---
kind: "section"
citation: "49 U.S.C. § 22403"
title: "49"
title_heading: "Transportation"
number: "22403"
heading: "Administration of direct loans and loan guarantees"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/49/22403"
units:
  - "Subtitle V — Rail Programs"
  - "Part B — Assistance"
  - "Chapter 224 — Railroad Rehabilitation and Improvement Financing"
---

# §22403. Administration of direct loans and loan guarantees

- (a) **Applications.—**
  - (1) **In general.—** The [Secretary](/usc/49/22401.md?p=14) shall prescribe the form and contents required of applications for assistance under [section 22402](/usc/49/22402.md), to enable the [Secretary](/usc/49/22401.md?p=14) to determine the eligibility of the [applicant](/usc/49/22901.md?p=1)’s proposal, and shall establish terms and conditions for [direct loans](/usc/49/22401.md?p=3) and [loan guarantees](/usc/49/22401.md?p=7) made under that section, including a program guide, a standard term sheet, and specific timetables.
  - (2) **Documentation.—** An [applicant](/usc/49/22901.md?p=1) meeting the size standard for small business concerns established under section 3(a)(2) of the Small Business Act ([15 U.S.C. 632(a)(2)](/usc/15/632.md?p=a-2)) may provide unaudited financial statements as documentation of historical financial information if such statements are accompanied by the [applicant](/usc/49/22901.md?p=1)’s Federal tax returns and Internal Revenue Service tax verifications for the corresponding years.
- (b) **Full Faith and Credit.—** All guarantees entered into by the [Secretary](/usc/49/22401.md?p=14) under [section 22402](/usc/49/22402.md) shall constitute general obligations of the United States of America backed by the full faith and credit of the United States of America.
- (c) **Assignment of Loan Guarantees.—** The holder of a [loan guarantee](/usc/49/22401.md?p=7) made under [section 22402](/usc/49/22402.md) may assign the [loan guarantee](/usc/49/22401.md?p=7) in whole or in part, subject to such requirements as the [Secretary](/usc/49/22401.md?p=14) may prescribe.
- (d) **Modifications.—** The [Secretary](/usc/49/22401.md?p=14) may approve the [modification](/usc/49/22401.md?p=10) of any term or condition of a [direct loan](/usc/49/22401.md?p=3), [loan guarantee](/usc/49/22401.md?p=7), [direct loan obligation](/usc/49/22401.md?p=4), or [loan guarantee commitment](/usc/49/22401.md?p=8), including the [rate](/usc/49/24102.md?p=10) of interest, time of payment of interest or principal, or security requirements, if the [Secretary](/usc/49/22401.md?p=14) finds in writing that—
  - (1) the [modification](/usc/49/22401.md?p=10) is equitable and is in the overall best interests of the United States;
  - (2) consent has been obtained from the [applicant](/usc/49/22901.md?p=1) and, in the case of a [loan guarantee](/usc/49/22401.md?p=7) or [loan guarantee commitment](/usc/49/22401.md?p=8), the holder of the obligation; and
  - (3) the [modification](/usc/49/22401.md?p=10) cost has been covered under [section 22402(f)](/usc/49/22402.md?p=f).
- (e) **Compliance.—** The [Secretary](/usc/49/22401.md?p=14) shall assure compliance, by an [applicant](/usc/49/22901.md?p=1), any other party to the loan, and any [railroad](/usc/49/22401.md?p=12) or [railroad](/usc/49/22401.md?p=12) partner for whose benefit assistance is intended, with the provisions of this chapter, regulations issued hereunder, and the terms and conditions of the [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7), including through regular periodic inspections.
- (f) **Commercial Validity.—** For purposes of claims by any party other than the [Secretary](/usc/49/22401.md?p=14), a [loan guarantee](/usc/49/22401.md?p=7) or [loan guarantee commitment](/usc/49/22401.md?p=8) shall be conclusive evidence that the underlying obligation is in compliance with the provisions of this chapter, and that such obligation has been approved and is legal as to principal, interest, and other terms. Such a guarantee or commitment shall be valid and incontestable in the hands of a holder thereof, including the original lender or any other holder, as of the date when the [Secretary](/usc/49/22401.md?p=14) granted the application therefor, except as to fraud or material misrepresentation by such holder.
- (g) **Default.—** The [Secretary](/usc/49/22401.md?p=14) shall prescribe regulations setting forth procedures in the event of default on a loan made or guaranteed under section 22402. The [Secretary](/usc/49/22401.md?p=14) shall ensure that each [loan guarantee](/usc/49/22401.md?p=7) made under that section contains terms and conditions that provide that—
  - (1) if a payment of principal or interest under the loan is in default for more than 30 days, the [Secretary](/usc/49/22401.md?p=14) shall pay to the holder of the obligation, or the holder’s agent, the amount of unpaid guaranteed interest;
  - (2) if the default has continued for more than 90 days, the [Secretary](/usc/49/22401.md?p=14) shall pay to the holder of the obligation, or the holder’s agent, 90 percent of the unpaid guaranteed principal;
  - (3) after final resolution of the default, through liquidation or otherwise, the [Secretary](/usc/49/22401.md?p=14) shall pay to the holder of the obligation, or the holder’s agent, any remaining amounts guaranteed but which were not recovered through the default’s resolution;
  - (4) the [Secretary](/usc/49/22401.md?p=14) shall not be required to make any payment under paragraphs [(1)](#g-1) through [(3)](#g-3) if the [Secretary](/usc/49/22401.md?p=14) finds, before the expiration of the periods described in such paragraphs, that the default has been remedied; and
  - (5) the holder of the obligation shall not receive payment or be entitled to retain payment in a total amount which, together with all other recoveries (including any recovery based upon a security interest in equipment or facilities) exceeds the actual loss of such holder.
- (h) **Rights of the Secretary.—**
  - (1) **Subrogation.—** If the [Secretary](/usc/49/22401.md?p=14) makes payment to a holder, or a holder’s agent, under [subsection (g)](#g) in connection with a [loan guarantee](/usc/49/22401.md?p=7) made under [section 22402](/usc/49/22402.md), the [Secretary](/usc/49/22401.md?p=14) shall be subrogated to all of the rights of the holder with respect to the obligor under the loan.
  - (2) **Disposition of property.—** The [Secretary](/usc/49/22401.md?p=14) may complete, recondition, reconstruct, renovate, repair, maintain, operate, charter, rent, sell, or otherwise dispose of any property or other interests obtained pursuant to this section. The [Secretary](/usc/49/22401.md?p=14) shall not be subject to any Federal or [State](/usc/49/26105.md?p=5) regulatory requirements when carrying out this paragraph.
- (i) **Action Against Obligor.—** The [Secretary](/usc/49/22401.md?p=14) may bring a civil action in an appropriate Federal court in the name of the United States in the event of a default on a [direct loan](/usc/49/22401.md?p=3) made under [section 22402](/usc/49/22402.md), or in the name of the United States or of the holder of the obligation in the event of a default on a loan guaranteed under section 22402. The holder of a guarantee shall make available to the [Secretary](/usc/49/22401.md?p=14) all records and evidence necessary to prosecute the civil action. The [Secretary](/usc/49/22401.md?p=14) may accept property in full or partial satisfaction of any sums owed as a result of a default. If the [Secretary](/usc/49/22401.md?p=14) receives, through the sale or other disposition of such property, an amount greater than the aggregate of—
  - (1) the amount paid to the holder of a guarantee under [subsection (g)](#g) of this section; and
  - (2) any other cost to the United States of remedying the default,

  the [Secretary](/usc/49/22401.md?p=14) shall pay such excess to the obligor.

- (j) **Breach of Conditions.—** The Attorney General shall commence a civil action in an appropriate Federal court to enjoin any activity which the [Secretary](/usc/49/22401.md?p=14) finds is in violation of this chapter, regulations issued hereunder, or any conditions which were duly agreed to, and to secure any other appropriate relief.
- (k) **Attachment.—** No attachment or execution may be issued against the [Secretary](/usc/49/22401.md?p=14), or any property in the control of the [Secretary](/usc/49/22401.md?p=14), prior to the entry of final judgment to such effect in any [State](/usc/49/26105.md?p=5), Federal, or other court.
- (l) **Charges and Loan Servicing.—**
  - (1) **Purposes.—** The [Secretary](/usc/49/22401.md?p=14) may collect from each [applicant](/usc/49/22901.md?p=1), obligor, or loan party a reasonable charge for—
    - (A) the cost of evaluating the application, amendments, [modifications](/usc/49/22401.md?p=10), and waivers, including for evaluating project viability, [applicant](/usc/49/22901.md?p=1) creditworthiness, and the appraisal of the value of the equipment or facilities for which the [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) is sought, and for making necessary determinations and findings;
    - (B) the cost of award management and project management oversight;
    - (C) the cost of services from expert firms, including counsel, and independent financial advisors to assist in the underwriting, auditing, servicing, and exercise of rights with respect to [direct loans](/usc/49/22401.md?p=3) and [loan guarantees](/usc/49/22401.md?p=7); and
    - (D) the cost of all other expenses incurred as a result of a breach of any term or condition or any event of default on a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7).
  - (2) **Standards.—** The [Secretary](/usc/49/22401.md?p=14) may charge different amounts under this subsection based on the different costs incurred under [paragraph (1)](#l-1).
  - (3) **Servicer.—**
    - (A) **In general.—** The [Secretary](/usc/49/22401.md?p=14) may appoint a financial entity to assist the [Secretary](/usc/49/22401.md?p=14) in servicing a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) under this chapter.
    - (B) **Duties.—** A servicer appointed under [subparagraph (A)](#l-3-A) shall act as the agent of the [Secretary](/usc/49/22401.md?p=14) in servicing a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) under this chapter.
    - (C) **Fees.—** A servicer appointed under [subparagraph (A)](#l-3-A) shall receive a servicing fee from the obligor or other loan party, subject to approval by the [Secretary](/usc/49/22401.md?p=14).
  - (4) **National surface transportation and innovative finance bureau account.—** Amounts collected under this subsection shall—
    - (A) be credited directly to the National Surface Transportation and Innovative Finance Bureau account; and
    - (B) remain available until expended to pay for the costs described in this subsection.
- (m) **Fees and Charges.—** Except as provided in this chapter, the [Secretary](/usc/49/22401.md?p=14) may not assess any fees, including user fees, or charges in connection with a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) provided under section 22402.

## Source credit

(Added and amended Pub. L. 117–58, div. B, title I, § 21301(a)(2), (5), (e), Nov. 15, 2021, 135 Stat. 683, 689.)

## Notes

### Editorial Notes

### Codification

The text of section 823 of Title 45, Railroads, which was transferred to this section and amended by Pub. L. 117–58, div. B, title I, § 21301(a)(5), (e), was based on Pub. L. 94–210, title V, § 503, as added and amended Pub. L. 105–178, title VII, § 7203(a)(1), (4), June 9, 1998, 112 Stat. 475, 477; Pub. L. 109–59, title IX, § 9003(h), (i), Aug. 10, 2005, 119 Stat. 1923; Pub. L. 114–94, div. A, title XI, § 11605(b), Dec. 4, 2015, 129 Stat. 1695; Pub. L. 115–56, div. D, § 164(b), as added Pub. L. 115–123, div. B, § 20101(2), Feb. 9, 2018, 132 Stat. 121.

### Amendments

2021—Pub. L. 117–58, § 21301(a)(5), transferred text of section 823 of Title 45, Railroads, to this section.

Subsec. (a). Pub. L. 117–58, § 21301(e)(1), designated existing provisions as par. (1), inserted heading, substituted “section 22402” for “section 502”, and added par. (2).

Subsecs. (b), (c). Pub. L. 117–58, § 21301(e)(4)(A), substituted “section 22402” for “section 502”.

Subsec. (d)(3). Pub. L. 117–58, § 21301(e)(2), substituted “section 22402(f)” for “section 502(f)”.

Subsecs. (e), (f). Pub. L. 117–58, § 21301(e)(4)(B), substituted “this chapter” for “this title”.

Subsecs. (g), (h)(1). Pub. L. 117–58, § 21301(e)(4)(A), substituted “section 22402” for “section 502”.

Subsec. (i). Pub. L. 117–58, § 21301(e)(4)(A), substituted “section 22402” for “section 502” in two places in introductory provisions.

Subsec. (j). Pub. L. 117–58, § 21301(e)(4)(B), substituted “this chapter” for “this title”.

Subsec. (l)(3)(A). Pub. L. 117–58, § 21301(e)(4)(B), substituted “this chapter” for “this title”.

Subsec. (l)(3)(B). Pub. L. 117–58, § 21301(e)(4)(B), substituted “this chapter” for “this title”.

Pub. L. 117–58, § 21301(e)(3), substituted “servicing a direct loan” for “serving a direct loan”.

Subsec. (m). Pub. L. 117–58, § 21301(e)(4), substituted “section 22402” for “section 502” and “this chapter” for “this title”.