§53704 Funding Limits

Summary

Limits how much the government can guarantee under this program. At any one time the total unpaid principal of guaranteed loans cannot be more than $12,000,000,000. Of that total, up to $850,000,000 is for loans tied to fishing vessels and fishery facilities. No extra yearly limits can be added except those set ahead of time by annual authorization laws. A vessel that is eligible for a guarantee cannot be turned down just because of its type. The term “cost” means the meaning in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a). The Secretary or Administrator must make and update each year a system of risk categories for guaranteed loans. They must set a yearly subsidy rate for each category that equals the cost of loans in that category, as a percent of the guaranteed amount. Before giving a guarantee and each year for ongoing projects, they must put the loan into a risk category using factors like loan length and size, borrower finances, other guarantees, expected use and market for the vessel or equipment, collateral, manager experience, whether coverage starts during construction, and concentration of loans by one borrower. The amount available for guarantees is treated as reduced by (guaranteed amount × the category’s subsidy rate). The government’s estimated cost of a guarantee is that reduced amount. No guarantees can be made once the available funds are reduced to zero by this calculation.