---
kind: "section"
citation: "42 U.S.C. § 16373"
title: "42"
title_heading: "The Public Health and Welfare"
number: "16373"
heading: "Secured loans"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/16373"
units:
  - "Chapter 149 — National Energy Policy and Programs"
  - "Subchapter IX — Research and Development"
  - "Part J — Carbon Dioxide Transportation Infrastructure Finance and Innovation"
---

# §16373. Secured loans

- (a) **Agreements—**
  - (1) **In general—** Subject to [paragraph (2)](#a-2), the [Secretary](/usc/42/15801.md?p=4) may enter into agreements with 1 or more [obligors](/usc/42/16371.md?p=10) to make [secured loans](/usc/42/16371.md?p=14), the proceeds of which—
    - (A) shall be used—
      - (i) to finance [eligible project costs](/usc/42/16371.md?p=4) of any [project](/usc/42/16371.md?p=12) selected under [section 16372 of this title](/usc/42/16372.md);
      - (ii) to refinance interim [construction](/usc/42/300s–3.md?p=7) financing of [eligible project costs](/usc/42/16371.md?p=4) of any [project](/usc/42/16371.md?p=12) selected under [section 16372 of this title](/usc/42/16372.md); or
      - (iii) to refinance long-term [project obligations](/usc/42/16371.md?p=13) or [Federal credit instruments](/usc/42/16371.md?p=5), if the refinancing provides additional funding capacity for the completion, enhancement, or expansion of any [project](/usc/42/16371.md?p=12) that—
        - (I) is selected under [section 16372 of this title](/usc/42/16372.md); or
        - (II) otherwise meets the requirements of that section; and
    - (B) may be used in accordance with [subsection (b)(7)](#b-7) to pay any fees collected by the [Secretary](/usc/42/15801.md?p=4) under [subparagraph (B)](#a-1-B) of that subsection.
  - (2) **Risk assessment—** Before entering into an agreement under this subsection, the [Secretary](/usc/42/15801.md?p=4), in consultation with the [Director](/usc/42/11851.md?p=5) of the Office of Management and Budget, shall determine an appropriate credit [subsidy amount](/usc/42/16371.md?p=15) for each [secured loan](/usc/42/16371.md?p=14), taking into account all relevant factors, including the creditworthiness factors under [section 16372(b)(2) of this title](/usc/42/16372.md?p=b-2).
- (b) **Terms and limitations—**
  - (1) **In general—** A [secured loan](/usc/42/16371.md?p=14) under this section with respect to a [project](/usc/42/16371.md?p=12) shall be on such terms and conditions and contain such covenants, representations, warranties, and requirements (including requirements for audits) as the [Secretary](/usc/42/15801.md?p=4) determines to be appropriate.
  - (2) **Maximum amount—** The amount of a [secured loan](/usc/42/16371.md?p=14) under this section shall not exceed an amount equal to 80 percent of the reasonably anticipated [eligible project costs](/usc/42/16371.md?p=4).
  - (3) **Payment—** A [secured loan](/usc/42/16371.md?p=14) under this section shall be payable, in whole or in part, from—
    - (A) user fees;
    - (B) payments owing to the [obligor](/usc/42/16371.md?p=10) under a public-private partnership; or
    - (C) other revenue sources that also secure or fund the [project obligations](/usc/42/16371.md?p=13).
  - (4) **Interest rate—**
    - (A) **In general—** Except as provided in [subparagraph (B)](#b-4-B), the interest rate on a [secured loan](/usc/42/16371.md?p=14) under this section shall be not less than the interest rate reflected in the yield on United States Treasury securities of a similar maturity to the maturity of the [secured loan](/usc/42/16371.md?p=14) on the date of execution of the loan agreement.
    - (B) **Limited buydowns—**
      - (i) **In general—** Subject to [clause (iii)](#b-4-B-iii), the [Secretary](/usc/42/15801.md?p=4) may lower the interest rate of a [secured loan](/usc/42/16371.md?p=14) under this section to not lower than the interest rate described in [clause (ii)](#b-4-B-ii), if the interest rate has increased during the period—
        - (I) beginning on, as applicable—
          - (aa) the date on which an application acceptable to the [Secretary](/usc/42/15801.md?p=4) is submitted for the applicable [project](/usc/42/16371.md?p=12); or
          - (bb) the date on which the [Secretary](/usc/42/15801.md?p=4) entered into a [master credit agreement](/usc/42/16371.md?p=9) for the applicable [project](/usc/42/16371.md?p=12); and
        - (II) ending on the date on which the [Secretary](/usc/42/15801.md?p=4) executes the [Federal credit instrument](/usc/42/16371.md?p=5) for the applicable [project](/usc/42/16371.md?p=12) that is the subject of the [secured loan](/usc/42/16371.md?p=14).
      - (ii) **Description of interest rate—** The interest rate referred to in [clause (i)](#b-4-B-i) is the interest rate reflected in the yield on United States Treasury securities of a similar maturity to the maturity of the [secured loan](/usc/42/16371.md?p=14) in effect, as applicable to the [project](/usc/42/16371.md?p=12) that is the subject of the [secured loan](/usc/42/16371.md?p=14), on—
        - (I) the date described in [clause (i)(I)(aa)](#b-4-B-i-I-aa); or
        - (II) the date described in [clause (i)(I)(bb)](#b-4-B-i-I-bb).
      - (iii) **Limitation—** The interest rate of a [secured loan](/usc/42/16371.md?p=14) may not be lowered pursuant to [clause (i)](#b-4-B-i) by more than 1½ percentage points (150 basis points).
  - (5) **Maturity date—** The final maturity date of the [secured loan](/usc/42/16371.md?p=14) shall be the earlier of—
    - (A) the date that is 35 years after the date of [substantial completion](/usc/42/16371.md?p=16) of the [project](/usc/42/16371.md?p=12); and
    - (B) if the useful life of the capital asset being financed is of a lesser period, the date that is the end of the useful life of the asset.
  - (6) **Nonsubordination—**
    - (A) **In general—** Except as provided in [subparagraph (B)](#b-6-B), the [secured loan](/usc/42/16371.md?p=14) shall not be subordinated to the claims of any holder of [project obligations](/usc/42/16371.md?p=13) in the event of bankruptcy, insolvency, or liquidation of the [obligor](/usc/42/16371.md?p=10).
    - (B) **Preexisting indenture—**
      - (i) **In general—** The [Secretary](/usc/42/15801.md?p=4) shall waive the requirement under [subparagraph (A)](#b-6-A) for a [public agency](/usc/42/11851.md?p=8) borrower that is financing ongoing capital programs and has outstanding senior bonds under a preexisting indenture, if—
        - (I) the [secured loan](/usc/42/16371.md?p=14) is rated in the A category or higher; and
        - (II) the [secured loan](/usc/42/16371.md?p=14) is secured and payable from pledged revenues not affected by [project](/usc/42/16371.md?p=12) performance, such as a tax-backed revenue pledge or a system-backed pledge of [project](/usc/42/16371.md?p=12) revenues.
      - (ii) **Limitation—** If the [Secretary](/usc/42/15801.md?p=4) waives the nonsubordination requirement under this subparagraph—
        - (I) the maximum credit [subsidy amount](/usc/42/16371.md?p=15) to be paid by the Federal Government shall be not more than 10 percent of the principal amount of the [secured loan](/usc/42/16371.md?p=14); and
        - (II) the [obligor](/usc/42/16371.md?p=10) shall be responsible for paying the remainder of the [subsidy amount](/usc/42/16371.md?p=15), if any.
  - (7) **Fees—**
    - (A) **In general—** The [Secretary](/usc/42/15801.md?p=4) may collect a fee on or after the date of the financial close of a [Federal credit instrument](/usc/42/16371.md?p=5) under this section in an amount equal to not more than $3,000,000 to cover all or a portion of the costs to the Federal Government of providing the [Federal credit instrument](/usc/42/16371.md?p=5).
    - (B) **Amendment to add cost of fees to secured loan—** If the [Secretary](/usc/42/15801.md?p=4) collects a fee from an [obligor](/usc/42/16371.md?p=10) under [subparagraph (A)](#b-7-A) to cover all or a portion of the costs to the Federal Government of providing a [secured loan](/usc/42/16371.md?p=14), the [obligor](/usc/42/16371.md?p=10) and the [Secretary](/usc/42/15801.md?p=4) may amend the terms of the [secured loan](/usc/42/16371.md?p=14) to add to the principal of the [secured loan](/usc/42/16371.md?p=14) an amount equal to the amount of the fee collected by the [Secretary](/usc/42/15801.md?p=4).
  - (8) **Maximum Federal involvement—** The total Federal assistance provided for a [project](/usc/42/16371.md?p=12) under the [CIFIA program](/usc/42/16371.md?p=1), including any grant provided under [section 16374 of this title](/usc/42/16374.md), shall not exceed an amount equal to 80 percent of the [eligible project costs](/usc/42/16371.md?p=4).
- (c) **Repayment—**
  - (1) **Schedule—** The [Secretary](/usc/42/15801.md?p=4) shall establish a repayment schedule for each [secured loan](/usc/42/16371.md?p=14) under this section based on—
    - (A) the projected cash flow from [project](/usc/42/16371.md?p=12) revenues and other repayment sources; and
    - (B) the useful life of the [project](/usc/42/16371.md?p=12).
  - (2) **Commencement—** Scheduled loan repayments of principal or interest on a [secured loan](/usc/42/16371.md?p=14) under this section shall commence not later than 5 years after the date of [substantial completion](/usc/42/16371.md?p=16) of the [project](/usc/42/16371.md?p=12).
  - (3) **Deferred payments—**
    - (A) **In general—** If, at any time after the date of [substantial completion](/usc/42/16371.md?p=16) of a [project](/usc/42/16371.md?p=12), the [project](/usc/42/16371.md?p=12) is unable to [generate](/usc/42/2021b.md?p=8) sufficient revenues in excess of reasonable and necessary operating expenses to pay the scheduled loan repayments of principal and interest on the [secured loan](/usc/42/16371.md?p=14), the [Secretary](/usc/42/15801.md?p=4) may, subject to [subparagraph (C)](#c-3-C), allow the [obligor](/usc/42/16371.md?p=10) to add unpaid principal and interest to the outstanding balance of the [secured loan](/usc/42/16371.md?p=14).
    - (B) **Interest—** Any payment deferred under [subparagraph (A)](#c-3-A) shall—
      - (i) continue to accrue interest in accordance with [subsection (b)(4)](#b-4) until fully repaid; and
      - (ii) be scheduled to be amortized over the remaining term of the loan.
    - (C) **Criteria—**
      - (i) **In general—** Any payment deferral under [subparagraph (A)](#c-3-A) shall be contingent on the [project](/usc/42/16371.md?p=12) meeting criteria established by the [Secretary](/usc/42/15801.md?p=4).
      - (ii) **Repayment standards—** The criteria established pursuant to [clause (i)](#c-3-C-i) shall include standards for the reasonable prospect of repayment.
  - (4) **Prepayment—**
    - (A) **Use of excess revenues—** Any excess revenues that remain after satisfying scheduled debt service requirements on the [project obligations](/usc/42/16371.md?p=13) and [secured loan](/usc/42/16371.md?p=14) and all deposit requirements under the terms of any trust agreement, bond resolution, or similar agreement securing [project obligations](/usc/42/16371.md?p=13) may be applied annually to prepay the [secured loan](/usc/42/16371.md?p=14), without penalty.
    - (B) **Use of proceeds of refinancing—** A [secured loan](/usc/42/16371.md?p=14) may be prepaid at any time without penalty from the proceeds of refinancing from non-Federal funding sources.
- (d) **Sale of secured loans—**
  - (1) **In general—** Subject to [paragraph (2)](#d-2), as soon as practicable after [substantial completion](/usc/42/16371.md?p=16) of a [project](/usc/42/16371.md?p=12) and after notifying the [obligor](/usc/42/16371.md?p=10), the [Secretary](/usc/42/15801.md?p=4) may sell to another entity or reoffer into the capital markets a [secured loan](/usc/42/16371.md?p=14) for the [project](/usc/42/16371.md?p=12) if the [Secretary](/usc/42/15801.md?p=4) determines that the sale or reoffering can be made on favorable terms.
  - (2) **Consent of obligor—** In making a sale or reoffering under [paragraph (1)](#d-1), the [Secretary](/usc/42/15801.md?p=4) may not change any original term or condition of the [secured loan](/usc/42/16371.md?p=14) without the written consent of the [obligor](/usc/42/16371.md?p=10).
- (e) **Loan guarantees—**
  - (1) **In general—** The [Secretary](/usc/42/15801.md?p=4) may provide a [loan guarantee](/usc/42/16371.md?p=8) to a [lender](/usc/42/16371.md?p=6) in lieu of making a [secured loan](/usc/42/16371.md?p=14) under this section if the [Secretary](/usc/42/15801.md?p=4) determines that the budgetary cost of the [loan guarantee](/usc/42/16371.md?p=8) is substantially the same as, or less than, that of a [secured loan](/usc/42/16371.md?p=14).
  - (2) **Terms—** The terms of a [loan guarantee](/usc/42/16371.md?p=8) under [paragraph (1)](#e-1) shall be consistent with the terms required under this section for a [secured loan](/usc/42/16371.md?p=14), except that the rate on the guaranteed loan and any prepayment features shall be negotiated between the [obligor](/usc/42/16371.md?p=10) and the [lender](/usc/42/16371.md?p=6), with the consent of the [Secretary](/usc/42/15801.md?p=4).

## Source credit

(Pub. L. 109–58, title IX, § 999C, as added Pub. L. 117–58, div. D, title III, § 40304(a), Nov. 15, 2021, 135 Stat. 995.)

## Notes

### Editorial Notes

### Prior Provisions

A prior section 16373, Pub. L. 109–58, title IX, § 999C, Aug. 8, 2005, 119 Stat. 921, related to additional requirements for awards, prior to repeal by Pub. L. 113–67, div. A, title III, § 301(a), Dec. 26, 2013, 127 Stat. 1181.

### Statutory Notes and Related Subsidiaries

### Wage Rate Requirements

For provisions relating to rates of wages to be paid to laborers and mechanics on projects for construction, alteration, or repair work funded under div. D or an amendment by div. D of Pub. L. 117–58, including authority of Secretary of Labor, see section 18851 of this title.