49 U.S.C. § 22403 — Administration of direct loans and loan guarantees

(a) Applications. (1) In general. The Secretary must set the required form and content for applications under section 22402, so the Secretary can judge whether an applicant qualifies. The Secretary must also set the terms and conditions for these loans and guarantees, including a program guide, a standard term sheet, and specific timelines. (2) Documentation. A small business (as defined by the Small Business Act) can submit unaudited financial statements as proof of its financial history, as long as it also includes its federal tax returns and IRS tax verifications for those years. (b) Full Faith and Credit. Every loan guarantee the Secretary makes under section 22402 is a general obligation of the United States, backed by the full faith and credit of the U.S. government. (c) Assignment of Loan Guarantees. Whoever holds a loan guarantee made under section 22402 can transfer ("assign") all or part of it to someone else, following whatever rules the Secretary sets. (d) Modifications. The Secretary can approve changing any term of a direct loan, loan guarantee, or related obligation — including the interest rate or payment timing or security requirements — but only if the Secretary finds, in writing, that: (1) the change is fair and serves the overall best interests of the United States; (2) the applicant has agreed to it, and so has the guarantee holder if it's a loan guarantee; and (3) the cost of the change has already been covered under section 22402(f). (e) Compliance. The Secretary must make sure applicants, other parties to the loan, and any benefiting railroad or partner follow this chapter, its regulations, and the loan's terms and conditions. The Secretary does this partly through regular inspections. (f) Commercial Validity. For anyone other than the Secretary making a claim, a loan guarantee or guarantee commitment is treated as solid proof that the underlying loan follows this chapter's rules, and that it was properly approved and is legally valid as to its principal, interest, and other terms. That guarantee stays valid and cannot be challenged in the hands of whoever holds it — including the original lender or a later holder — as of the day the Secretary approved the application, except in cases of fraud or serious misrepresentation by that holder. (g) Default. The Secretary must write regulations covering what happens if a loan made or guaranteed under section 22402 goes into default. Every loan guarantee must include these terms: (1) if a payment is more than 30 days late, the Secretary must pay the holder the unpaid guaranteed interest; (2) if the default lasts more than 90 days, the Secretary must pay the holder 90 percent of the unpaid guaranteed principal; (3) once the default is finally resolved — through liquidation or otherwise — the Secretary must pay the holder any remaining guaranteed amount that wasn't recovered; (4) the Secretary doesn't have to make any of those payments if the default gets fixed before the relevant deadline; and (5) the holder cannot receive or keep payments that, combined with everything else recovered, add up to more than the holder's actual loss. (h) Rights of the Secretary. (1) Subrogation. If the Secretary pays a holder because of a default on a guaranteed loan, the Secretary steps into the holder's shoes — taking over all the holder's rights against the borrower. This is called "subrogation." (2) Disposition of property. The Secretary can fix up, rebuild, repair, maintain, run, rent out, sell, or otherwise deal with any property obtained this way, and does not have to follow ordinary federal or state regulatory rules while doing it. (i) Action Against Obligor. If a direct loan defaults, the Secretary can sue the borrower in federal court, in the name of the United States. If a guaranteed loan defaults, the Secretary can sue in the name of the United States or of the loan's holder. The holder must give the Secretary whatever records and evidence are needed to bring that lawsuit. The Secretary can accept property instead of money to settle some or all of what's owed. If selling that property brings in more than what the Secretary already paid the holder plus other costs of fixing the default, the Secretary must pay that extra amount back to the borrower. (j) Breach of Conditions. The Attorney General must sue in federal court to stop any activity the Secretary finds violates this chapter, its regulations, or any agreed-to conditions, and to get any other appropriate remedy. (k) Attachment. No one can seize the Secretary's property, or property the Secretary controls, through attachment or a court order, before a final court judgment says they can. (l) Charges and Loan Servicing. (1) Purposes. The Secretary can charge applicants, borrowers, or other loan parties a reasonable fee to cover: evaluating the application and any changes or waivers, including checking the project's viability, the applicant's creditworthiness, and the value of the equipment or facilities; managing the award and overseeing the project; hiring outside experts like lawyers and financial advisors to help underwrite, audit, and service the loan; and any extra costs from a breach or a default. (2) Standards. The Secretary can charge different amounts depending on how much each of those costs actually is. (3) Servicer. The Secretary can hire a financial company to help service a loan. That servicer acts as the Secretary's agent, and it collects its own servicing fee from the borrower, subject to the Secretary's approval. (4) National Surface Transportation and Innovative Finance Bureau account. Money collected this way goes into that account and stays available until it's spent on the costs described above. (m) Fees and Charges. Except as this chapter allows, the Secretary cannot charge any other fees in connection with a direct loan or loan guarantee under section 22402.