FREQUENTLY ASKED QUESTIONS

THE FEDERAL SHIPFINANCING (TITLE XI) PROGRAM

Q. Does the Program provide funds similar to a bank financing?

A. No, the Program is a guarantee program and not a direct loan program. Funds are secured in the private sector with repayment guaranteed by the U.S. Government. However, the review process and documentation are similar in nature to private sector transactions.

Q. What projects are eligible?

A. Construction, reconstruction and reconditioning of commercial vessels in U.S. shipyards, U.S. shipyard modernization projects and certain refinancings on these type of projects.

Q. Who is eligible?

A. U.S. shipowners, foreign shipowners and U.S. shipyards.

Q. What is the length of the financing?

A. Up to 25 years depending on the type of project.

Q. What level of financing is available?

A. Up to 87 ½ percent depending on the type of project.

Q. What is the normal amortization schedule?

A. The guaranteed debt is generally repaid through equal semi-annual payments of principal plus accrued interest (level principal).

Q. Are foreign components eligible for financing?

A. Yes, certain foreign items can be included in the costs to be financed provided the Maritime Administration (MARAD) grants a waiver.

Q. How is the interest rate determined?

A. The interest rate is set by the private sector which generally utilizes comparable U.S. Treasury obligations as a benchmark for rate determination. MARAD must determine that the rate is acceptable.

Q. Is the interest rate fixed for the entire term of the financing or is it a floating rate?

A. Historically, the interest rate has been fixed for the financing period. However, we have recently approved floating interest rates with certain restrictions.

Q. How long is the application processing time?

A. Approximately 60 days from the date the application is determined to be completed by MARAD.

Q. How can a company expedite the application process?

A. There are several ways in which the company can facilitate the processing of their application. First, it is strongly recommended that the company have meeting(s) with MARAD to discuss the project prior to actually filing the application. Second, when an application is filed make it as complete as possible. Third, indicate to MARAD any unique aspects of the project that MARAD should consider. Finally, respond to MARAD’s requests for information as completely and quickly as possible.

Q. What are the costs of using the Program?