§22403 Administration of Direct Loans and Loan Guarantees

Summary

Requires the Secretary to set the application form, the information needed, and the rules for making direct loans and loan guarantees under section 22402. The Secretary must create a program guide, a standard term sheet, and timetables. Small businesses that meet the size rule in 15 U.S.C. 632(a)(2) may give unaudited financial statements if they also provide Federal tax returns and IRS tax verifications for the same years. All guarantees made under section 22402 are backed by the full faith and credit of the United States. A holder of a loan guarantee can assign it, subject to Secretary rules. The Secretary may change loan or guarantee terms (like interest rate or payment times) if the change is fair, is best for the United States, the borrower and holder agree, and the cost is covered under section 22402(f). The Secretary must check that borrowers and others follow the rules, including by doing inspections. For parties other than the Secretary, a loan guarantee is proof that the loan follows this law and was legally approved, and is valid in the hands of a holder as of the approval date except for fraud or major lies by that holder. The Secretary must write rules for what happens if a loan or guaranteed loan goes into default. If payment is more than 30 days late, the Secretary will pay the unpaid guaranteed interest. If default continues more than 90 days, the Secretary will pay 90 percent of the unpaid guaranteed principal. After the default is finally resolved, the Secretary will pay any remaining guaranteed amounts not recovered. No payment is required if the default is fixed before those time limits, and the holder cannot get more than its actual loss. If the Secretary pays a holder, the Secretary gets the holder’s rights against the borrower. The Secretary can sell, repair, operate, or otherwise deal with property obtained and is not bound by other Federal or State rules when doing so. The Secretary may sue in Federal court for defaults, and the holder must provide records to help. The Attorney General must sue to stop violations when the Secretary asks. No court attachment can be made against the Secretary or its property before a final judgment. The Secretary may collect reasonable charges for application review, project oversight, expert services, and costs from breaches. The Secretary may hire a servicer to act as agent and charge a fee approved by the Secretary. Money collected goes to the National Surface Transportation and Innovative Finance Bureau account and stays available until spent. Except where this law allows, the Secretary may not charge other fees for these loans or guarantees.