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.

Related Programs

Examples of Funded Projects

A wide-range of community and economic development projects includes public facilities, housing rehabilitation projects, and economic development loan funds.

Agency - Department of Housing and Urban Development

The Department of Housing and Urban Development's mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. HUD fulfills this mission through high ethical standards, management and accountability, and by forming partnerships with community organizations.

Office - Contact appropriate HUD Field Office listed in Appendix IV of the Catalog.

Program Accomplishments

For fiscal year 2007, 37 commitments are estimated to have generated 4,108 jobs. Fiscal year 2008 estimate: 35 commitments issued and 4,100 jobs created or retained.

Uses and Use Restrictions

For purposes of determining eligibility, the Community Development Block Grant (CDBG) rules and requirements apply.

As with the CDBG program, all projects and activities must either principally benefit low- and moderate-income persons, aid in the elimination or prevention of slums and blight, or meet urgent needs of the community.

The President's FY 2009 budget proposes to combine several categorical programs, including the Section 108 program, into the CDBG program.

Eligibility Requirements

Applicant Eligibility

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 2008 appropriations act authorizes HUD to provide loan guarantees to States borrowing on behalf of local governments in nonentitlement areas.

Beneficiary Eligibility

The principal beneficiaries are low and moderate income persons.


Costs will be determined in accordance with OMB Circular No. A-87 for State and local governments.

Aplication and Award Process

Preapplication Coordination

Preapplication requirements are found in 24 CFR Section 570.704.

Presubmission requirements are similar to those applicable for the Community Development Block Grants program.

Proposed activities must be consistent with a unit of local government's Consolidated Plan submitted for HUD's Community Planning and Development Programs.

This program is eligible for coverage under E.O.

12372, "Intergovernmental Review of Federal Programs." An applicant should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review.

Application Procedures

Application requirements are found in 24 CFR Section 570.704.

Award Procedures

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.


None; applications can be submitted at any time.


Housing and Community Development Act of 1974, Section 108 as amended.

Range of Approval/Disapproval Time

Approximately 75 days from submission of complete application to appropriate HUD Field Office.




Not Applicable.

Assistance Considerations

Formula and Matching Requirements

Formula and Matching Requirements: Section 108 has no matching requirement but Section 108 funds (like CDBG funds) may be used as local matching funds for most other Federal programs. Maximum commitment amounts are limited as follows: Entitlement Public Entities an entitlement public entity may apply for up to five times the public entity's latest (approved) CDBG entitlement amount, minus any outstanding Section 108 commitments and/or principal balances on Section 108 loans; State assisted public entities a nonentitlement public entity may apply for up to five times the latest (approved) CDBG amount received by its State, minus any outstanding Section 108 commitments and/or principal balances on Section 108 loans for which the State has pledged its CDBG funds as security; and Nonentitlement public entities eligible under the HUD administered Small Cities Program in Hawaii and Insular Areas, the maximum commitment amount is five times the public entity's latest grant under Subpart F of 24 CFR Part 570, minus any outstanding Section 108 commitments and/or principal balances on Section 108 loans.

Length and Time Phasing of Assistance

The maximum repayment period for a Section 108 loan is twenty years. Repayment schedules and forms are negotiable.

Post Assistance Requirements


The reporting requirements for Section 108 are the same as the reporting requirements for the CDBG program.


In accordance with the provisions of OMB Circular No. A-133, "Audits of State and Local governments and Nonprofit Organizations," nonfederal entities that expend financial assistance of $500,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. Nonfederal entities that expend less than $500,000 a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in Circular No. A-133.


The record keeping requirements of Subpart J of 24 CFR Part 570 apply to entitlement public entities receiving grants under Subpart F of 24 CFR Part 570. The record keeping requirements of Subpart I of 24 CFR Part 570 apply to State-assisted public entities.

Financial Information

Account Identification



(Loan limitation) FY 07 $137,500,000; FY 08 est $200,000,000; and FY 09 est $0.

Range and Average of Financial Assistance

$223,000 to $20,890,000; $5,425,000.

Regulations, Guidelines, and Literature

24 CFR 570 Subpart M.

Information Contacts

Regional or Local Office

Contact appropriate HUD Field Office listed in Appendix IV of the Catalog.

Headquarters Office

Financial Management Division, Room 7180, Community Planning and Development, Department of Housing and Urban Development, 451 7th Street, S.W., Washington, DC 20410.

Criteria for Selecting Proposals

Applications are reviewed against criteria set forth at 24 CFR S 570.704.

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