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U.S. Department of Transportation U.S. Department of Transportation Icon United States Department of Transportation United States Department of Transportation

Financing and Debt Overview

Eligibility Requirements

The Maritime Administrator will consider approval of all Federal Ship Financing Program obligation guarantees who meet the following criteria:

  • Be an individual, corporation, partnership, or other business formation that is U.S. organized, domiciled, and recognized as a U.S. citizen,
  • Exhibit sufficient operating experience and ability to operate the vessels or employ the new shipyard technology on an economically sound basis,
  • Exhibit creditworthiness and the ability to repay guaranteed debt according to its terms, keep a positive working capital balance and an aggregate debt level at no more than two times its net worth


Generally include commercial vessels such as ferries, bulk, container, cargo, tankers, tugs, towboats, barges, dredges, oceanographic research, floating power barges, offshore oil rigs and support vessels, and floating drydocks. The focus of the program is on new construction, but projects for reconstruction and/or reconditioning of existing vessels to improve efficiency and extend useful life -- such as repowering to use LNG for propulsion -- may also be considered.  Export Vessels are no longer eligible.

The Vessel must:

  • Meet the American Bureau of Shipping standards or other such standards approved by the U.S. Coast Guard or other standards acceptable to the Maritime Administration; 
  • Have its design and engineering approved by the Maritime Administration; and
  • Document compliance with the Cargo Preference Act requirements for foreign materials and components included in construction.


Limited to privately-owned, general shipyard facilities in the U.S. designed for construction, reconstruction, repair, rehabilitation or refurbishment of vessels. Floating drydocks, barges, or vessels used for vessel construction, reconstruction, repair, rehabilitation, or refurbishment are also eligible.

Projects must:

  • Demonstrate economic soundness;
  • Provide U.S. public policy benefits, such as increased employment, new job creation, energy efficiency, or carbon emission reduction, or serve other U.S. Executive Branch, Department of Transportation, or Maritime Administration public policy goals and objectives; and
  • Enhance shipyard productivity and quality, where the Program will support investment in technology (new or generally-proven), techniques, and processes. Or, novel techniques and processes designed to improve shipbuilding and related industrial production that advance U.S. shipbuilding.

Eligibility determination may also include:

  • Vessels of National Interest;
  • Other U.S. public policy benefits;
  • Risk concentration assessment.

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Guaranteed Obligation Amount

  • Legislation permits guarantee for up to 75 percent of the Actual Cost for barges and 87.5 percent of the Actual Cost of certain classes of vessels.
  • Actual Costs are those determined to be fair and reasonable by the Maritime Administration. Actual Costs include those items which would normally be capitalized as vessel costs under U.S. generally accepted accounting principles, such as the cost of construction, reconstruction or reconditioning (including designing, inspection, outfitting and equipping) of the vessel, together with construction period interest and the Guarantee Fee.
  • Technology costs generally include those items which would normally be capitalized as shipbuilding technology under U.S. generally accepted accounting principles including construction period interest and the Guarantee Fee, but excludes amounts payable to the manufacturer for early delivery of equipment and pre-delivery expenses which may not be properly capitalized as the cost of the Technology.
  • However, some capitalizable expenses are excluded from Actual Cost, such as legal and accounting fees, printing costs, vessel insurance and underwriting fees, and any interest on borrowings for the shipowner’s equity in the vessels or shipyard’s equity in the Technology.
  • If a Title XI guarantee of obligations is documented after delivery of the underlying vessel or technology, or is a refinancing, Actual Costs will be reduced for depreciation from the date of delivery to the documentation date of the guarantee.

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Amortization and Interest Rate

The maximum guarantee period is the lesser of 25 years or the remaining economic life of the vessel or Technology, as determined by the Maritime Administration. The actual financing period will be based on the financial, economic, market, and other critical aspects of the project.  Amortization in equal payments of principal is usually required.  However, other amortization methods such as level debt (equal payments of principal and interest) may be approved if sufficient security in the form of long-term charters, reduction in the amount of guarantee, and/or the reduction in the length of the guarantee period is offered.

The interest rate of the guaranteed obligation is determined by the Federal Financing Bank (FFB) using the base interest rate of a U.S. Treasury security of comparable average life to that of the proposed debt issuance plus an interest rate spread. In most cases, the interest rate is fixed. In some cases, MARAD has, with restrictions, approved floating interest rates.

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Sources of Fund for Obligations

The Federal Ship Financing Program is a debt guarantee program only.  Funds for the guaranteed debt obligations are obtained from another U.S. Government source, the Federal Financing Bank (FFB), an agency of the Department of Treasury.  The FFB is designated the "Preferred Lender" for the Program by statute.

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The Federal Ship Financing Program also allows for vessel refinancing on outstanding debt guaranteed by the Federal Ship Financing Program, or amounts existing on obligations not previously guaranteed up to the applicable financing level of 75% or 87.5% of the depreciated Actual Cost not to exceed the amount of the existing obligations to be refinanced. Refinancing under the Federal Ship Financing Program must meet all of the applicable requirements of the existing regulations and statutes, and the original debt must have been issued within one (1) year after vessel delivery or within one (1) year of the date the Technology was placed into service.

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Program Fees

  • Application Fee:  Applicant must pay a non-refundable filing fee of $5000 with the submission of the application. *Credited against Investigation Fee.

  • Independent Analysis Fees:  The Federal Ship Financing Program may utilize third party experts, including legal counsel, related to an application or guarantee.

    • Independent Financial Advisor (IFA) Fee:  Depending on the type of project, an outside firm may be hired to do a separate analysis in conjunction with the analysis being done by MARAD to ensure the economic soundness of the project. The cost of the IFA review varies based on the size and complexity of the proposed project. This fee is non-refundable and must be paid by the applicant prior to the IFA undertaking any work. *Credited against Investigation Fee.

    • Legal Counsel Fee:  Depending on the type of project, an outside firm may be hired to do a separate analysis and/or drafting of loan documentation with oversight by MARAD to ensure appropriate and timely legal review and loan documentation preparation.   

  • Investigation Fee:  Prior to the issuance of a Letter Commitment to guarantee obligations, an investigation fee must be paid. This fee is based on the amount of guaranteed debt issued. 1/2% of first $10,000,000, then 1/8% of amount in excess of $10,000,000. *Application and IFA Fees are deducted from this fee.

  • Guarantee Fee:  This one-time fee is determined based upon borrower’s financial condition and paid at the time of the closing to issue the guaranteed debt. 1/2% to 1% of average amount of outstanding obligations. Present value of cumulative annual fees due at initial closing. This fee can be financed if certain conditions are met.

Note:  For Administrative Fees, such as Independent Analysis and Legal Counsel Fees, the Secretary/Administrator shall charge and collect from the obligor fees they consider reasonable for processing the application and monitoring the loan guarantee. Fees collected for this purpose are not subject to the previous limitation of 0.5% of principal amount of obligation guarantee.

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  • Repayment periods up to 25 years;
  • Interest rates comparable to U.S. Treasury rate for comparable-term securities;
  • Up to 87.5 percent financing;
  • Fixed or floating rates; and
  • Stimulate the growth and modernization of the U.S. Merchant Marine and U.S. shipyards.

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Last updated: Thursday, November 10, 2022