The primary objective of NADB is to facilitate financing for the development, execution and operation of environmental infrastructure projects located in the U.S.-Mexico border region and certified by the Border Environment Cooperation Commission (BECC). In accordance with its charter, NADB may provide loans for infrastructure projects with a demonstrable and reasonable assurance of repayment. This webpage outlines the eligibility and evaluation criteria, general financing terms, and procedures for the NADB’s Loan Program.

Basic Eligibility Criteria

Under its charter, NADB is authorized to make loans to both public and private sector borrowers, operating within the United States and Mexico. Any project, regardless of community size or project cost, is eligible for financing and other forms of assistance from NADB, if it meets all three of the following eligibility criteria:

  • The project must be located within 100 km (62 miles) north of the international boundary in the four U.S. states of Texas, New Mexico, Arizona and California or within 300 km (about 186 miles) south of the border in the six Mexican states of Tamaulipas, Nuevo Leon, Coahuila, Chihuahua, Sonora, and Baja California. Projects beyond these areas may be eligible if they remedy a transboundary environmental or health problem, as determined by the BECC-NADB Board of Directors.

  • It must remedy an environmental and/or human health problem.

  • It must pass through the BECC certification process.

Through its Loan Program, NADB is prepared to finance a portion of the capital costs of a project. Eligible capital costs 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.

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.

Types of Financing Available

NADB works closely with project sponsors to structure appropriate and affordable financing packages to meet the specific needs of each community or project. NADB can provide financing in a number of ways, including: direct loans, Interim financing and participation in municipal bond issues or as part of a syndicate.

General Financing Terms

All NADB project financing operations must be structured with a view toward preserving the bank’s resources and credit rating for the benefit of current and future border residents. Funding from other sources in the form of grants, equity or cofinancing is required as NADB generally cannot finance more than 85 percent of the eligible costs of a project. 

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. The borrower must maintain the debt coverage ratio set by NADB at the time of funding.

Loans must be paid back in the currency in which they are originally funded. An exchange rate hedging mechanism is available to protect against currency risks, where necessary.

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.

The terms and conditions of NADB financing will be appropriate to the project financed. 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. A list of standard financing fees is provided in the table.

Interest rates for particular loans are established at loan closing, and 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 (see table).

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.



Loan Policies and Procedures

Certification and Financing Application

Financing Process


















Commitment fee on undisbursed loan balances


Interest Rate

Base rate:  Related to the yield on U.S. Treasury securities or to the LIBOR Swap rate, TIIE rate, or any other U.S. dollar or Mexican peso rate related to the interest rate on borrowings by the Bank.

Administrative margin:  25-150 basis points.

Risk exposure spread:  0-400 basis points, depending on the borrower’s creditworthiness and project risk.

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