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
Eligible borrowers must first:
Principal forgiveness amounts are determined and finalized at loan signing.
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.