Loan Interest Rates

Clean Water and Drinking Water State Revolving Fund Programs are charged with maintaining a low-cost, long-term, perpetual funding source for communities to construct the infrastructure and implement practices that will deliver safe drinking water to citizens and treat water pollution for a healthy environment.

To carry out this mandate, SRF Programs must remain responsive to evolving financial markets. Beginning October 1, 2023, Iowa's State Revolving Fund Loan Programs will utilize Base Interest Rates for Tax-Exempt and Taxable Standard Term SRF Loans (up to a 20-year term) that will be re-calculated and published on the first business day each January, April, July, and October (the "Effective Date").


SRF Construction Loans

Standard Term Loans (up to 20 years)

The Base Interest Rate for tax-exempt loans will be calculated by taking 75 percent of the average Bloomberg BVAL General Obligation Municipal AAA 20-year yield ("BVAL") for the calendar month immediately preceding the Effective Date. For example, the Base Interest Rate effective October 1 will be calculated using the average 20-year BVAL yield for the month of September.

The Base Interest Rate for the taxable portions of SRF projects will be calculated by taking 75 percent of the average Bloomberg BVAL Taxable General Obligation Municipal AAA 20-year yield for the calendar month immediately preceding the Effective Date.

Extended Term Loans (21-30 years)

Extended term loans of up to 30 years are available for qualifying projects. The interest rate for projects that qualify and wish to close a loan with extended term financing will be:
Loan Term* Interest Rate
21-30 years Base Interest Rate + 1.00%
* Not to exceed the qualifying average useful life of the project

Special Purpose Fund Loans

The interest rate for the loaned portion of lead service line projects is 0%. Loan servicing fees will still apply.

Interest Rate Lock

Applicants will receive a financing offer letter from Iowa Finance Authority that includes an interest rate lock for 90 days on the later of 1) the date a complete bid package is received (as determined by DNR staff), or 2) the date of final environmental review clearance. The applicant should then work with their Bond Counsel, Municipal Advisor, and other members of the financing team to complete the loan issuance process such as completing the SRF Construction Loan Application, completing the proforma financial analysis, holding a public hearing and authorizing the debt, adopting a utility rate ordinance if required, and so on. Should the Program's loan interest rates fall prior to signing a loan agreement within the rate lock period, the applicant will automatically receive the more favorable rate at loan closing.

Planning & Design (P&D) Loans

P&D Loans have no interest or payments due for up to three years while the project is designed.  Borrowers will still need to engage their Bond Counsel to authorize and issue the debt.  P&D Loans will be rolled into an SRF Construction Loan or may be repaid when other permanent financing is committed.