Securing matching funds for BEAD projects can be a challenge, but there are a number of things that providers can do to increase their chances of success. Most importantly, start early. The matching fund requirement can be a significant challenge, so it is important to start early and develop a plan to secure the necessary funds. 

Chris Perlitz, managing director with Municipal Capital Markets Group, discusses how broadband applicants can secure matching funds for broadband grants.  Beyond meeting NTIB requirements of 25% of funds upfront and a letter of credit, Perlitz says that municipal bonds can be a great source of opportunity.

Municipal bonds offer tax-exempt benefits to investors and are often among the most affordable means of rasing capital. Perlitz also shares insights on private activity bonds, or bonds that provide tax-exempt interest rates, and the process of issuing municipal bonds and how to navigate both financial and political hurdles. Perlitz also shares valuable tools on navigating ARPA and Capital Project Funds requests. 
 

Match Generally

Except in certain specific circumstances described herein (including projects in designated “high-cost areas” and other cases in which NTIA has waived the matching requirement), each State shall provide, require its applicants to provide matching funds of not less than 25 percent of project costs. Funds from other Federal programs including the FCC generally may not be used as matching funds; however, the

Infrastructure Act expressly provides that matching funds for the BEAD Program may

come from a federal regional commission or authority and from funds that were provided to a State or applicant for the purpose of deploying broadband service under the Families First Coronavirus Response Act; the CARES Act, the Consolidated Appropriations Act, 2021; or the American Rescue Plan Act of 2021, to the extent permitted by those laws.

State should rigorously explore ways to cover a project’s cost with contributions outside of the BEAD program funding. Matching contributions, including in-kind contributions that lower project costs, demonstrate commitment to a particular project and minimize BEAD funding outlay, extend the reach of the BEAD program funding and help to ensure that every unserved location and underserved location in the United States has access to reliable, affordable, high-speed internet.

In some cases, though, a match requirement could deter participation in the BEAD Program by small and non-traditional providers, in marginalized or low-income communities, or could threaten affordability (i.e., if an applicant seeks to offset the cost of a substantial match through higher end user prices). In those cases, the State should consider ways to cover part or all of the provider’s match through the State or other funds or seek a match waiver through the process explained below. A matching contribution may be provided by the applicant, a State entity, a unit of local government, a utility company, a cooperative, a nonprofit or philanthropic organization, a for profit company, regional planning or governmental organization, a federal regional commission or authority, or any combination thereof.

Preference to maximize grant capital

While the match may be provided by multiple sources, States are encouraged to require a match from the applicant rather than utilizing other sources where it deems the applicant capable of providing matching funds. This approach will maximize the impact of States funds and funds provided via other federal programs. As detailed below with regard to the applicant selection process for last-mile broadband deployment projects,States are also required to incentivize matches of greater than 25 percent from applicants wherever feasible (especially where expected operational costs and revenues are likely to justify greater investment by the applicants) by focusing on minimizing the BEAD funding outlay on a particular project. NTIA will provide technical assistance to States to assist in making these determinations. States will be expected to explain in their Initial Proposals how they intend to ensure that applicants will offer the maximum feasible match for each project.

Matches from Other Federal Programs and Entities

The Infrastructure Act expressly provides that matching funds for the BEAD Program may come from a federal regional commission or authority and from funds that were provided to a State or an applicant for the purpose of deploying broadband service under the Families First Coronavirus Response Act, the CARES Act, the Consolidated Appropriations Act, 2021 or the American Rescue Plan Act of 2021, to the extent permitted by those laws.

States are encouraged to consider terms and conditions that may be associated with potential sources of match funds and how those may impact the project overall. For example, if a State utilizes federal regional commission funding as a match, the project will need to comply with all BEAD programmatic requirements and any requirements imposed by the federal regional commission.

Likewise, States that use funds from the Coronavirus State and Local Fiscal Recovery

Funds or Coronavirus Capital Projects Fund as the source of matching funds for the BEAD Program must comply with the requirements of both the BEAD Program and the relevant Treasury program. Loan funding issued through a federal agency, such as through the USDA ReConnect Program, may also be used as match funding.