BEAD Letter of Credit Waiver Update

The Broadband Equity, Access, and Deployment (BEAD) Notice of Funding Opportunity (NOFO) requires states to establish a model letter of credit substantially similar to the model letter of credit established by the Federal Communications Commission (FCC) in connection with the Rural Digital Opportunity Fund. On December 11, 2024, the FCC adopted a Report and Order modifying its rules to eliminate Weiss ratings as the standard for United States banks to be considered acceptable for issuing letters of credit. This requirement was replaced with the requirement that the issuing bank be “well capitalized.” This rule change will become effective August 24, 2025. Because NTIA has incorporated this rule into the BEAD NOFO, the modified rule will likewise go into effect for the BEAD program effective August 24, 2025. Additionally, NTIA will allow financial institutions rated BBB- or higher by a Nationally Recognized Statistical Rating Organization (NRSRO), as recognized by the Securities and Exchange Commission (SEC), to be considered acceptable for issuing letters of credit in the BEAD program.