Coronavirus State and Local Fiscal Recovery Funds (CRSLFRF)

Overview

The Coronavirus State and Local Fiscal Recovery Funds (CRSLFRF) are a component of the American Rescue Plan Act of 2021 (ARPA). Their purpose is to provide flexible, lowinterest financing to state, local, and tribal governments to repair the fiscal damage caused by the COVID19 pandemic.

Key characteristics of the program include:

• Funding source: The U.S. Treasury issues nonappropriated, lowinterest loans that may be forgiven up to a specified percentage.
• Maximum loan amount: $5billion per state, territory, or tribal government; $10billion for the District of Columbia.
• Interest rates: 0.25% for loans up to $500million, 1% for the remainder.
• Forgiveness: Up to 100% of the principal may be forgiven if funds are used for qualifying expenditures.

Eligibility

To qualify for CRSLFRF assistance, a government entity must meet all of the following conditions:

• Be a state, U.S. territory, the District of Columbia, or an Indian tribe recognized under federal law.
• Demonstrate a fiscal shortfall directly attributable to the pandemic (e.g., reduced tax revenues, increased health expenses).
• Have an existing, or be willing to create, a comprehensive fiscal recovery plan that outlines how the funds will be used.
• Agree to comply with all reporting and audit requirements set by the Treasury.

Permitted Uses

The funds are meant to address both immediate and longterm recovery needs. Eligible expenditures fall into three broad categories:

1. RevenueLoss Mitigation

• Payroll and operating expenses for essential government services.
• Support for publicsector employees whose wages were reduced.
• Funding to maintain critical programs such as public safety, education, and social services.

2. CapitalImprovement Projects

• Infrastructure upgrades (roads, bridges, water systems).
• Publichealth facilities and pandemicrelated equipment.
• Modernization of informationtechnology systems to support remote work.

3. Resilience & Preparedness

• Emergency preparedness and response planning.
• Climateresilient infrastructure to reduce future disaster risk.
• Programs that improve community health and economic stability.

Funds may not be used for privatesector projects, political campaign activities, or to pay off existing debt unrelated to pandemic recovery.

Application Process

The application is conducted through the Treasurys online portal. Below is a simplified stepbystep guide:

1. Preapplication checklist Verify eligibility, gather financial statements, and draft a recovery plan.
2. Register Create an account on treasury.gov and obtain a unique identifier.
3. Submit the application Upload the fiscal recovery plan, budget documents, and a signed certification of need.
4. Review Treasury staff assess the submission, request clarification if necessary, and may conduct an onsite review.
5. Award Upon approval, a loan agreement is signed, and funds are disbursed in tranches based on milestones.

Applications are accepted on a rolling basis. Authorities are encouraged to apply early, as Treasury reserves are limited.

Reporting & Compliance

Transparent use of funds is a core condition of the program. Recipients must meet the following reporting obligations:

• Quarterly financial statements showing how the money is spent.
• Annual performance reports that measure outcomes against the recovery plan.
• Audit by an independent CPA firm no later than three years after the final disbursement.

Noncompliance can result in repayment, reduction of forgiveness, or exclusion from future federal assistance.

Frequently Asked Questions