DOT Short-Term Lending Program (STLP)
The Department of Transportation's Office of Small and Disadvantaged Business Utilization (OSDBU) operates a Short-Term Lending Program (STLP) — a loan guarantee program at 49 CFR Part 22 that helps small and disadvantaged transportation contractors access working capital while performing DOT-funded or supported contracts. DOT guarantees loans made by participating banks to Disadvantaged Business Enterprises (DBEs) and Small Disadvantaged Businesses (SDBs) that hold eligible transportation contracts — up to $750,000 per loan.
Legal Authority
- 49 U.S.C. § 332 — DOT Short-Term Lending Program authority: authorizes DOT's Office of Small and Disadvantaged Business Utilization (OSDBU) to establish and administer a short-term working capital loan guarantee program for small and disadvantaged businesses performing DOT-funded transportation contracts
- 49 CFR Part 22 — DOT regulations implementing the Short-Term Lending Program; establishes loan guarantee limits, eligible borrowers, participating lender requirements, and application procedures
Key Mechanics
The STLP works as a guarantee program, not a direct loan: DOT guarantees loans made by participating commercial banks to eligible borrowers, reducing the bank's credit risk and enabling lending that might not otherwise occur. Eligible borrowers must be Disadvantaged Business Enterprises (DBEs) certified under 49 CFR Part 26 or Small Disadvantaged Businesses holding a DOT-funded or supported contract. The guarantee covers loans up to $750,000 per borrower; the guarantee is for working capital purposes (covering the cost of performing the contract, not general business expansion). Loans must be repaid from proceeds of the covered contract. The program is administered by OSDBU, which reviews applications, approves guarantee requests, and monitors participating lenders.
Current Rule (2026)
| Parameter | Value |
|---|---|
| Citation | 49 CFR Part 22 |
| Issuing agency | DOT Office of Small and Disadvantaged Business Utilization (OSDBU) |
| Statutory authority | 49 U.S.C. § 332 (DOT minority/disadvantaged business programs) |
| Maximum loan amount | $750,000 (with OSDBU Director approval for higher) |
| Interest rate | Variable, prime rate-based |
| Guarantee | DOT OSDBU guarantees repayment to participating lender |
What This Rule Does
The STLP addresses a persistent problem for small transportation contractors: cash flow gaps. When a DBE or SDB wins a contract with a state DOT, transit agency, or airport — partially funded by federal DOT dollars — the contractor often needs working capital to hire workers, buy materials, and pay overhead before the first payment arrives. Banks are sometimes reluctant to lend against government contract receivables, particularly to small businesses with limited collateral.
DOT's STLP closes that gap by having OSDBU guarantee the loan. A participating bank (an FDIC-insured institution with a cooperative agreement with OSDBU) makes the working capital loan; OSDBU backs it up. The borrower draws on the loan to fund contract performance and repays as the government client pays invoices. The loan is tied to specific contract receivables — as the contractor bills and collects on the contract, those payments flow through to repay the STLP loan.
The program is explicitly targeted at DBEs (certified under 49 CFR Part 26 — the DOT disadvantaged business enterprise program) and SDBs (small disadvantaged businesses as defined by SBA standards). It is designed to extend credit to businesses that might otherwise be locked out of conventional bank lending, helping DOT meet its minority business participation goals in federally-assisted transportation projects.
Key Provisions
- § 22.1 — Purpose: to provide financial assistance via short-term loans from Participating Lenders guaranteed by DOT OSDBU to DBEs and SDBs for execution of DOT-funded transportation contracts
- § 22.3 — Definitions: "accounts receivable" means monies due the borrower for work performed under a contract, subcontract, or purchase order; "activation date" is when the STLP loan is established on the lender's books; "DBE" means a firm certified as a disadvantaged business enterprise under 49 CFR Part 26
- § 22.11 — Eligibility criteria for borrowers: must be (1) a for-profit entity; (2) hold an eligible transportation-related contract; (3) demonstrate an eligible use for credit; (4) be a certified DBE or SDB; (5) have at least one qualified principal with transportation contracting experience; (6) not be delinquent on federal, state, or local debt; and (7) certify compliance with child support obligations (any owner of 50%+ must certify no more than 60 days delinquent on child support)
- § 22.13 — Loan terms: maximum $750,000 per loan unless the OSDBU Director authorizes a higher amount; variable interest rates tied to the prime rate; loans are short-term working capital instruments — typically not long-term capital financing
- § 22.19 — Credit criteria: lender evaluates character/reputation/credit history, payment record on past obligations, financial strength, management capability, and the borrower's transportation contracting track record
- § 22.21 — Participating lender requirements: must be FDIC-insured or regulated by Federal Reserve or OCC (the regulation as drafted also references the Office of Thrift Supervision, which was abolished by Dodd-Frank in 2011 and folded into OCC/Fed/FDIC); must enter a cooperative agreement with DOT OSDBU before making STLP loans; must commit to DOT's lending standards and reporting requirements
- § 22.23 — Cooperative agreements: OSDBU enters written cooperative agreements with lenders; the agreement does not obligate OSDBU to approve any specific loan, but establishes the framework under which OSDBU will evaluate and guarantee loans
- § 22.27 — Lender reimbursements: OSDBU reimburses participating lenders for reasonable expenses in processing, administering, and monitoring STLP loans
- § 22.29 — DOT access to files: OSDBU, OIG, and GAO have the right to access, review, inspect, and copy all STLP loan files held by participating lenders — ensuring oversight accountability
- § 22.41 — Application procedures: the borrower submits a Loan Guarantee Request Application to OSDBU (obtained from OSDBU's office or website); supporting documentation includes contract copies, financial statements, and demonstration of DBE/SDB status
- § 22.43 — Approval: if approved, OSDBU issues a Guarantee Agreement (DOT Form 2314-1) to the participating lender; if the lender then declines, the lender must communicate the reasons
- § 22.45 — Fees to borrowers: participating lenders may charge a loan application fee, as determined by OSDBU; fees must be reasonable and OSDBU sets fee norms
- § 22.53 — Loan monitoring: the participating lender monitors project progress, reviews advance requests, processes disbursements and payments, and maintains contact with the borrower throughout the loan term
- § 22.65 — Subordination prohibition: DOT OSDBU may not be placed in a subordinate position to any other debt on the collateral — protecting the federal guarantee position
- § 22.67 — Default and collection: delinquent loans must be immediately reported to OSDBU; the lender and OSDBU jointly establish collection procedures; after exhausting collection efforts, the lender may invoke the guarantee — DOT pays the guaranteed amount and acquires the right to pursue the borrower for recovery
- § 22.69 — Claim process: lender demands OSDBU honor its guarantee in writing after reasonable collection efforts are exhausted; OSDBU's maximum liability is the guaranteed amount stated in the Guarantee Agreement
How It Affects You
If you are a DBE or SDB with a transportation contract funded by federal DOT dollars (a transit project, airport improvement, highway construction, or rail project), the STLP can provide working capital when commercial credit is unavailable or too expensive. The program is specifically designed for contractors who have won work but need cash to mobilize before payments start flowing.
To access the program, you need: an active DOT-funded transportation contract, DBE or SDB certification, no federal debt delinquency, and a creditworthy track record. You apply through OSDBU, not directly through a bank. OSDBU evaluates the application and, if approved, directs you to a participating lender who makes the actual loan. Loan fees are set by OSDBU and must be disclosed upfront.
The STLP is distinct from SBA loan programs — it is administered entirely by DOT OSDBU, scoped specifically to transportation contracts, and requires DBE or SDB certification. DBEs who work on non-DOT contracts or who are not certified would not be eligible for the STLP (though they may be eligible for SBA programs).
Statutory Authority
This rule implements:
- 49 U.S.C. § 332 — DOT authority to develop and implement programs to ensure disadvantaged businesses have equitable opportunity to compete for and participate in DOT-funded contracts; authorizes OSDBU to provide financial and technical assistance to DBEs and SDBs
Recent Rulemakings
No significant recent rulemakings. Part 22 has been stable since its original promulgation; OSDBU periodically updates loan maximums and fee schedules through administrative updates rather than formal rulemaking.