Revolving Loan Funds

Revolving loan funds can be a source of start-up funding. Low-interest loans are made to eligible recipients. As borrowers pay off their loans, those interest payments and repaid principal become the source of new loans to other recipients. In that way, the money “revolves” through various projects.

Maine’s Clean Water State Revolving Loan Fund (CWSRF) provides low-interest loans to municipalities and quasi-municipal corporations for the construction of wastewater infrastructure projects, i.e., publicly-owned sewage collection systems, interceptor sewers, pumping stations, and wastewater treatment plants.

The CWSRF program is funded by federal and state contributions which are loaned out and repaid with interest. The MMBB combines federal, state, and repayment monies to create attractive interest rates. The program offers interim financing at 1%, or two-thirds of the one-year AAA municipal tax-exempt rate, whichever is higher, and long-term financing at, 2% below the market rate, with a minimum 1% interest rate. Loan terms up to 30 years or the useful life of the project, whichever is less, are available.

The Pew Charitable Trusts urged Congress in February 2017 to establish a flood mitigation state revolving loan fund to “enable more communities to take measures to reduce risk to structures and infrastructure, such as elevating buildings, putting vents in the lowest level of structures to reduce pressure on the walls and allow floodwater to pass through, and fund larger-scale projects such as improving stormwater management and building berms or flood walls.”

Maine’s Clean Water State Revolving Loan Fund appropriated $4.3M as a loan to Rockport for a sewer extension along Route 1 in FY 2019.