Section 108 Loan Guarantee Program
Anaheim, California used $7 million of HUD Section 108 guaranteed loan funds to finance the restoration of a historic orange packing facility, originally built in 1919. The dilapidated building was rehabilitated into a food market with local vendors that has catalyzed economic development in Anaheim’s downtown.
With $694,000 in Section 108 guaranteed financing, High Point, North Carolina acquired and improved a site in its Deep River neighborhood that it then sold to a developer in order to construct a 58-unit, affordable housing development.
After a devastating fire forced a small business to relocate and left the building vacant for three years, Austin, Texas made a low-interest loan under its Family Business Loan Program with $150,000 in Section 108 guaranteed funds for the Practice Yoga studio to renovate the space and create 12 new, full-time jobs.
Green City Growers Greenhouse Cooperative
Cleveland, Ohio lent $8M of Section 108 Loan Guarantee financing to remediate and redevelop 10.68 acres of an industrial/residential site into an employee-owned cooperative greenhouse that created 42 full-time jobs producing 2 million pounds of healthy greens and 200,000 pounds of fresh herbs annually.
The Section 108 Loan Guarantee Program (Section 108) provides communities with low-cost, flexible financing for economic development, housing rehabilitation, public facilities, and other physical infrastructure projects, including those to increase resilience to natural disasters. Section 108's unique flexibility and range of applications makes it one of the most potent and important public investment tools that HUD offers to state and local governments.
Section 108 offers Community Development Block Grant (CDBG) recipients the ability to leverage their annual grant allocation to gain access to federally guaranteed loans large enough to pursue physical and economic development projects capable of revitalizing entire neighborhoods. This critical public investment is often needed to catalyze private economic activity in underserved areas in cities and counties across the nation. Section 108 loan guarantees are often the initial resource that provides the confidence private firms and individuals need to finance projects in areas that have experienced disinvestment.
Loans typically range from a few hundred thousand to several million dollars. The size of the guaranteed loan depends on several factors, including but not limited to, a community's maximum borrowing capacity under the program and an underwriting assessment of the project or loan fund. Section 108 can be used for specific projects or for communities to start a loan pool, similar to a line of credit for communities to fund multiple projects over time. Section 108's flexible repayment terms makes it ideal for layering with other sources of community and economic development financing such as New Market Tax Credits (NMTC), Low Income Housing Tax Credits (LIHTC), and Opportunity Zones funding. Under Section 108, communities can take advantage of lower interest rates than could be obtained from private financing sources.
View the Current Availability of Section 108 Financing to see how much borrowing capacity your State or community has under the program
Featured Resources & Topics
Section 108 Loan Guarantee Program Application Tool
The Section 108 Loan Guarantee Program Application Tool lists the general elements that states and local governments seeking to apply for Section 108 loan guarantee assistance should include in an application to HUD.
Program Design and Application Process
The Program Design and Application Process webinar describes how Section 108 can serve as an important financing tool in targeting reinvestment for economic development, public facilities and improvements, and housing rehabilitation.
Section 108 Underwriting Guidelines for Income-Producing Projects
The Section 108 Underwriting Guidelines for Income-Producing Projects assists Section 108 recipients in underwriting third party loans that finance the development of income producing properties.
The Explore CDBG collection of products helps grantees: create transformative impact in your community, improve the lives of residents, especially those with low and moderate income levels; develop strategies that bring partners and resources together; and implement your program effectively.