Loan Finance Rate and Repayment Term
The SRF Program is charged with maintaining a low-cost, long-term, perpetual funding source for communities to finance the infrastructure that will deliver safe drinking water to citizens and treat water pollution for a healthy environment.
To carry out this mandate and remain responsive to evolving financial markets, the SRF Program offers fixed finance rate loans. The finance rate includes a 0.5% administrative fee based on disbursed funds and the interest rate determined pursuant to Alaska Administrative Code.
| Loan Repayment Period | Finance Rate (when the Bond Index is less than 4%) |
Finance Rate (when the Bond Index is greater than 4%) |
|---|---|---|
| 20–30 Years | 2% | 2 + [0.75 × (Bond Rate – 4)] |
| 5–20 Years | 1.5% | 1.5 + [0.625 × (Bond Rate – 4)] |
| 0–5 Years | 1% | 1 + [0.5 × (Bond Rate – 4)] |
| < 1 Year | 0.5% | 0.5% |
Loan Terms
The interest rate is determined by the loan repayment term and by the current municipal bond market rate as reflected in the Bond Buyer’s Municipal Bond Index Current Day Yield to Maturity. For information about the current finance rate, contact the SRF Program.
After a loan is executed, the finance rate is fixed throughout the life of the loan.
Accrual of the finance rate begins one year after the date of the first loan disbursement to the borrower.
Repayment Term
The repayment period of a loan many not exceed 30 years or the useful life of the project. Planning and design loans are offered a 5-year repayment term.
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