Are loans an eligible use of the Pandemic Recovery Funds?

Loans may be an eligible use of the Pandemic Recovery Funds, provided they are for an eligible use category. Additionally, there are special rules about how recipients should track program income depending on the length of the loan.

Additional Information

-When Pandemic Recovery Funds are used as the principal for loans, there is an expectation that a significant share of the loaned funds will be repaid. Thus, recipients may not simply consider the full amount of loaned funds to be permanently expended and must appropriately account for the return of loaned funds. 

-For loans that mature or are forgiven on or before December 31, 2026, the recipient must account for the use of funds on a cash flow basis, consistent with Treasury’s guidance regarding loans made by recipients using payments from the Coronavirus Relief Fund. Recipients may use Pandemic Recovery Funds to fund the principal of the loan and in that case must track repayment of principal and interest (i.e., “program income,” as defined under 2 CFR 200). When the loan is made, recipients must report the principal of the loan as an expense.

-Repayment of principal may be re-used only for eligible uses and is subject to restrictions on the timing of the use of funds. Interest payments received prior to the end of the period of performance will be considered an addition to the total award and may be used for any purpose that is an eligible use of funds under the statute and final rule. Recipients are not subject to restrictions under 2 CFR 200.307(e)(1) with respect to such payments. 

-For loans with maturities longer than December 31, 2026, the recipient must estimate the cost to the recipient of extending the loan over the life of the loan. In other words, at origination, the recipient must measure the projected cost of the loan and may use Pandemic Recovery Funds for the projected cost of the loan. Recipients have two options for estimating this amount: they may estimate the subsidy cost (i.e., net present value of estimated cash flows) or the discounted cash flow under current expected credit losses (i.e., CECL method).

Show All Answers

1. What are the Pandemic Recovery Funds?
2. What is the timeline for the Pandemic Recovery Funds?
3. What if the project is unable to be completed by December 31, 2026?
4. What are the eligible use categories for the Pandemic Recovery Funds?
5. What are other eligible uses of the Pandemic Recovery Funds?
6. Are administrative expenses an eligible use of the Pandemic Recovery Funds?
7. What are direct costs and indirect administrative costs?
8. Are grants an eligible use of the Pandemic Recovery Funds?
9. Are loans an eligible use of the Pandemic Recovery Funds?
10. What does the Final Rule say about non-federal match or cost-share requirements?
11. Can Pandemic Recovery Funds be pooled with other resources?
12. Can Pandemic Recovery Funds be blended or braided with other funds?
13. What are ineligible uses of the Pandemic Recovery Funds?
14. What is a pension fund?
15. Is the funding one-time or reoccurring?
16. How will the Pandemic Recovery Funds be paid out?
17. Can the County transfer Pandemic Recovery Funds?
18. Who is a subrecipient?
19. Who is a beneficiary?
20. Who is presumed "impacted"?
21. Who is presumed "disproportionately impacted"?
22. What is a Title I Eligible School?
23. How is low-income defined?
24. How is moderate-income defined?
25. What are Qualified Census Tracts (QCTs)?
26. What are the County's priorities?
27. What is meant by "transformative"?
28. What is meant by "underserved"?
29. Are there compliance and reporting requirements?
30. What if the Pandemic Recovery Funds are used in violation of the Final Rule?