Optimizing Interest Rate and Other Loan Policies for SRF Financing

waterresources
Written By Danielle Goshen

By Danielle Goshen, Jake Adams, and Janet Pritchard 

The State Revolving Fund (SRF) programs play a pivotal role in financing essential water infrastructure projects across the United States. These programs, bolstered by the recent infusion of funds from the Infrastructure Investment and Jobs Act (IIJA), offer a combination of funding and financing options to support a wide range of projects. The balance between grants and loans, along with the structure and terms of these loans, is crucial to ensuring the sustainability and accessibility of the SRFs.

This brief explores policy options, analyzes trends across the states, and highlights policies and practices that states should consider when determining interest rate and other loan policies. Key recommendations include:

  • Interest Rate Policies

    • Evaluate Fixed vs. Market-Based Rates

    • Adopt Tiered or Formula-Based Rate Structures

  • Loan Term Policies

    • Customize Loan Terms

    • Offer Shorter Loan Terms for Planning Loans

  • Loan Fee Policies

    • Assess the Impact of Fees

    • Consider Flexible, Variable Fees

Danielle Goshen
Previous

How States’ Disadvantaged Community Definitions Can Prioritize Access to SRFs for Under-Resourced Communities
Next

This Tool is Changing How We Protect our Wetlands, here’s how you can help