Project Requirements
- Financial Requirements - Modifications to GAAP
- Economic Soundness
- Technical Acceptance
- Legal and Regulatory Compliance
- Insurance Requirements
Financial Requirements - Modifications to GAAP
To be eligible for guarantees, the applicant, its parent company (if applicable), and any other participants having a significant financial or contractual interest in the proposed project will be required to submit U.S. GAAP-compliant, audited financial information. An applicant must demonstrate that there are adequate resources available to meet the following requirements:
- Minimum of 12.5% equity funded or committed prior to Maritime Administration approval,
- Positive working capital,
- Long-term debt to equity ratio of 2:1 or less, and
- Ability to maintain net worth
Economic Soundness
Economic soundness and the applicant’s ability to repay the guaranteed debt are the primary consideration for approval of a proposed project. An applicant must demonstrate the following requirements:
- Need in the particular segment of the maritime industry for new or additional capacity,
- Market potential for the employment of the vessel or utilization of the shipyard over the term of the guaranteed debt,
- Projected revenues and expenses associated with the employment of the vessel or utilization of the shipyard,
- Charters, contracts, agreements, or undertakings which are relevant to the employment of the vessel or utilization of the shipyard,
- Need for technical improvements, such as increased fuel efficiency or improved safety (for inland waterway projects), and
- Any other information believed to be relevant to the project
Technical Acceptance
To be eligible for guarantees, the vessel financed under the project must meet the following criteria:
- Constructed in the United States and meet the applicable requirements of the U.S. Coast Guard,
- Acceptable actual costs for construction, reconstruction, or reconditioning,
- Constructed, maintained, and operated to meet the requirements of either the American Bureau of Shipping (ABS) or another approved classification society,
- Comply with any applicable U.S. laws relating to vessel operation,
- For reconstruction or reconditioning – demonstrate that needed work on the vessel would not the result of inadequate maintenance and repair
To be eligible for guarantees, the operator of the vessel financed under the project must meet the following criteria:
- Provide detailed information about the applicant and bareboat charter to demonstrate that it has the necessary experience, ability, and other qualifications to operate and maintain the vessel or shipyard,
- Identify the ownership of the applicant, including tax identification number, principal business address, articles of incorporation, and officers,
- Principal business of the applicant for the previous five years, including information on controlled business entities and nature of all relevant businesses,
- Information on all management personnel,
- Detailed statement of applicant’s ability to successfully operate the financed vessel or the shipyard
Legal and Regulatory Compliance
An applicant for a project involving a vessel to be operated in the U.S. coastwise trade must demonstrate U.S. citizenship for the owner and any bareboat charterer. Additionally, if the applicant is a partnership or limited liability company, governing agreements for the entities must be in a form and substance satisfactory to the Maritime Administration.