Lending Program

Any project, regardless of community size or project cost, is eligible for loan financing and other forms of assistance from NADB provided it meets the basic eligibility and certification criteria established by the Board of Directors pursuant to the Bank’s charter. All loans made by NADB must offer a demonstrable and reasonable assurance of repayment.

NADB works closely with project sponsors to structure appropriate and affordable financing packages to meet the specific needs of each community or project. Financing may be provided in a number of ways, including: direct loans, interim financing, revolving lines of credit and participation in municipal bond issues. Additionally, NADB may act as sole lender or co-finance projects with other public or private financiers, depending upon the characteristics and financing needs of the project.

Loans may be made to both public and private sector borrowers, operating within the U.S.-Mexico border region. Loan proceeds may be used to finance a portion of the capital costs of a project, which may include the acquisition of land and buildings; site preparation and development; system design, construction, rehabilitation and improvements; and the procurement of necessary machinery and equipment.

Detailed information regarding financing requirements, general loan terms and conditions, the loan application process and evaluation criteria is provided in the Loan Policies and Procedures.

General Financing Terms

The terms and conditions of NADB financing will be appropriate to the project financed.

Lending Limit

As a matter of prudent risk management, the Bank imposes limits per project and per borrower. NADB cannot finance more than 85 percent of the eligible costs of a project. Therefore, funding from other sources in the form of equity contributions, grants or cofinancing is required.


Loan maturities may range up to 25 years, depending on individual project requirements, but cannot exceed the useful life of the project. Grace periods for principal repayment are negotiable and may cover the anticipated project construction and start-up phase.


Loans are available in U.S. dollars or Mexican pesos, depending on project location and the source of repayment, and must be repaid in the currency in which they were originally funded. Loans denominated in Mexican pesos must be hedged through cross-currency swaps.

Financial Costs

Interest rates for loans are market-based and established at loan closing. Payments may be made on a monthly, quarterly or semi-annual basis. NADB generally charges an interest rate that is composed of a base rate plus an administrative margin and a risk exposure spread. 

In making a loan, NADB must be reimbursed for its expenses, including legal fees and loan supervision costs, as well as receive suitable compensation for its risk.


All loans made by NADB must offer a demonstrable and reasonable assurance of repayment. NADB loans must be secured with collateral in the form of project and/or borrower cash flows or other assets. The value of the collateral must be greater than the unpaid balance of the loan. Third-party guaranties may be required to demonstrate a reasonable assurance of repayment or to support collateral requirements.


Project sponsors are responsible for the procurement of all goods and services related to the project. However, procurement of goods and services with NADB loans must be carried out in compliance with NADB Procurement Policies and Procedures.

General Evaluation Criteria

NADB carefully reviews each project proposal to ensure that the project is technically, environmentally, financially and economically sound; that the project sponsor has the institutional, managerial and structural capability to carry out the project; and that the project meets the standards of the financial community in terms of viability, security, and legal structure. In evaluating a loan application, NADB is primarily concerned with the following factors:

Technical criteria

  • The project is part of a long-term master plan that promotes the most efficient use of all resources.
  • The proposed technology is appropriate and effective.
  • The project contains a comprehensive operations and maintenance plan.

Economic criteria

  • The service area can sustain a sufficient level of user fees or other revenue or income streams to repay the debt.

Financial criteria

  • There is a demonstrable and reasonable assurance of repayment at the time of funding.
  • The project is self-sustaining through user fees or other revenue or income streams in order to repay all debts, cover operations and maintenance costs, and create reserves.

Legal/regulatory criteria

  • The project meets all the applicable legal and regulatory requirements of its locality.
  • The proposed procurement procedures are fair, reasonable, competitive and transparent.

Sponsor criteria

  • Project sponsors, borrowers and guarantors must demonstrate their technical, managerial and financial capabilities for carrying out their respective obligations.
  • Project sponsors, borrowers or guarantors must have the legal authority to set and increase user fees and rates.