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State Revolving Loan Funds

In 1987, Congress voted to phase out the old construction grants program for funding of municipal sewer and wastewater treatment plant upgrades, replacing it with the Clean Water State Revolving Fund (CWSRF).

Under the CWSRF, EPA provides annual capitalization grants to states, who in turn provide low interest loans for a wide variety of water quality projects. States must match the federal funds with $1 for every $5 (a 20-percent match). As a result of federal capitalization grants, state match, loan repayments, and leverage bonds, the total amount of assets in all the CWSRFs is approaching $40 billion. Between $3 and $4 billion was loaned annually from CWSRFs nationwide through 2007. The CWSRFs have issued $70 billion in loans since the program was initiated in 1998. In 2008, $5.8 billion was appropriated.

Some funds also are provided to territories and tribes to be used as grants for municipal wastewater treatment projects. Territories must match the federal funds with a 20-percent match, while the tribes are not required to provide a match. Loans are usually made at low, sometimes no, interest. Although most loans have gone to local governments, they also can go to businesses or nonprofit organizations. Payback periods for loans extend to 20 years.

Most of the CWSRF dollars loaned to date have gone for construction expansion, repair, or upgrading of municipal sewage collection and treatment systems. But CWSRF loans can be made for the following: (1) NPS control projects consistent with a state, territorial, or tribal section 319 program; or (2) implementing a management plan developed under the National Estuary Program. CWSRFs have funded over $74 billion through early 2010, providing more than 24,688 low-interest loans to date.