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?
A. The Program fees are
described in detail in the Program fees section of this brochure. There
are three fees due to MARAD: an application filing fee; an investigation
fee; and a guarantee fee. Additional costs may be incurred to complete the
application, document the transaction and place the debt obligation.