Short-term Loan Involving Either a USDA or SRF  Takeout Letter.  The purpose of the program is to provide construction funding for water and sewer systems that have received a permanent loan commitment from the United States Department of Agriculture-Rural Development (“RD”) (formally known as the Farmers Home Administration). The program structure provides communities access to short-term loan funds at favorable interest rates. Loan proceeds are utilized for the construction period only and are repaid with RD bond funds when the project is complete. RD will provide the permanent financing once the construction phase is complete and project conditions have been met.

The program is designed as a tax-exempt pooled financing with flexible loan terms. The effective rate of borrowing under the program is based on a stated loan rate less an interest earnings credit on undisbursed construction proceeds.