Wednesday, June 25, 2014

Nearly half of USDA rural broadband loans since 2003 were rescinded or defaulted upon

A report by the U.S. Government Accountability Office found that more than two-fifths of U.S. Department of Agriculture loans designed to improve broadband service in rural areas have been rescinded or defaulted upon, Anne Kim reports for Roll Call.

Of the 100 Rural Broadband Access Loan and Loan Guarantee Program loans approved since 2003 by the Rural Utility Service, 57 have been paid back or are being paid back, Kim writes. But 25 loans were cancelled before being issued and 18 defaulted. Officials said the main reason for loan defaults is because the “provider cannot produce the necessary revenue to support the broadband network and debt payments, often due to not attracting enough subscribers."

"And the report states that RUS officials said there are varying reasons for rescission of loans, 'including situations where the provider cannot meet equity requirements or the provider experiences significant financial problems before the principal has been loaned. Although providers sometimes voluntarily request a full rescission, that situation is less common.'” (Read more)

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