There is a particular kind of bad news in rural water work: you win the grant, and then you lose it.

Not because anything went wrong with the project. Because the award requires a local match, the system does not have that cash on hand, and the clock on the award keeps running.

What a local match is

Most grant and forgivable funding programs will not pay for 100 percent of a project. They cover a share and expect the recipient to bring the rest. That remainder is the local match. It might be a fixed percentage, or simply the difference between what the award covers and what the project actually costs.

For a utility with a healthy reserve, the match is an accounting exercise. For a system serving a few hundred connections with a thin tax base, it can be the whole obstacle.

Mayor Theresa Howard of Felsenthal, Arkansas, a town of 56 residents whose system serves 264 water and wastewater connections, put the underlying math plainly: “We don’t have much funding. We don’t have businesses here.”

Why the match is a financing question, not a savings question

Systems in this position are often told to build reserves. That is good advice over ten years. It is useless when an award has a deadline this quarter.

The match is better understood as something to finance. You are not trying to find money you do not have. You are trying to convert a future obligation into a manageable monthly payment so that an award worth many times the match does not slip away.

That is what grant matching funds are for. At Communities Unlimited they sit alongside interim financing, construction loans, and equipment loans, with water system lending up to $750,000 and terms up to 15 years.

What stacking looks like in practice

In Hull, Texas, drinking water for the Hull Fresh Water Supply District, which also supplies the neighboring city of Daisetta, depended on a single well that had been running for more than six decades.

“We had been talking about drilling another well, but it wasn’t urgent. Then our 65-year-old well failed. Just like that, our long-term plan became an emergency.”
Cindy Birchfield, office manager, Hull Fresh Water Supply District

The district was not empty handed. Liberty County had committed $800,000 in American Rescue Plan Act funds toward a new well. But the ARPA dollars did not cover the entire project, and the Texas Commission on Environmental Quality requires systems to maintain at least two sources of supply, which made a single source system a compliance problem as well as a service one.

Birchfield first approached the local bank that had held the district’s accounts for decades. Financing was available. The terms were not built for a small rural utility.

“It just didn’t feel like something we could manage,” she said.

Working with CU’s lending team and Economic Development Loan Officer Chris Ranniger, she found terms that fit. The district closed a CU loan on February 4, made through the Economic Development Administration’s Revolving Loan Fund, which closed the funding gap alongside the ARPA dollars. The final package combined Liberty County ARPA funds, CU financing, and a contribution from the district itself.

“When Chris told me what the monthly payment would be, I knew immediately it was something we could do. That’s when everything finally clicked into place.”
Cindy Birchfield

Construction is now underway on a well producing roughly 300 gallons per minute, along with piping, electrical, and treatment upgrades. For the first time, Hull will have two water sources. The full story is Full Turnaround.

Notice the shape of it. Three sources, none sufficient alone. The grant was the largest piece, and it would have been worth nothing without the smaller piece that completed it.

Questions worth asking before you accept an award

• What exactly is the match, in dollars, not percentages?
• When is it due, and is it due before or after reimbursement?
• Does the program allow the match to be borrowed? Most do. Some restrict the source.
• Can any of it be met with in kind contributions, such as your own labor or equipment?
• What happens to the award if the match is late?

Get these answers in writing before you sign, because they determine whether you need financing in place at closing or later.

Common questions about the local match

Can you borrow the local match?

Usually yes. Most grant and forgivable funding programs allow the match to come from borrowed funds, though some restrict the source. Confirm it in writing with your program officer before you close on any financing, because the answer determines your timeline.

What counts as an in kind match?

Some programs let you count your own labor, equipment use, engineering already paid for, or donated materials toward the match instead of cash. The rules vary by program and the documentation requirements are strict, so ask early rather than assuming.

What happens if the match is not ready in time?

It depends on the program. Some allow an extension, some reduce the award, and some withdraw it and move to the next applicant. This is why the match is worth solving as soon as the award is offered rather than after.

Related reading

• How to fund a rural water system upgrade, the full picture of where upgrade money comes from and what unlocks it.
• What is interim financing for a water project, for when the award is committed but the cash has not arrived yet.

If you are holding an award you cannot yet match

This is a solvable problem and a common one. The sooner you start, the more options stay open.

Communities Unlimited lends to rural water and wastewater systems across Arkansas, Oklahoma, Tennessee, Louisiana, Mississippi, Texas, and Alabama, and can look at the match alongside the rest of your funding package.