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 and responsive to evolving financial markets, Iowa's State Revolving Fund Loan Programs utilizes Base Interest Rates for Tax-Exempt and Taxable Standard Term loans (up to 20-year terms) that are re-calculated and published on the first business day each January, April, July, and October (the "Effective Date").

Current Interest Rates – effective 7/1/2024-9/30/2024

Planning & Design Term (years) Interest Rate Servicing Fee Total
3-year Balloon 3 0.00% 0.00% 0.00%
Standard Term Term (years) Interest Rate Servicing Fee Total
Tax Exempt 20 2.61% 0.25% 2.86%
Taxable 20 3.84% 0.25% 4.09%
Extended Term Term (years) Interest Rate Servicing Fee Total
Tax Exempt 21-30 3.61% 0.25% 3.86%
Taxable 21-30 4.84% 0.25% 5.09%

Interest Rate Lock

Applicants should work with their Bond Counsel, Municipal Advisor, and other members of their financing team to complete the loan issuance process (e.g., submit a complete SRF Construction Loan Application: NOFE letter, legal opinion on bidding procedures, hold public hearing and authorize debt, complete proforma financial analysis, pass rate ordinance if required, etc.).  

After receiving an acceptable construction application, the loan will be presented for IFA Board approval.  Once approved, applicants will receive a notification from IFA that includes an interest rate lock for 90 days.  If the Program’s loan interest rates decrease before signing a loan agreement, applicants will automatically receive the more favorable rate at loan closing while remaining within the 90-day rate lock period.  If the 90-day rate lock period expires, the loan will be executed using the current interest rates (which are set quarterly).

Interest Rate Policy

Standard Term Construction Loans (up to 20 years)

The Base Interest Rate for tax-exempt loans is calculated by taking 75 percent of the average daily 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 is calculated using the average daily 20-year BVAL yield for the month of September.

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

Extended Term Construction Loans (21-30 years)

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

Loans for Lead Service Line Projects

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

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.