Community Development Block Grants Section 108 Loan Guarantees

To provide communities with a source of financing for economic development, housing rehabilitation, public facilities, and large scale physical development projects.

Eligible Applicants include: metropolitan cities and urban counties, i.e., CDBG entitlement recipients; nonentitlement communities that are assisted in their submission of applications by States that administer the CDBG program; nonentitlement communities eligible to receive CDBG funds under the HUD-Administered Small Cities CDBG program; and Insular Areas (American Samoa, Guam, Northern Mariana Islands, and the Virgin Islands). The public entity may be the borrower or it may designate a public agency to be the borrower. Furthermore, HUD's FY 2018 and FY 2019 appropriations acts continue HUD's authority to provide loan guarantees to States borrowing on behalf of local governments in nonentitlement areas.

The principal beneficiaries are low and moderate income persons.

Upon approval of an application, HUD will issue to the applicant an offer of commitment to guarantee notes or other obligations issued by the applicant or its public agency designee. The commitment will be subject to compliance with applicable requirements and such conditions as HUD may specify in the commitment document. Furthermore, borrowers are required to pledge current and future CDBG funds as security for the loan guarantee. HUD also requires that the loan guarantee be secured with other collateral. Beginning in FY 2016, borrowers are required to pay a fee based on a percentage of loan disbursements (2% in FY 2020). The fee is applied only at the time of loan disbursement and may be financed as part of the guaranteed loan.

Approximately 45 days from submission of complete application to appropriate HUD Field Office and Program Office.