Rural Development
Grants being cut or changed
Rural communities are experiencing disproportionate impacts from 2025 federal grant reductions. The U.S. Department of Agriculture (USDA) has scaled back programs under Rural Development (RD), including grants and loans for rural housing, business development, community facilities, and broadband. Key initiatives like the Rural Economic Development Loan and Grant (REDLG) program and the Community Facilities Grant Program have been either paused or funded at much lower levels than in previous years. Technical assistance for small communities navigating federal funding is also being reduced.
Eliminations or restructuring
USDA is consolidating several rural assistance programs and prioritizing funding to larger-scale infrastructure and agriculture projects, often bypassing smaller communities. Programs with equity or capacity-building components—including those serving persistent poverty counties—have been significantly deprioritized. Additionally, the Rural Partnership Program, intended to fund local collaboratives and planning in distressed areas, has been scrapped entirely.
On hold or court challenges
Rural advocacy groups and associations of small-town governments are pushing back through lobbying and administrative challenges. No major lawsuits have been filed yet, but coalitions are gathering data to demonstrate that cuts violate the intent of rural-targeted legislation. Some grantees have received partial awards or extensions instead of full funding.
Timeline
Cuts began in January 2025 with the general grant freeze, and deeper restructuring has continued through the spring. FY2026 appropriations, if unchanged, would cement long-term reductions to USDA Rural Development programs starting October 2025. Some planning grants and business loan guarantees are already delayed or withdrawn.
State-level impact
Kentucky, West Virginia, and Tennessee have high concentrations of communities eligible for rural development aid—many of which rely on USDA for basic infrastructure, housing, and healthcare facilities. North Carolina and South Carolina are experiencing stalled projects in rural broadband and community center construction. In Ohio and Pennsylvania, rural housing repair programs have been paused or denied funding, and regional planning agencies are reporting reduced USDA engagement and support.
Sources
U.S. Department of Agriculture. (2025, March 1). FY2026 Rural Development Budget Summary. https://www.rd.usda.gov/newsroom/fy2026-budget-summary
National Rural Housing Coalition. (2025, March 10). Statement on rural housing and facilities grant reductions. https://ruralhousingcoalition.org/news/2025-grant-cuts
Daily Yonder. (2025, March 20). Rural communities face mounting pressure from federal funding changes. https://dailyyonder.com/funding-pressure-rural-2025
NPR. (2025, March 27). USDA pulls back support for small-town projects. https://www.npr.org/2025/03/27/usda-rural-development-funding
