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Overview: Principal Forgiveness

Principal forgiveness is an additional subsidy that reduces the amount of principal a Clean Water State Revolving Fund borrower is required to pay back on a loan. In order to receive an award of principal forgiveness, a project must be eligible and there must be principal forgiveness funds available at the time of loan signing. 

Fact sheet: Principal Forgiveness

How is a borrower eligible for principal forgiveness?

Eligibility is determined by meeting any one of the following criteria:
  • Affordability: Borrowers who meet the affordability criteria (refer to Intended Use Plan)
  • Rate payer hardship: Borrowers with a rate payer hardship or rate reduction program 
  • Green/sustainability projects: Projects that: Incorporate environmentally innovative and/or green infrastructure practices, including those that:
    • Conserve water 
    • Conserve energy
    • Address stormwater

Frequently asked questions

  • Eligibility for either a borrower or a project is determined as part of application review and scoring.

  • Eligible recipients for principal forgiveness are identified on the Intended Use Plan.

Eligible borrowers must first:

  • Meet all loan requirements by successfully completing required loan documents and exhibits; and

  • Be ready to sign a loan agreement.

​Principal forgiveness amounts are determined and finalized at loan signing.​


  • The maximum that an eligible borrower can receive per state fiscal year is $2,000,000.

  • This maximum amount of $2,000,000 applies to that borrower regardless of the number of active loans or projects the borrower has with the program.

  • Emerging Contaminants awards are not included in this $2,000,000 limit. See below.

Planning loans:

  • Borrowers eligible to receive principal forgiveness may receive subsidization for up to 100% of the loan but not to exceed $100,000.

  • Limit of one 100% forgivable loan per borrower per state fiscal year.

Design/construction loans:

  • Borrowers eligible to receive principal forgiveness for design and/or construction loans may receive up to 50% of the loan but not to exceed $2,000,000, over the life of the loan.

If the design and construction loans for a project are executed separately even if in different fiscal years, the combined subsidization cannot exceed the $2,000,000 limit. If the loan is implemented in phases, the combined subsidization cannot exceed the $2,000,000 limit. 

Emerging Contaminants Awards

Bipartisan Infrastructure Law CWSRF funding to address Emerging Contaminants: The Bipartisan Infrastructure Law provides for supplemental federal capitalization funding for CWSRFs to address emerging contaminants under the Clean Water Act. EPA's BIL Implementation Guidance Memo requires states to provide 100% of the emerging contaminants capitalization grant amount as additional subsidization in the form of principal forgiveness and/or grants.

  • Borrowers eligible to receive principal forgiveness for any project eligible under section 603(c) of the CWA that addresses emerging contaminants may be offered up to 100% principal forgiveness of the emerging contaminants funds.

  • An award of principal forgiveness under emerging contaminants funding may be in addition to principal forgiveness awarded under other criteria and may exceed the $2,000,000 limit for a project.

  • The amount of emerging contaminants subsidization is based on availability of funds.​

​Principal forgiveness benefits the borrower in the following ways:

  • Throughout the active loan period principal forgiveness is applied to each loan disbursement to reduce the amount that is accruing interest.

  • Once the project is complete and the borrower is ready to start repayment, the total loan amount (principal) is reduced by the principal forgiveness award amount. This reduced amount is the principal for repayment. Meaning, the amount the borrower has to repay is reduced at the start of the repayment period.​

How can I start the loan conversation with CWSRF?

If you have project in mind and are ready to start a conversation with CWSRF, please submit a Loan Information Request Form. A member of our staff will respond to set up the initial conversation with you.

Learn more about principal forgiveness

Additional details and more information are available on the Overview of Principal Forgiveness and Green Project Resources web pages


Alli Miller
Program Analyst

Oscar Orejel
Senior Loan Specialist

You can also contact the project officer for your county or region by visiting the on the Program Contacts web page.