The not-for-profit water company says the money will be used as part of a five-year investment plan.
The loan facility has been agreed by the European Investment Bank, which has provided Dwr Cymru Welsh Water with £500m since 2001.
The firm says the loan means services can improve without increasing bills.
Projects in the pipeline for Welsh Water include £120m to upgrade or rebuild 12 water treatment plants, and a £15m scheme that is being rolled out in Carmarthenshire and Swansea to manage surface water, called RainScape.
Welsh Water's chief executive Chris Jones said he was delighted to have secured the loan offer "as it helps us deliver higher investment and lower bills for our customers".
Welsh Water has secured a £230m European loan to help meet a £1.5bn bill to invest in its network of pipes and sewerage sites across Wales.