§53714 Guarantee fees

Summary

The Secretary or Administrator must write rules to charge a fee whenever the government guarantees a loan under this chapter. The fee equals the total of yearly charges while the guarantee is in effect. For each year, the charge is the estimated average unpaid principal for that year (not counting non-interest money in an escrow under section 53715) multiplied by a fee rate, then converted to today’s dollars using a discount rate set by the Treasury based on similar U.S. bonds. The fee rate comes from a formula that looks at the loan’s security and uses a sliding scale tied to the borrower’s credit: the best credit gets the lowest allowed rate and the worst credit gets the highest. Rates must be between 0.5% and 1.0% for delivered vessels or equipment, and between 0.25% and 0.5% for vessels being built, rebuilt, reconditioned, or for equipment to be delivered. The fee must be collected by the time the first loan payment is made. The fee can be financed and added to the loan cost. Fees are not refundable, but if the loan is refinanced and re-guaranteed under this chapter, the borrower gets credit for the fee already paid for the remaining term.