Section 108 Program

Overview

Section 108 enables states and local governments participating in the Community Development Block Grant (CDBG) program to obtain federally guaranteed loans to fund large economic development projects and undertake revitalization activities. Under Pennsylvania’s initiative to use Section 108 the loans are guaranteed by the Commonwealth, committing the use of future CDBG funds to pay off the loan in case of default.

Standards for Underwriting

Uses

  • Acquisition
  • Rehabilitation
  • Relocation
  • Clearance
  • Site preparation
  • Special economic development activities
  • Certain public facilities
  • Housing construction

Funding

Varies

Eligibility

  • Loan Guarantees as security for federal loans
  • Local governments that are not designated by HUD as urban counties or entitlement municipalities

Terms

Refer to program guidelines

FAQs

What is Section 108?

Section 108 enables states and local governments participating in the Community Development Block Grant (CDBG) program to obtain federally guaranteed loans to fund large economic development projects and undertake revitalization activities. Under Pennsylvania’s initiative to use Section 108 the loans are guaranteed by the Commonwealth, committing the use of future CDBG funds to pay off the loan in case of default.

Who is eligible to apply?
How is this program changing?
What kinds of activities can be funded?
Do CDBG rules govern the Section 108 Loan Program?
How does HUD fund the program?
Is it a direct loan or a guarantee?
Why are CDBG funds pledged as well as collateral even if there is other state backing?
Can Section 108 Loans be in subordinated positions or do they have to be in first position?
What types of funds can be used for making the repayments?
How are the interest rates set?

Purpose of Funding

  • Community Development
  • Infrastructure
  • Land & Building
  • Housing
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