rural financing needs. Ongoing debates may focus on balancing program accessibility with risk management, particularly as rural economies evolve amid climate and infrastructure challenges. (Word count: 852)
