---
kind: "section"
citation: "15 U.S.C. § 3721"
title: "15"
title_heading: "Commerce and Trade"
number: "3721"
heading: "Federal loan guarantees for innovative technologies in manufacturing"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/3721"
units:
  - "Chapter 63 — Technology Innovation"
---

# §3721. Federal loan guarantees for innovative technologies in manufacturing

- (a) **Establishment—** The [Secretary](/usc/15/3703.md?p=1) shall establish a program to provide loan guarantees for obligations to small- or medium-sized manufacturers for the use or production of innovative technologies.
- (b) **Eligible projects—** A loan guarantee may be made under the program only for a project that re-equips, expands, or establishes a manufacturing facility in the United States—
  - (1) to use an innovative technology or an innovative process in manufacturing;
  - (2) to manufacture an innovative technology product or an integral component of such a product; or
  - (3) to commercialize an innovative product, process, or idea that was developed by research funded in whole or in part by a grant from the Federal government.
- (c) **Eligible borrower—** A loan guarantee may be made under the program only for a borrower who is a small- or medium-sized manufacturer, as determined by the [Secretary](/usc/15/3703.md?p=1) under the criteria established pursuant to [subsection (l)](#l).
- (d) **Limitation on amount—** A loan guarantee shall not exceed an amount equal to 80 percent of the obligation, as estimated at the time at which the loan guarantee is issued.
- (e) **Limitations on loan guarantee—** No loan guarantee shall be made unless the [Secretary](/usc/15/3703.md?p=1) determines that—
  - (1) there is a reasonable prospect of repayment of the principal and interest on the obligation by the borrower;
  - (2) the amount of the obligation (when combined with amounts available to the borrower from other sources) is sufficient to carry out the project;
  - (3) the obligation is not subordinate to other financing;
  - (4) the obligation bears interest at a rate that does not exceed a level that the [Secretary](/usc/15/3703.md?p=1) determines appropriate, taking into account the prevailing rate of interest in the private sector for similar loans and risks; and
  - (5) the term of an obligation requires full repayment over a period not to exceed the lesser of—
    - (A) 30 years; or
    - (B) 90 percent of the projected useful life, as determined by the [Secretary](/usc/15/3703.md?p=1), of the physical asset to be financed by the obligation.
- (f) **Defaults—**
  - (1) **Payment by Secretary—**
    - (A) **In general—** If a borrower defaults (as defined in regulations promulgated by the [Secretary](/usc/15/3703.md?p=1) and specified in the loan guarantee) on the obligation, the holder of the loan guarantee shall have the right to demand payment of the unpaid amount from the [Secretary](/usc/15/3703.md?p=1).
    - (B) **Payment required—** Within such period as may be specified in the loan guarantee or related [agreements](/usc/15/7a.md?p=2), the [Secretary](/usc/15/3703.md?p=1) shall pay to the holder of the loan guarantee the unpaid interest on and unpaid principal of the obligation as to which the borrower has defaulted, unless the [Secretary](/usc/15/3703.md?p=1) finds that there was no default by the borrower in the payment of interest or principal or that the default has been remedied.
    - (C) **Forbearance—** Nothing in this subsection precludes any forbearance by the holder of the obligation for the benefit of the borrower which may be agreed upon by the parties to the obligation and approved by the [Secretary](/usc/15/3703.md?p=1).
  - (2) **Subrogation—**
    - (A) **In general—** If the [Secretary](/usc/15/3703.md?p=1) makes a payment under [paragraph (1)](#f-1), the [Secretary](/usc/15/3703.md?p=1) shall be subrogated to the rights, as specified in the loan guarantee, of the recipient of the payment or related [agreements](/usc/15/7a.md?p=2) including, if appropriate, the authority (notwithstanding any other provision of law)—
      - (i) to complete, maintain, operate, lease, or otherwise dispose of any property acquired pursuant to such loan guarantee or related [agreement](/usc/15/7a.md?p=2); or
      - (ii) to permit the borrower, pursuant to an [agreement](/usc/15/7a.md?p=2) with the [Secretary](/usc/15/3703.md?p=1), to continue to pursue the purposes of the project if the [Secretary](/usc/15/3703.md?p=1) determines that such an [agreement](/usc/15/7a.md?p=2) is in the public interest.
    - (B) **Superiority of rights—** The rights of the [Secretary](/usc/15/3703.md?p=1), with respect to any property acquired pursuant to a loan guarantee or related [agreements](/usc/15/7a.md?p=2), shall be superior to the rights of any other [person](/usc/15/7a.md?p=6) with respect to the property.
  - (3) **Notification—** If the borrower defaults on an obligation, the [Secretary](/usc/15/3703.md?p=1) shall notify the Attorney General of the default.
- (g) **Terms and conditions—** A loan guarantee under this section shall include such detailed terms and conditions as the [Secretary](/usc/15/3703.md?p=1) determines appropriate—
  - (1) to protect the interests of the United States in the case of default; and
  - (2) to have available all the patents and technology necessary for any [person](/usc/15/7a.md?p=6) selected, including the [Secretary](/usc/15/3703.md?p=1), to complete and operate the project.
- (h) **Consultation—** In establishing the terms and conditions of a loan guarantee under this section, the [Secretary](/usc/15/3703.md?p=1) shall consult with the [Secretary](/usc/15/3703.md?p=1) of the Treasury.
- (i) **Fees—**
  - (1) **In general—** The [Secretary](/usc/15/3703.md?p=1) shall charge and collect fees for loan guarantees in amounts the [Secretary](/usc/15/3703.md?p=1) determines are sufficient to cover applicable administrative expenses.
  - (2) **Availability—** Fees collected under this subsection shall—
    - (A) be deposited by the [Secretary](/usc/15/3703.md?p=1) into the Treasury of the United States; and
    - (B) remain available until expended, subject to such other conditions as are contained in annual appropriations Acts.
  - (3) **Limitation—** In charging and collecting fees under [paragraph (1)](#i-1), the [Secretary](/usc/15/3703.md?p=1) shall take into consideration the amount of the obligation.
- (j) **Records—**
  - (1) **In general—** With respect to a loan guarantee under this section, the borrower, the lender, and any other appropriate party shall keep such records and other pertinent documents as the [Secretary](/usc/15/3703.md?p=1) shall prescribe by regulation, including such records as the [Secretary](/usc/15/3703.md?p=1) may require to facilitate an effective audit.
  - (2) **Access—** The [Secretary](/usc/15/3703.md?p=1) and the Comptroller General of the United States, or their duly authorized representatives, shall have access to records and other pertinent documents for the purpose of conducting an audit.
- (k) **Full faith and credit—** The full faith and credit of the United States is pledged to the payment of all loan guarantees issued under this section with respect to principal and interest.
- (l) **Regulations—** The [Secretary](/usc/15/3703.md?p=1) shall issue final regulations before making any loan guarantees under the program. The regulations shall include—
  - (1) criteria that the [Secretary](/usc/15/3703.md?p=1) shall use to determine eligibility for loan guarantees under this section, including—
    - (A) whether a borrower is a small- or medium-sized manufacturer; and
    - (B) whether a borrower demonstrates that a market exists for the innovative technology product, or the integral component of such a product, to be manufactured, as evidenced by written statements of interest from potential purchasers;
  - (2) criteria that the [Secretary](/usc/15/3703.md?p=1) shall use to determine the amount of any fees charged under [subsection (i)](#i), including criteria related to the amount of the obligation;
  - (3) policies and procedures for selecting and monitoring lenders and loan performance; and
  - (4) any other policies, procedures, or information necessary to implement this section.
- (m) **Audit—**
  - (1) **Annual independent audits—** The [Secretary](/usc/15/3703.md?p=1) shall enter into an arrangement with an independent auditor for annual evaluations of the program under this section.
  - (2) **Report—** The results of the independent audit under [paragraph (1)](#m-1) shall be provided directly to the Committee on Science and Technology of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate.
- (n) **Report to Congress—** Concurrent with the submission to Congress of the President’s annual budget request in each year after January 4, 2011, the [Secretary](/usc/15/3703.md?p=1) shall transmit to the Committee on Science and Technology of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate a report containing a summary of all activities carried out under this section.
- (o) **Coordination and nonduplication—** To the maximum extent practicable, the [Secretary](/usc/15/3703.md?p=1) shall ensure that the activities carried out under this section are coordinated with, and do not duplicate the efforts of, other loan guarantee programs within the Federal Government.
- (p) **MEP centers—** The [Secretary](/usc/15/3703.md?p=1) may use [centers](/usc/15/3703.md?p=2) established under [section 278k of this title](/usc/15/278k.md) to provide information about the program established under this section and to conduct outreach to potential borrowers, as appropriate.
- (q) **Minimizing risk—** The [Secretary](/usc/15/3703.md?p=1) shall promulgate regulations and policies to carry out this section in accordance with Office of Management and Budget Circular No. A–129, entitled “Policies for Federal Credit Programs and Non-Tax Receivables”, as in effect on January 4, 2011.
- (r) **Sense of Congress—** It is the sense of Congress that no loan guarantee shall be made under this section unless the borrower agrees to use a federally-approved electronic employment eligibility verification system to verify the employment eligibility of—
  - (1) all [persons](/usc/15/7a.md?p=6) hired during the contract term by the borrower to perform employment duties within the United States; and
  - (2) all [persons](/usc/15/7a.md?p=6) assigned by the borrower to perform work within the United States on the project.
- (s) **Definitions—** In this section:
  - (1) **Cost—** The term “cost” has the meaning given such term under [section 661a of title 2](/usc/2/661a.md).
  - (2) **Innovative process—** The term “innovative process” means a process that is significantly improved as compared to the process in general use in the commercial marketplace in the United States at the time the loan guarantee is issued.
  - (3) **Innovative technology—** The term “innovative technology” means a technology that is significantly improved as compared to the technology in general use in the commercial marketplace in the United States at the time the loan guarantee is issued.
  - (4) **Loan guarantee—** The term “loan guarantee” has the meaning given such term in [section 661a of title 2](/usc/2/661a.md). The term includes a loan guarantee commitment (as defined in [section 661a of title 2](/usc/2/661a.md)).
  - (5) **Obligation—** The term “obligation” means the loan or other debt obligation that is guaranteed under this section.
  - (6) **Program—** The term “program” means the loan guarantee program established in [subsection (a)](#a).
- (t) **Authorization of appropriations—** There are authorized to be appropriated $20,000,000 for each of fiscal years 2011 through 2013 to provide the cost of loan guarantees under this section.

## Source credit

(Pub. L. 96–480, § 26, as added Pub. L. 111–358, title VI, § 602, Jan. 4, 2011, 124 Stat. 4026; amended Pub. L. 117–167, div. B, title II, § 10246(b)(2), Aug. 9, 2022, 136 Stat. 1492.)

## Notes

### Editorial Notes

### Amendments

2022—Subsec. (m)(2), (3). Pub. L. 117–167 redesignated par. (3) as (2), struck out “and the Comptroller General’s review under paragraph (2)” before “shall be provided”, and struck out former par. (2). Prior to amendment, text of par. (2) read as follows: “The Comptroller General of the United States shall conduct a biennial review of the Secretary’s execution of the program under this section.”

### Statutory Notes and Related Subsidiaries

### Change of Name

Committee on Science and Technology of House of Representatives changed to Committee on Science, Space, and Technology of House of Representatives by House Resolution No. 5, One Hundred Twelfth Congress, Jan. 5, 2011.