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 as defined in Oregon Administrative Rule 340-054-0010.
To receive an award of principal forgiveness, a project must be eligible and there must be principal forgiveness available at the time a borrower is ready to proceed, meaning all requirements are met to sign a loan.
Policy changes starting Oct. 1, 2026
The Infrastructure Investment and Jobs Act of 2021 temporarily increased federal funding for State Revolving Fund programs and expanded principal forgiveness opportunities. As IIJA funding ends after federal fiscal year 2026, less funding will be available for principal forgiveness.
To make the best use of available funding, the Oregon CWSRF Program has updated its principal forgiveness eligibility criteria and award limits.
The updated criteria and award limits apply to all new and amended loans beginning Oct. 1, 2026.
Key information
- Principal forgiveness is not guaranteed. Meeting the eligibility criteria does not guarantee an award.
- Borrowers should plan to repay the full loan amount.
- Principal forgiveness is awarded when a borrower is ready to enter into a loan agreement and all program requirements have been met.
- Eligibility and award amounts are based on the criteria for borrowers, project type, community size, and available funding.
- The maximum principal forgiveness a borrower may receive is $500,000 per state fiscal year, regardless of the number of active loans.
Eligibility
Principal forgiveness is available for borrowers and projects that meet specific criteria, including:
- Affordability criteria/domestic wastewater projects. Borrowers that meet affordability criteria based on the Oregon Distressed Areas Index implementing a domestic wastewater project.
- Green Project Reserve, stormwater, and sustainability projects.
- Ratepayer hardship. Borrowers that have a utility rate reduction program that benefits low-income populations with their sewer utility bill and the project benefits low-income residents,