§41763 Federal Credit Instruments

Summary

The Secretary of Transportation may offer federal loans, loan guarantees, or lines of credit to help buy aircraft. Secured loans can cover up to 50% of the purchase price (including credits or discounts) and, together with any other federal credit, cannot make more than $100,000,000 outstanding to one borrower. Loan payments must start no later than 3 years after the loan is made, and the loan must be paid off no later than 18 years after the loan agreement. Borrowers may prepay without penalty after meeting required debt service or when they refinance with non‑federal funds. The Secretary can set fees to cover administrative costs, can allow loans to be subordinate to other creditors, and can require terms, audits, and other protections. Loan guarantees may cover unpaid interest and up to 50% of unpaid principal, may not support loans with repayment terms longer than 15 years, and follow the same 50% and $100,000,000 limits. Lines of credit can be used as future direct loans, may total up to 50% of the purchase price, and may be drawn at no more than 20% of the line in any year. A line of credit must be available no more than 5 years after purchase; repayments for each draw must start within 3 years of the first draw and be finished within 18 years of that draw. Before making any credit available, the Secretary, with the OMB Director, must set a capital reserve subsidy based on credit reviews. Credit is allowed only for regional jets that will improve service for commuter or new entrant carriers, only if the carrier signs a binding agreement to serve underserved markets, and only if the aircraft meets Stage 3 noise rules as of January 1, 1999 and will be used for scheduled passenger service for at least 36 consecutive months after entering service.