(1)    Definitions. In this section:

      (a)    “Community water system” means a public water system that serves at least 15 service connections used by year-round residents or that regularly serves at least 25 year-round residents.

      (b)    “Department” means the department of natural resources.

      (c)    “Local governmental unit” has the meaning given in s. 281.61 (1) (am), except that the term does not include a joint local water authority created under s. 66.0823.

      (d)    “Noncommunity water system” means a public water system that is not a community water system.

      (e)    “Public water system” has the meaning given in s. 281.61 (1) (c).

   (2)   Guarantee requirements. The authority may use money from the Wisconsin drinking water reserve fund under s. 234.933 to guarantee a loan under this section if all of the following apply:

      (a)    The borrower is not a local governmental unit and is one of the following:

         1.    The owner of a community water system.

         2.    The owner of a noncommunity water system and is not operated for profit.

      (b)    The loan qualifies as an eligible loan under sub. (3).

      (c)    The lender is a financial institution that enters into an agreement under s. 234.933 (3) (a).

   (3)   Eligible loans. A loan is an eligible loan if all of the following apply:

      (a)    The department determines that the loan will facilitate compliance with national primary drinking water regulations under 42 USC 300g-1 or otherwise significantly further the health protection objectives of the Safe Drinking Water Act, 42 U.S. Code § 300f to 300j-26.

      (b)    The department determines that the loan satisfies the requirements under s. 281.625 (2).

   (4)   Guarantee of collection.

      (a)    Subject to par. (b), the authority may guarantee collection of a percentage, not exceeding 80 percent, of the principal of any loan eligible for a guarantee under this section. The authority shall establish the percentage of the unpaid principal of an eligible loan that will be guaranteed using the procedures described in the guarantee agreement under s. 234.933 (3) (a). The authority may establish a single percentage for all guaranteed loans or establish different percentages for eligible loans on an individual basis.

      (b)    Except as provided in s. 234.933 (4), the total outstanding principal amount of all guaranteed loans under par. (a) may not exceed $3,000,000.