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MARAD Finalizes Rules for Title XI Loan Applicants and Borrowers

Maritime Activity Reports, Inc.

December 18, 2023

© Maxim Khalansky / Adobe Stock

© Maxim Khalansky / Adobe Stock

The U.S. Department of Transportation's Maritime Administration (MARAD) issued a final rule updating its financial requirements for the Federal Ship Financing Program, commonly referred to as Title XI. The final rule provides the application requirements for MARAD loan guarantees for construction or reconstruction of a U.S.-flagged vessel or shipyard modernization.  

Designed to promote the growth and modernization of the U.S. merchant marine and U.S. shipyards, Title XI provides for a full faith and credit guarantee by the U.S. government. Through long-term debt repayment guarantees, the program encourages U.S. shipowners to obtain new vessels from U.S. shipyards cost effectively. It also assists U.S. shipyards with modernizing their facilities for building and repairing vessels. The repayment term allowed under the program generally is much longer, and the interest rates are lower, than those available from the commercial lending market.

MARAD said the final rule establishes modern financial performance as well as initial and continuing creditworthiness criteria for Title XI loan guarantees. The rule will also provide applicants with more flexible repayments terms, aligning program regulations with the best practices of maritime industry lending and federal credit. By introducing greater flexibility to the regulations governing the Title XI program, MARAD will be able to adapt the terms of new loan guarantees according to the risks of particular projects.

The final rule will become effective 30 days after publication in the Federal Register, and can be found at regulations.gov, docket number MARAD-2023-0086.

The program is of particular importance for the U.S. offshore wind industry. In June 2022, MARAD designated vessels used in construction, service and/or maintenance of offshore wind facilities as "vessels of national interest", giving these applications processing priority for Title XI support.

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