§1843 Limitations and conditions of loan guarantees

Summary

The Board may guarantee a loan only if three things are true: the loan is needed so the borrower can keep providing goods or services and not doing so would hurt the national or regional economy or jobs; the borrower cannot get credit elsewhere on reasonable terms; and the borrower’s future earnings plus any pledged collateral make it likely the loan will be repaid and protect the United States. The lender must also certify it would not make the loan without the guarantee. Loans must be repaid in no more than five years and can be renewed for up to three more years. The Board sets the interest rate. It will consider that the guarantee lowers the lender’s risk and will compare rates for similar loans. The Board must also charge a guarantee fee to cover the government’s administrative costs and the risk taken. That fee cannot be so low that the combined interest and fee would be less than what the normal capital markets would charge for a similar loan.