Promotional Programs » Title XI Shipbuilding
This program, officially known as the "Federal Ship Financing Guarantee Program", was established under Title XI of the Merchant Marine Act of 1936. Its initial purpose was to assist U.S.-flag operators in obtaining private capital to build ships in American shipyards for both the U.S. foreign and the U.S. domestic trades. The government, through the Maritime Administration, guarantees payment of the underlying debt obligations, permitting the shipowner to obtain long-term financing at favorable interest rates. The U.S. government insures or guarantees full payment to the lender of the unpaid principal and interest of the mortgage obligation in the event of default by the vessel owners.
Guarantees on the obligations are eligible to be granted for up to 87 1/2 percent of the vessel's actual cost, as defined in Title XI regulations. Moreover, vessels eligible for Title XI guarantees are required to be of a design satisfactory to MarAd and includes passenger vessels, cargo vessels, tankers, towboats, dredges, barges, floating drydocks, oceanographic research vessels, and drilling rigs. The 103rd Congress enacted legislation amending the Title XI program to allow guarantees for vessels built for the export market. The legislation also authorized guarantees for shipyard modernization and improvement.
The Title XI program is self-sustaining. The Credit Reform Act of 1990 mandates that the Maritime Administration may only approve Title XI guarantees to the extent appropriations have been obtained to cover the estimated cost of the project to the government, as well as the administrative expenses of the entire program. In January of 2009, a loan guarantee of nearly $267 million was approved for the construction of 5 articulated tug/barge units. Currently, 9 applications are pending for the construction of 53 barges, 5 tugs, 3 articulated tug/barge units, 2 shuttle tankers, 6 platform supply vessels and 7 drill rigs.