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Financing and Debt Overview

Eligibility Requirements

MARAD will consider approval of all TItle XI loans which 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 (see legal and regulatory compliance);
  • Exhibit sufficient operating experience and ability to operate the vessels or employ the new technology for a shipyard on an economically sound basis (see economic soundness); and
  • Exhibit creditworthiness and the ability to repay the Title XI loan according to its terms based on contracts and charters and supportable financial projections for long term employment of the vessels or shipyard.

Projects that meet the above eligibility requirements as well as those for Vessels of National Interest will be entitled to higher priority processing by MARAD over other projects that are not Vessels of National Interest.


Generally include commercial vessels such as ferries, bulk, container, cargo, tankers, tugs, towboats, barges, dredges, oceanographic research, floating power barges, offshore support vessels (oil & gas and windfarm), and floating drydocks. The focus of the Title XI 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 MARAD; 
  • Have its design and engineering approved by MARAD; and
  • Document compliance with the domestic content and Cargo Preference Act requirements for foreign materials and components included in construction.  MARAD will only finance foreign components if they are not available in the U.S.  Fifty percent of all foreign components must be shipped on U.S.-flagged vessels if construction period financing is approved.

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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:

  • 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 MARAD public policy goals and objectives;
  • Enhance shipyard productivity and quality by supporting investment in technology (new or generally-proven), techniques, and processes, as well as, novel techniques and processes designed to improve shipbuilding and related industrial production that advance U.S. shipbuilding; and
  • Document compliance with the domestic content and Cargo Preference Act requirements for foreign materials and components included in construction.  MARAD will only finance foreign components if they are not available in the U.S.  Fifty percent of all foreign components must be shipped on U.S.-flagged vessels if construction period financing is approved.

Eligibility determination may also include:

  • Other U.S. public policy benefits;
  • Risk concentration assessment.

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Loan Obligation Amount

  • The program may authorize up to 75 percent of the for barges and 87.5 percent of the Actual Cost of most self-propelled vessels;
  • “Actual Cost” is determined to be fair and reasonable by MARAD. Actual Cost includes almost all those items which would normally be capitalized as vessel or shipbuilding technology 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;
  • Some capitalizable expenses are excluded from Actual Cost, such as legal and accounting fees, printing costs, vessel insurance and underwriting fees, early delivery of equipment and pre-delivery expenses by a manufacturer, and any interest on borrowings for the shipowner’s equity in the vessels or shipyard’s equity in the shipyard technology project; and
  • If a Title XI loan is closed after delivery of the underlying vessel or shipyard technology, or is a refinancing, Actual Cost will be reduced for depreciation from the date of delivery of the vessel or the completion of the shipyard technology project to the loan documentation date.

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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 shipyard technology project, as determined by MARAD. The actual financing period will be based on the financial, economic, market, and other critical aspects of the project.  The Title XI debt must be fully amortized by its maturity date. Amortization in equal payments of principal or level debt is usully required.  Other amortization methods may be approved if they are determined to be in the best interest or MARAD.

The interest rate of the loan is determined by the Federal Financing Bank (FFB) using the interest rate based on U.S. Treasury securities calculated the business day before loan funding plus an interest rate spread. In most cases, the interest rate is fixed at the time of loan funding through the repayment period. In some cases, MARAD has, with restrictions, approved floating interest rates.

Generally, Title XI loans include a prepayment penalty (i.e., a make-whole premium) that is determined at the time of prepayment based on interest rate of the loan and current U.S. Treasury securities rates.  An applicant may elect at the time the loan is funded to be able to prepay the debt without penalty (i.e., at par prepayment) for an additional interest rate cost.

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Sources of Fund for Loan Obligations

The Title XI loans are funded by the program’s designated “preferred lender” – the FFB – a U.S. Government corporation supervised by the Department of Treasury.  MARAD is the loan servicer and manages all borrower payments on behalf of the FFB.  While Title XI is a loan guarantee program, through the use of the FFB, MARAD functions like other federal credit programs with direct lending authority.

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The Title XI Program allows for vessel refinancing on amounts existing on loans up to the applicable financing level of 75% or 87.5% of the depreciated Actual Cost not to exceed the amount of the existing loans to be refinanced. Refinancing under the Title XI 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 shipyard technology was placed into service.

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Program Fees

  • Application Fee: Applicant must pay a non-refundable filing fee of $5,000 with the submission of the application. *Credited against Investigation Fee.
  • Independent Analysis Fees: The Title XI Program may utilize third party experts, including legal counsel, related to an application or outstanding loan.
    • Independent Financial Advisor (IFA) Fee: Depending on the type of project, an outside financial advisor 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 negotiated before the IFA commences review and is usually fixed.  The fee non-refundable and the applicant must agree to pay the IFA before any work is undertaken. *See below - Credited against Investigation Fee.
    • Legal Counsel Fee: An outside law firm may be hired to review and advise MARAD on the contracts, charters, and other legal documents supporting the application and/or draft the loan documentation. This fee is negotiated before the outside counsel commences reeview, but is not fixed and varies based on the size and complexity of the proposed project.  The fee is non-refundable, and the applicant must agree to pay the outside counsel's fees before any work is undertaken. *See below - Credited against Investigation Fee.
    • Other Analysis Fees: While MARAD has many subject matter experts employed by the agency, depending on the type of project and underlying financial model assumptions or risks being evaluated and substantiated, additional third party, private sector experts may be needed and utilized by MARAD during the application review process. Any additional fee(s), including for a marketing study, specialized advisor, or project engineer would be for the account of the applicant and, if possible, may be deducted from the Investigation Fee.

Note: While Independent Analysis Fees are credited against the Investigation Fee, depending on the size of the loan, such costs may exceed the Investigation Fee. The Investigation Fee cost is not a cap on the Independent Analysis Fees.

  • 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 expected loan amount.  The fee is 1/2% of first $10,000,000, then 1/8% of amount in excess of $10,000,000. *Application, IFA and legal counsel 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 loan. An applicant may elect to finance the cost of this fee as part of the loan.  The fee ranges from 1/2% to 1% of the cumulative, annual outstanding balance of the loan discounted to present value.  The fee is due at the initial closing.