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Meramec Funding Sources

Section 108 Loan Guarantee Program

Section 108 Loan Guarantee Program

Aug. 1, 2019
By HUD

Story summary:

  • The Section 108 Loan Guarantee Program provides communities with financing for economic development, housing rehabilitation, public facilities, and other physical development projects, including improvements to increase resilience against natural disasters.

Quick Facts

HUD Mission
Create strong, sustainable, inclusive communities and quality affordable homes for all 

Eligibility
Local governments, State governments, Nonprofits, Tribes

Project must serve “eligible area” – Click HERE to check address eligibility

What do they fund?
All activities under CDBG: Acquisition of real property, Relocation, Site improvements, Public facility construction or reconstruction, Debt service reserves, and more.

What will not be funded?
Buildings used for conduct of government, Projects that don’t meet national objectives, Small business development, Where public benefit is not sufficient

Length of Funding
Variable

Amount of Loan
Typically $500,000 - $140M

Interest Rate 
Variable 

Timing 
Applications accepted year round

About

The Section 108 Loan Guarantee Program allows communities to transform a small portion of the Community Development Block Grant (CDBG) funds into federally guaranteed loans large enough to pursue physical and economic revitalization projects capable of revitalizing entire neighborhoods.

Public investment is often needed to inspire private economic activity in distressed areas. The benefit of the Section 108 program is that project costs can be spread over time with flexible repayment terms and lower interest rates than private funding sources.

CDBG and Section 108 Loans present wonderful opportunities to include green infrastructure and other healthy watershed projects into neighborhood enhancements and public property projects.

Section 108 projects must meet at least one of two goals in the 2010-2015 Strategic Plan:

  • Goal 2B: Meet the need for quality affordable rental homes – expand the supply of affordable rental homes where they are most needed
  • Goal 4A: Build inclusive and sustainable communities free from discrimination: catalyze economic development and job creation, while enhancing and preserving community assets.

Local governments borrowing Section 108 funds must pledge their current and future CDBG allocations as security for the loan. The goal is for the proposed project to have sufficient cash flow to repay the loan without any need for current or future CDBG dollars used for repayment.

 Project Examples

Project Examples Webpage

https://www.hudexchange.info/programs/section-108/

Click on the years on the right-side of the webpage to look at projects by year.

Youngstown, OH 2017

Youngstown is using their Section 108 Loan to redevelop a 20-acre riverfront site into a public park and amphitheater. The site includes a play area, walking trails, green infrastructure for stormwater retention, event space, water features and athletic areas.

More Info/Resources

Contact Info

Eastern Missouri
St. Louis Field Office
314-418-5405

Kathy Smith, CPD Director - Kathryn.A.Smith@hud.gov

Alexander Furla, HOME program, CDBG - Alexander.C.Furla@hud.gov

Consult your community’s attorney and financial advisors prior to moving forward with any of these funding options. Any reference in this website to any person, or organization, or activities, products, or services related to such person or organization, or any linkages from this website to the website of another party, do not constitute or imply the endorsement, recommendation, or favoring of companies or organizations.
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