Requires VerificationRequires VerificationFederal

HUD Section 108 Loan Guarantee Program.

Section 108 can let CDBG recipients leverage future block-grant capacity into federally guaranteed financing for large economic-development, housing, facility, and infrastructure projects.

Offered byHUD Office of Community Planning and Developmentverified 2026-07-10

Overview

What it does.

A Chester project would require the City and State of Illinois to support the application and pledge eligible CDBG security. Private businesses can receive project financing only through the public structure. Current FY2026 authority and Illinois participation must be confirmed before relying on the program.

Best for: Large, repayable community or economic-development projects that need flexible, long-term public financing beyond an annual CDBG grant.

Eligibility

Who and what may qualify.

Eligible applicants

  • CDBG entitlement recipients
  • States and qualifying non-entitlement communities when authorized and supported through the state CDBG structure

Applicants excluded by the source

  • Private businesses and developers as direct HUD applicants
  • Projects without CDBG eligibility and an acceptable repayment and security structure

Eligible uses

  • Economic development
  • Housing rehabilitation
  • Real-property acquisition
  • Public facilities and infrastructure
  • Historic preservation
  • Loan funds for multiple eligible projects

Uses excluded by the source

  • Projects that fail CDBG national objectives
  • Unsecured or infeasible projects
  • Activities not approved under 24 CFR part 570

Application

How to start.

  1. Ask DCEO and HUD whether current Section 108 authority and state support are available for a Chester non-entitlement application
  2. Develop a CDBG-eligible project, repayment source, collateral, public process, and underwriting case
  3. Have the eligible public applicant submit and negotiate the guarantee with HUD

Timing: Historically year-round, but current commitment authority and Illinois access require verification for FY2026.

Planning notes

Limits to account for.

  • The public applicant pledges current and future CDBG resources as security
  • Private parties cannot apply directly
  • Current federal authority, state support, national objective, underwriting, and repayment must all be confirmed

Designed for layered financing and may combine with tax credits and other capital, but the public borrower must control security, eligible uses, and repayment risk.

Evidence

Official sources.