Wednesday, February 25, 2009

New Rule on Rural Water and Waste Interest Rates to Take Effect Feb. 20

On February 20, 2009, new rules governing the interest rates charged by the U.S. Department of Agriculture (USDA) for rural water and waste loans will take effect. Under the new rule, interest rates charged to communities meeting the poverty rate criteria will be 60 percent of the market rate and the intermediate rate will be 80 percent of market rate. As before, USDA will determine the market rate quarterly based on a bond index. The new rates will apply to loan commitments entered after May 23, 2008. You can find the new rule here.

As a matter of comparison, the state revolving fund program (SRF) in Missouri charges an interest rate of 30 percent of the market rate and a 1 percent administration fee. However, SRF loans may not exceed 20 years, while USDA loans commonly have terms of 30 years or greater.

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