When WASDA members sat down with lawmakers this spring, "sustainable funding" topped the priority list. But what does that funding actually look like on the ground? For water and sewer utility professionals, especially WASDA members weighing sustainable ways to pay for infrastructure, the answer starts with state revolving funds: two federal-state partnerships, the Clean Water State Revolving Fund (CWSRF) and its companion, the Drinking Water State Revolving Fund (DWSRF), that provide capital to states so they can make low-interest loans for eligible water projects, with repayments revolving back into future projects.
That structure makes SRFs one of the most practical financing tools available to utilities that need to upgrade systems now without taking on higher-cost debt later. This article explains how these programs work, what kinds of water infrastructure they can finance, what the current federal funding picture looks like, and why utilities should consider SRF loans as part of a long-term funding strategy.
Unlike a one-time grant, an SRF works like a bank. The EPA provides capital to all 50 states plus Puerto Rico, and states add a 20% match on top of the federal contribution. States then use that combined pool to issue low-interest loans to communities for water infrastructure projects, everything from treatment plant upgrades to stormwater management to lead service line replacement.
Here's the part that makes it powerful: as communities repay those loans, the principal and interest get recycled back into the state's fund to finance the next round of projects. States can set their own interest rates anywhere from zero percent to market rate, with repayment terms stretching up to 30 years, flexibility that lets states target the communities that need help most, particularly smaller and disadvantaged systems that couldn't otherwise afford major upgrades.
The CWSRF's eligibility list is broader than most people expect. Beyond traditional wastewater treatment plant construction, it can finance publicly owned treatment facilities and nonpoint source projects, as well as stormwater runoff mitigation, green infrastructure, water reuse and conservation, decentralized and onsite systems, and even the water-quality side of brownfield cleanup. The DWSRF, its sister program, provides low-interest loans for drinking water system upgrades and supports eligible drinking water projects. Together, the two programs cover nearly every category of water infrastructure a utility is likely to need financing for.
Congress appropriates SRF dollars annually, and the last few years have seen a significant boost. The Infrastructure Investment and Jobs Act added $11.7 billion to the CWSRF on top of regular annual appropriations, aimed at helping systems build climate resilience alongside their core water quality work. Most recently, EPA announced $7.2 billion for states, tribes, and territories through the combined CWSRF and DWSRF programs for FY 2026, drawing on both annual appropriations and the remaining IIJA allocation.
Because SRF programs are state-administered, application processes, deadlines, and priority-setting criteria vary significantly from state to state. WASDA members should check with their state's SRF program directly to understand local requirements and timelines.
That's real money moving through the system, but it's also money that has to be reauthorized and appropriated year after year, which is exactly why sustained federal funding was a top talking point on Capitol Hill this spring. A revolving fund only keeps revolving if it's kept full.
If you're a WASDA member weighing how to finance an upcoming project, your state's SRF program should be one of the first calls you make, often before private financing. Processes vary by state, but most require submitting a project for consideration and meeting basic eligibility requirements, so it's worth reaching out early to understand what your state needs. Local governments and special districts are typically eligible loan sponsors, and private utilities may also be eligible for drinking water project funding in some states. Because the loans carry below-market rates and flexible terms, they can dramatically lower the lifetime cost of a project compared to conventional borrowing. And because the fund structure is designed to self-sustain, today's SRF investment supports the projects your community will need decades from now.
The funding conversation doesn't end with an EPA allotment memo. It continues every time WASDA members show up in Washington to make the case for sustained investment. If you want to be part of that conversation, join the WASDA Advocacy Committee.
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