Rural Electrification Administration (REA) was an agency of the United States Department of Agriculture from 1935 to 1994. It made insured loans and loan guarantees to rural electric and telephone cooperatives and companies in 47 states and many U.S. territories. The loans financed the construction, operation, and improvement of electric and telephone service. The agency also provided its borrowers with engineering and management assistance. In addition, the REA lent money to its borrowers for them to invest in economic development projects in their communities. An administrator appointed by the president with the approval of the U.S. Senate headed the REA.
Electric program.
When the REA was established in 1935, about 10 percent of the farms in the United States had electricity. By the early 1990’s, 99 percent of all U.S. farms had electric service, and REA-financed systems served about half of them. About 95 percent of the REA’s electric loans were made to cooperatives (independent, private, nonprofit organizations). Other borrowers included public power districts and other public bodies.
Telephone program.
When the telephone program began in 1949, about 35 percent of all farms in the United States had telephone service. By the early 1990’s, more than 95 percent of the nation’s farms had telephones. About 75 percent of the borrowers in the telephone program were commercial telephone companies. Almost all the rest were cooperatives. Borrowers received insured loans and loan guarantees as well as supplemental loans from the Rural Telephone Bank, which was established in 1971.
Rural development program.
Beginning in 1989, the REA was authorized by Congress to make rural development loans. In most cases, the rural electric and telephone utilities receiving the loans made these funds available to businesses or other organizations to promote economic development and create jobs. The loans were interest-free, and most of them ran for 10 years.
History.
President Franklin D. Roosevelt established the REA in 1935 as an emergency relief program. The Rural Electrification Act of 1936 made the REA a provider of loans for rural electrification. In 1949, the organization was authorized to make loans to improve and extend telephone service in rural areas. It was authorized to guarantee the loans of other organizations in 1973. In 1994, the agency was replaced by the Rural Utilities Service. The new service took over the REA’s programs. It also received responsibility for providing funds for the development of water and waste-disposal systems in rural areas.
