Title 7, AgricultureRelease 119-110
§904 Loans for Electrical Plants and Transmission Lines
Title 7 › CHAPTER 31 — RURAL ELECTRIFICATION AND TELEPHONE SERVICE › SUBCHAPTER I — RURAL ELECTRIFICATION › § 904
Summary
The Secretary may make loans to people, companies, state and local governments, municipal utilities, utility districts, and cooperative or nonprofit utility groups organized under state law. The loans pay for building and running power plants and electric transmission and distribution systems to serve people in rural areas. They can also fund demand-side management, energy efficiency, conservation, and on-grid or off-grid renewable energy. The Secretary can use funds under section 903 to help cooperatives and municipalities pay or refinance long-term debts to the Tennessee Valley Authority for rural transmission and distribution. Preference is given to projects that meet the chapter’s rules. The Secretary decides the loan rules, how the money is used, and what security is needed. Some loans can be repaid from the borrower’s income. A loan for building or enlarging a generating plant needs prior consent from the state authority. Direct hardship loans follow the rules in section 935(c)(1). Other direct loans charge interest equal to the Government’s current cost of money for similar loans plus one-eighth of one percent. Loans are made only if the Secretary finds the security is adequate and repayment is likely on time.
Full Legal Text
Title 7, §904
Agriculture, Source: USLM XML via OLRC
(a)In general
The Secretary is authorized and empowered, from the sums hereinbefore authorized, to make loans for rural electrification to persons, corporations, States, Territories, and subdivisions and agencies thereof, municipalities, peoples’ utility districts and cooperative, nonprofit, or limited-dividend associations, organized under the laws of any State or Territory of the United States, for the purpose of financing the construction and operation of generating plants, electric transmission and distribution lines or systems for the furnishing and improving of electric service to persons in rural areas, including by assisting electric borrowers to implement demand side management, energy efficiency and conservation programs, and on-grid and off-grid renewable energy systems, and loans, from funds available under section 903 of this title, to cooperative associations and municipalities for the purpose of enabling said cooperative associations, and municipalities to the extent that such indebtedness was incurred with respect to electric transmission and distribution lines or systems or portions thereof serving persons in rural areas, to discharge or refinance long-term debts owed by them to the Tennessee Valley Authority on account of loans made or credit extended under the terms of the Tennessee Valley Authority Act of 1933, as amended [16 U.S.C. 831 et seq.]: Provided, That the Secretary, in making such loans, shall give preference to States, Territories, and subdivisions and agencies thereof, municipalities, peoples’ utility districts, and cooperative, nonprofit, or limited-dividend associations, the projects of which comply with the requirements of this chapter.
(b)Terms and conditions
Such loans shall be on such terms and conditions relating to the expenditure of the moneys loaned and the security therefor as the Secretary shall determine and may be made payable in whole or in part out of the income, except that no loan for the construction, operation, or enlargement of any generating plant shall be made unless the consent of the State authority having jurisdiction in the premises is first obtained.
(c)Direct loans
(1)Direct hardship loans
Direct hardship loans under this section shall be for the same purposes and on the same terms and conditions as hardship loans made under section 935(c)(1) of this title.
(2)Other direct loans
All other direct loans under this section shall bear interest at a rate equal to the then current cost of money to the Government of the United States for loans of similar maturity, plus ⅛ of 1 percent.
(d)Certification
Loans under this section shall not be made unless the Secretary finds and certifies that in his judgment the security therefor is reasonably adequate and such loan will be repaid within the time agreed.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The Tennessee Valley Authority Act of 1933, referred to in subsec. (a), is act May 18, 1933. ch. 32. 48 Stat. 58, which is classified generally to chapter 12A (§ 831 et seq.) of Title 16, Conservation. For complete classification of this Act to the Code, see section 831 of Title 16 and Tables. Codification Pub. L. 110–234 and Pub. L. 110–246 made identical
Amendments
to this section. The
Amendments
by Pub. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246.
Amendments
2008—Pub. L. 110–246, § 6102(a), designated first, second, and third sentences as subsecs. (a), (b), and (d), respectively, and added subsec. (c). Pub. L. 110–246, § 6101, inserted “efficiency and” before “conservation” in first sentence. 1996—Pub. L. 104–127, in first sentence, struck out “for the furnishing of electric energy to persons in rural areas who are not receiving central station service and” after “transmission and distribution lines or systems” and substituted “section 903 of this title,” for “the provisions of section 903(d) and 903(e) of this title but without regard to the 25 per centum limitation therein contained,”, in second sentence, substituted “, except that” for “: Provided, further, That all such loans shall be self-liquidating within a period of not to exceed thirty-five years, and shall bear interest at the rate of 2 per centum per annum; interest rates on the unmatured and unpaid balance of any loans made pursuant to this section prior to
September 21, 1944, shall be adjusted to 2 per centum per annum, and the maturity date of any such loans may be readjusted to occur at a date not beyond thirty-five years from the date of such loan: And provided further, That”, and in third sentence, struck out “and section 905 of this title” before “shall not be made”. 1994—Pub. L. 103–354 substituted “Secretary” for “Administrator”. 1993—Pub. L. 103–129 inserted “and for the furnishing and improving of electric service to persons in rural areas, including by assisting electric borrowers to implement demand side management, energy conservation programs, and on-grid and off-grid renewable energy systems” after “central station service”. 1955—Act
June 15, 1955, substituted “25 per centum” for “10 per centum”. 1949—Act Oct. 28, 1949, inserted “for rural electrification” after “to make loans” in first sentence, and inserted “title I,” in credit of act
May 20, 1936. 1948—Act
June 29, 1948, permitted certain municipalities to refinance with R.E.A. their indebtedness with T.V.A. 1944—Act Dec. 23, 1944, inserted provision authorizing loans to cooperative associations to enable them to discharge or refinance debts owed to the Tennessee Valley Authority. Act Sept. 21, 1944, extended limit of self-liquidating period from 25 to 35 years and changing the rate of interest.
Statutory Notes and Related Subsidiaries
Effective Date
of 2008 AmendmentAmendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 of Pub. L. 110–246, set out as an
Effective Date
note under section 8701 of this title.
Reference
Citations & Metadata
Citation
7 U.S.C. § 904
Title 7, Agriculture
Last Updated
Sep 22, 2026
Release point: 119-110