A State Revolving Fund (SRF) is a fund administered by a U.S. state for the purpose of providing low-interest loans for investments in water and sanitation infrastructure (e.g., sewage treatment, stormwater management facilities, drinking water treatment), as well as for the implementation of nonpoint source pollution control and estuary protection projects. A SRF receives its initial capital from federal grants and state contributions. It then emits bonds that are guaranteed by the initial capital. It then "revolves" through the repayment of principal and the payment of interest on outstanding loans. There are currently two SRFs, the Clean Water State Revolving Fund created in 1987 under the Clean Water Act, and the Drinking Water State Revolving Fund created in 1997 under the Safe Drinking Water Act.
Early in the implementation of the Drinking Water State Revolving Fund program, following passage of the 1974 Safe Drinking Water Act, EPA underwent a process of evaluating the adequacy of state public water systems. The agency’s goal was to devolve primacy for drinking water quality management to states that were prepared to accept the responsibility, and to use the new funds provided by Congress in EPA’s budget to give states financial support.