LRWA has partnered with CoBank to provide financing options for Louisiana’s rural water systems. We hope that the lower pricing and expedited review that we’ve arranged with CoBank will be a valuable benefit to your membership with LRWA.
While we are very excited about this opportunity, we recognize that the LRWA Loan Program isn’t always the best choice for your water system and we continue to recommend that you analyze all the options before you make a financing decision. Please be advised that this program does not remove the traditional credit approval process and the information on this webpage is not a commitment to lend.
For more information, contact Michael Griffiths at Louisianawater@cobank.com or call (720) 520-6261.
USDA Interim (Construction) Loans
One of the conditions associated with a Direct Loan with USDA Rural Development is finding a third party to provide interim funding. For Direct Loans in excess of $500,000, CoBank offers a no fee, low cost, way to meet that condition. The loan is structured to match the timing of your project and you only pay interest on the money that’s used. Often that interest can even be capitalized into your USDA Loan, which means you don’t need to use operating cash flow to finance the construction draws.
A typical interim loan from CoBank comes with an interest rate of daily SOFR (https://www.sofrrate.com/) + 1.65% and an upfront fee of $2,500. LRWA has worked with CoBank to provide water and waste water utilities in LA a lower interest rate (1.40%) and no fees. Additionally, Bridge Financing is available to help fund soft costs incurred in meeting the terms of the USDA Letter of Conditions.
CoBank is the leading provider of interim loans for water and wastewater utilities combining their expertise with our negotiated lower pricing makes this a fantastic option.
Term Loan
Sometimes a small to midsized project comes up that needs to be dealt with immediately; LRWA has worked with CoBank to provide your solution. With flexible terms and a fixed rate for up to 20 years, CoBank is an alternative to consider. LRWA members benefit from an interest rate that is 0.25% lower than CoBank’s standard pricing and there are no fees charged by CoBank or LRWA. Additionally, your application qualifies for expedited review, which means you’ll have your financing in place a lot quicker than you might have expected.
USDA Guaranteed Loans
USDA Guaranteed Loans are a great way to work with USDA Rural Development through a third party lender. With a USDA Guarantee Loan, through CoBank, you’ll get all the expertise that comes with the nation’s leading provider of USDA Water and Wastewater Guaranteed loans with an interest rate that is lower than available to non-LA utilities. USDA’s guarantee program has changed materially recently, and is a great option for utilities in high growth areas. For more details please speak with either CoBank or USDA.
Line of Credit
A line of credit is an efficient way to backstop your utility’s rainy day fund. Emergencies happen and it’s important to have enough money available to deal with them when they do. A line of credit can also finance small items like a new computer system, improvements to your SCADA system, vehicles or equipment, or engineering/ environmental reports; the options really are endless. A Line of credit through CoBank comes with a standard interest rate of Daily SOFR (https://www.sofrrate.com/) + 2.0%, which is reduced to +1.75% for LRWA members. You pay interest only on the amounts borrowed with no set repayment schedule providing flexibility to repay on your terms.
Leasing:
Systems should consider Leasing as an alternative to purchasing items such as vehicles, equipment, meters and more. Leasing programs offer flexible terms, quicker approvals than traditional loans, shorter repayment periods that match the asset’s useful life, and the ability to replace equipment at desired intervals. Choose your own supplier and maintain the flexibility to order the equipment that works best for you.
Information to Get Started
Every loan application is different, but here are a few things to have ready when you contact CoBank to start the process:
· System overview – # of taps, water sources, rate structure, and area served
· Project description – amount needed, use of funds, and benefit of project
· Financials – Last three years financial statements/Audits, YTD results, Budget
· Manager bio
· List of board members
· Bylaws
· Articles of Incorporation (if applicable)
· Tax ID number
· Proof of insurance (property and liability)
For more information, contact Michael Griffiths at Louisianawater@cobank.com or call (720) 520-6261.