
[Federal Register: August 21, 2008 (Volume 73, Number 163)]
[Proposed Rules]               
[Page 49386-49405]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21au08-23]                         

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

49 CFR Part 22

[Docket No: OST-2008-0236]
RIN 2105-AD50

 
Short-Term Lending Program (STLP)

AGENCY: Office of the Secretary (OST), Office of Small and 
Disadvantaged Business Utilization.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: In an effort to financially assist Disadvantaged Business 
Enterprises (DBEs) and other certified small and disadvantaged business 
(SDBs) in their execution of transportation related contracts at the 
local, state and federal levels, the Department of Transportation's 
(DOT) Office of Small and Disadvantaged Business Utilization (OSDBU) 
has developed the Short-Term Lending Program (STLP), under which DOT 
guarantees short-term lines of credit for said businesses. The program 
is administered through cooperative agreements between DOT's OSDBU and 
Participating Lenders and under the STLP's governing policies and 
procedures. This NPRM proposes new rules to govern the STLP.

DATES: Comments on the proposed rules must be received by October 20, 
2008. Late comments will be considered to the extent practicable.

ADDRESSES: You may submit comments to this rule by any of the following 
methods:
     Agency Web site: http://dms.dot.gov: Follow the 
instructions for submitting comments on the Web site.
     Mail: Docket Management Facility; U.S. Department of 
Transportation, U.S. Department of Transportation, 1200 New Jersey 
Ave., SE., West Building Ground Floor, Room 140, Washington, DC 20590.
     Hand Delivery: Room 140 on the ground floor of the West 
Building Ground Floor, 1200 New Jersey Ave., SE., Washington, DC, 
between 9 a.m. and 5 p.m., Monday through Friday, except Federal 
holidays.
     Federal eRulemaking Portal: Go to http://
www.regulations.gov. Follow the instructions for submitting comments.

FOR FURTHER INFORMATION CONTACT: Nancy Strine, Financial Assistance 
Division Manager, U.S Department of Transportation, OSDBU, 1200 New 
Jersey Ave, SE., Room W56-497, Washington, DC 20590. Telephone: (800) 
532-1169 ext. 65343 or (202) 366-5343.

SUPPLEMENTARY INFORMATION:

 Background

    The Director of DOT's OSDBU has been delegated to carry out the 
functions vested in the Secretary of Transportation by section 906 of 
the Railroad Revitalization and Regulatory Reform Act of 1976 (Pub. L. 
940-210, as amended) known as the Minority Business Resource Center 
Program, which includes a guaranteed loan program. 49 U.S.C. 332 
authorizes DOT's OSDBU to establish, under the Minority Resource 
Center, programs that would assist DBEs and SDBs in acquiring access to 
working capital and to debt financing, in order to obtain 
transportation-related contracts wholly or partially funded by DOT. To 
implement this authority, OSDBU developed its Short Term Lending 
Program (STLP) which offers DBE's and other certified small and 
disadvantaged businesses short term working capital loans at variable 
interest rates to perform on these transportation-related contracts.
    Initially developed in 1989 as a direct loan program, the STLP was 
converted in 2001 to a loan guarantee program under which, private 
sector Participating Lenders (PLs) offer loans with a government 
guarantee of up to 75 percent for qualified applicants.
    These loans are revolving lines of credit that provide working 
capital funds to assist the borrower in financing the direct labor and 
material costs of completing transportation contracts. The contracts 
that are funded are assigned to the loan as collateral, and the PL 
advances monies up to 85% of eligible and approved Accounts Receivable 
that arise from the Assigned Contract(s). The contracts must be 
transportation-related and receive DOT funding. Repayment comes in the 
form of a two-party check to the borrower and to the PL directly from 
the contract proceeds. The total length of time that an eligible 
borrower may remain in the program cannot exceed a total of five years.
    DOT monitors these loans, which require contract assignments and 
direct joint payee check remittances for principal repayment, through 
its relationship with the transportation agencies and recipients that 
receive DOT funds and the Participating Lenders (PLs).
    The STLP has undergone an extensive program review to improve its 
business processes and achieve operational and financial efficiencies. 
As part of this effort, DOT is proposing regulations to replace the 
internal policies and guidelines currently used to manage the program.

[[Page 49387]]

    In recent years the total funds available for full principal amount 
of loans under the STLP has been limited to $18,367,000 per fiscal 
year.

Section-by-Section Analysis

    The proposed regulations utilize objective, plain language in an 
attempt to make the regulations more understandable to Participating 
Lenders, Small and Disadvantaged Business Enterprises and other small 
and disadvantaged businesses.
    Sec. 22.1 Purpose: The purpose of the DOT OSDBU STLP is to provide 
financial assistance in the form of a short-term loan from 
Participating Lenders that is guaranteed by DOT OSDBU, to DBE's and 
other certified small businesses for the execution of DOT funded and 
supported transportation related contracts.
    Sec. 22.3 Definitions: This section contains definitions of common 
banking and lending terminology as included in STLP documents and the 
STLP Policy and Procedure Manual.
    Sec. 22.11 Eligibility Criteria: Paragraph (a) defines those 
requirements needed in order to qualify for a STLP loan. Paragraph (b) 
clarifies what instrument qualifies as a ``transportation-related 
contract,'' and paragraph (c) explains the maximum length of time in 
which a qualified business may remain as an STLP borrower, as well as 
what circumstances and documentation are required on an annual basis in 
order to remain eligible.
    Sec. 22.13 Loan Terms and Conditions: Section 22.13 describes the 
parameters of the Short Term Lending Program, including: maximum loan 
amount, interest rates, the term and structure of the loan, source of 
funds for loan repayment, allowable uses of the loan proceeds, how loan 
disbursements are made, as well as any personal guarantees, collateral 
or insurance.
    Sec. 22.15 Delinquency on Federal, State, or Municipality Debt: 
This section provides that the borrower must be current on all federal, 
state, and local taxes to be able to participate in the program.
    Sec. 22.17 Compliance with Child Support Obligations: Indicates 
that pursuant to the Office of Management and Budget (OMB) Circular No. 
A-129, Revised (Policies for Federal Credit Programs and Non-Tax 
Receivables), individuals that are subject to administrative offset to 
collect delinquent child support payments are not eligible for Federal 
financial assistance. Therefore, STLP applicants must submit a negative 
certification to this effect.
    Sec. 22.19 Credit Criteria: Section 22.19 describes the required 
creditworthiness of an STLP applicant, and lists those aspects of 
creditworthiness that OSDBU will consider in its evaluation of an STLP 
application.
    Sec. 22.21 Participation Criteria: Section 22.21 describes the 
criteria for banks in order to qualify as STLP Participating Lenders, 
including certifications, documentation, history of community 
involvement, loan experience, and the ability to implement, monitor and 
manage this loan program.
    Sec. 22.23 Agreement: Section 22.23 describes the Cooperative 
Agreement that is executed between U.S. DOT and the Participating 
Lender that defines the relationship between the two, as well as the 
responsibilities and obligations of each party with regard to the STLP.
    Sec. 22.25 Lender Deliverables and Delivery Schedule: This section 
describes the obligation of the Participating Lenders to adhere to 
established deadlines for actions such as, the submission of periodic 
reports and site visits.
    Sec. 22.27 Eligible Reimbursements to PLs: Section 22.27 describes 
the fees and expenses that are eligible for reimbursement to the 
Participating Lenders.
    Sec. 22.29 DOT OSDBU Access to PLs' Files: Section 22.29 describes 
the policy that governs DOT access to Participating Lender records and 
files.
    Sec. 22.31 Suspension or Revocation of Eligibility to Participate: 
This section describes the circumstances under which the STLP 
eligibility of a Participating Lender may be suspended or revoked, and 
the notification procedure for such an action.
    Sec. 22.33 Termination of Participation in STLP: Section 22.33 
explains the situations, under which the cooperative agreement between 
DOT OSDBU and the Participating Lender may be terminated, by either 
party, and the notification procedure for such action.
    Sec. 22.41 Application Procedures: Describes the complete STLP 
application process, the supporting documentation that must accompany 
the STLP application, and the submission process of the application to 
the Participating Lender.
    Sec. 22.43 Approval or Denial: Section 22.43 describes what will 
occur when an application is approved or denied, and the method of 
notification.
    Sec. 22.45 Allowable Fees to Borrowers: This section describes 
those fees that a Participating Lender may collect from the borrower.
    Sec. 22.51 Loan Closing: Section 22.51 discusses the process that 
the Participating Lender must follow for the closing of an STLP loan.
    Sec. 22.53 Loan Monitoring and Servicing Requirements: Section 
22.53 describes what is required of the Participating Lender insofar as 
the monitoring and servicing of an STLP loan.
    Sec. 22.57 Loan Reporting Requirements: Section 22.57 clarifies 
that the STLP loan is subject to the Federal Credit Reform Act of 1990, 
and describes those reporting requirements that a Participating Lender 
must undertake to keep DOT OSDBU informed of the borrower's compliance 
with the terms of the STLP loan.
    Sec. 22.59 Loan Modifications: Describes the procedure that the 
Participating Lender must follow for any proposed modifications of the 
terms of the guarantee agreement between DOT OSDBU and the 
Participating Lender.
    Sec. 22.61 Loan Guarantee Extensions: Section 22.61 describes the 
process under which an extension of the loan guarantee extension may be 
requested and granted.
    Sec. 22.63 Loan Close Outs: Section 22. 63 describes the process 
for closing out a loan that has been fully repaid.
    Sec. 22.65 Subordination: Section 22.65 describes the parameters of 
a subordination of the line of credit in which the debt guarantee of 
DOT OSDBU has priority over any other debt of the borrower.
    Sec. 22.67 Delinquent Loans and Loan Defaults: This section 
describes the notification procedure that a Participating Lender must 
undertake whenever an STLP loan is delinquent. This section also 
indicates the possible collection or litigation processes that are 
available in the event of loan delinquency or default.
    Sec. 22.69 Claim Process: Section 22.69 describes the action that 
the Participating Lender may take once all means for the collection of 
a delinquent debt have been exhausted.

Regulatory Analyses and Notices

Executive Order 12866 (Regulatory Planning and Review)

    This proposed rule is not a ``significant regulatory action'' under 
section 3(f) of Executive Order 12866, Regulatory Planning and Review, 
and does not require an assessment of potential costs and benefits 
under section 6(a)(3) of the Order, as it does not have an annual 
effect on the economy of $100 million or more, nor affect the economy 
adversely; does not interfere or cause a serious

[[Page 49388]]

inconsistency with any action or plan of another agency; does not 
materially alter the impact of entitlements, grants, user fees or loan 
programs; and does raise novel legal or policy issues.

Executive Order 12372 (Intergovernmental Review)

    The STLP is not subject to the provisions of Executive Order 12372, 
which requires intergovernmental consultation with state and local 
officials that would provide the non-Federal funds for, or that would 
be directly affected by, proposed Federal financial assistance or 
direct Federal development, as the STLP program facilitates the 
participation of small and disadvantaged businesses in fully or 
partially federally funded local and state transportation projects.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the Department certifies that this rule will not have a 
significant economic impact on a substantial number of small entities. 
Some provisions published as a part of this rule are, in fact, a 
benefit to small entities. The STLP provides a loan guarantee for DBEs 
and SDBs who require financial assistance to perform on transportation-
related contracts. Since this rule has no significant economic impact 
on a substantial number of small entities, a regulatory flexibility 
analysis was not performed.

Executive Order 13132 (Federalism)

    A rule has implications for federalism under Executive Order 13132, 
Federalism, if it has a substantial direct effect on State or local 
governments and would either preempt State law or impose a substantial 
direct cost of compliance on them. We have analyzed this proposed rule 
under the Order and have determined that it does not have implications 
for federalism, as the loan program creates relationships and 
obligations between a borrower (usually a sub-contractor), a prime 
contractor, a Participating Lender and DOT/OSDBU only.

Paperwork Reduction Act

    DOT/OSDBU invites public comment about our intention to request the 
Office of Management and Budget's (OMB) approval for a new information 
collection, which is summarized below under Supplementary Information. 
We are required to publish this notice in the Federal Register by the 
Paperwork Reduction Act (PRA) of 1995.
    It is estimated that the total burden hours for 100 Participating 
Lenders to qualify as such, monitor loans, comply with monthly 
reporting and retain loan records to be approximately 8,000 hours per 
year. It is estimated that the total burden hours for 100 borrowers to 
complete the STLP application, with supporting documentation, loan 
renewals and the submission of the same, to be approximately 2,700 
hours.
Title: Short Term Lending Program--Participating Lenders--Qualifying 
Criteria
    Background: OSDBU's Short Term Lending Program (STLP) offers 
certified Disadvantaged Business Enterprises (DBEs) and other Certified 
Small Businesses (8a, women-owned, small disadvantaged, HubZone, 
veteran-owned, and service-disabled veteran-owned) the opportunity to 
obtain short-term working capital at prime interest rates for 
transportation-related projects. The STLP provides up to a 75% 
guaranteed revolving line of credit for a maximum of $750,000 to 
finance accounts receivable arising from transportation-related 
contracts. The primary collateral consists of the proceeds of the 
transportation-related contracts. These loans are provided through 
banks that serve as STLP Participating Lenders (PL).
PL Qualifying Criteria
    As a requirement for approval as a PL, banks must submit 
documentation that demonstrates:
    (A) Their philosophy and history of lending to small and 
disadvantaged businesses in their communities. As part of their 
submission, the bank must show these efforts in relationship to its 
overall lending portfolio.
    Respondents: 100.
    Frequency: Once.
    Estimated Average Burden per Response: 3 hours.
    Estimated Total Annual Burden Hours: 300 hours.
    (B) Their experience in administering monitored lines of credit, 
such as construction loans, accounts receivable financing, and/or 
contract financing for at least two years. Such experience should be 
held by any PL representative managing, reviewing or authorizing STLP 
loan portfolios.
    Respondents: 100.
    Frequency: Once.
    Estimated Average Burden per Response: \1/2\ hour.
    Estimated Total Annual Burden Hours: 50 hours.
    (C) At least two (2) years experience with other federal government 
lending programs such as U.S. Small Business Administration (SBA), 
Agriculture Rural Development, Bureau of Indian Affairs (BIA), Economic 
Development Administration (EDA), Department of Housing and Urban 
Development (HUD), Export Import Bank of the United States and/or state 
loan programs.
    Respondents: 100.
    Frequency: Once.
    Estimated Average Burden per Response: \1/2\ hour.
    Estimated Total Annual Burden Hours: 50 hours.
    (D) At least a satisfactory or better Community Reinvestment Act 
(CRA) rating.
    Respondents: 100.
    Frequency: Once.
    Estimated Average Burden per Response: 15 minutes.
    Estimated Total Annual Burden Hours: 25 hours.
    (E) The ability to implement, monitor and manage a two-party payee 
check system, in which the PL and borrower are joint payees of any 
checks paid to the borrower for performance under the assigned 
contract(s).
    Respondents: 100.
    Frequency: Once.
    Estimated Average Burden per Response: 15 minutes.
    Estimated Total Annual Burden Hours: 25 hours.
    (F) That it is not currently debarred or suspended from 
participation in a government contract or delinquent on a government 
debt by submitting a current SBA Form 1624 or its equivalent. The SBA 
Form 1624 is available at http://www.sba.gov/sbaforms/sba1624.pdf. (see 
Appendix E)
    Respondents: 100.
    Frequency: Once.
    Estimated Average Burden per Response: 15 minutes.
    Estimated Total Annual Burden Hours: 25 hours.
    (G) That it is a drug-free workplace by executing a Certification 
of Compliance concerning a drug-free workplace. The Certification is 
provided by OSDBU. (see Appendix C)
    Respondents: 100.
    Frequency: Once.
    Estimated Average Burden per Response: 15 minutes.
    Estimated Total Annual Burden Hours: 25 hours.
    (H) That no Federal funds will be utilized for lobbying by 
executing a Certificate Regarding Lobbying in compliance with Section 
1352, Title 21, of the U.S. Code. The Certificate is provided by OSDBU. 
(see Appendix D)
    Respondents: 100.
    Frequency: Once.
    Estimated Average Burden per Response: 15 minutes.
    Estimated Total Annual Burden Hours: 25 hours.

[[Page 49389]]

PL Record Retention
    A PL must allow the authorized representatives of OSDBU, as well as 
representatives of the Office of Inspector General (OIG) and General 
Accountability Office (GAO), access to its STLP loan files to review, 
inspect, and copy all records and documents pertaining to OSDBU 
guaranteed loans. The PL shall retain all documents, files, books, and 
records relevant to the execution and implementation of the terms of 
their Cooperative Agreement with OSDBU for a period of not less than 
three years from the date of termination of the Cooperative Agreement 
or payment in full from the borrower; except, if any litigation, 
collection action, or audit is commenced. In these cases, records and 
other materials shall be retained until the litigation, collection 
action, or audit is judicially or administratively final.
    Respondents: 100.
    Frequency: Annually.
    Estimated Average Burden per Response: \1/2\ hour.
    Estimated Total Annual Burden Hours: 50 hours.
PL Reporting Requirements
    The STLP is subject to the requirements of the Federal Credit 
Reform Act of 1990 (FCRA) that includes certain budgeting and 
accounting requirements for Federal credit programs. The PL must 
undertake processes to activate, monitor, service and close-out STLP 
loans. To fulfill the requirements of FCRA, the PL must submit regular 
reports and required documentation to OSDBU on these processes.
    (A) Loan Activation: The PL must submit to OSDBU a Loan Activation 
Form that indicates the date in which the loan has been activated/
funded. The form is provided by OSDBU. (see Appendix A)
    Respondents: 100.
    Frequency: Annually, up to five years.
    Estimated Average Burden per Response: \1/2\ hour.
    Estimated Total Annual Burden Hours: 50 hours.
    (B) Loan Close-out: The PL must submit to OSDBU a Loan Close-out 
Form upon full repayment of the STLP loan, or upon expiration of the 
loan guarantee. The form is provided by OSDBU. (See Appendix B.)
    Respondents: 100.
    Frequency: Annually.
    Estimated Average Burden per Response: \1/2\ hour.
    Estimated Total Annual Burden Hours: 50 hours.
    (C) Monthly Reporting Requirement: PL must submit each month to 
OSDBU a status report of pending loans and guaranteed loans including 
the previous month's activity for these loans. The forms are provided 
by OSDBU.
    Respondents: 100.
    Frequency: Monthly.
    Estimated Average Burden per Response: 1 hour.
    Estimated Total Annual Burden Hours: 1200 hours.
    (D) Call Reports or Thrift Financial Reports: PLs shall provide two 
copies of their quarterly Reports of Condition and Income (Federal 
Financial Institutions Examination Council--FFIEC Form 041), or 
quarterly Thrift Financial Reports (Office of Thrift Supervision--OTS 
Form 1313) within 60 days after the close of each calendar quarter.
    Respondents: 100.
    Frequency: Quarterly.
    Estimated Average Burden per Response: 15 minutes.
    Estimated Total Annual Burden Hours: 100 hours.
    (E) Credit verification: When a PL submits to OSDBU an approved 
loan package, the same must be accompanied by the PL's internal credit 
approval memo, credit analysis, and any other third-party credit 
verifications obtained for the processing of the loan application.
    Respondents: 100.
    Frequency: For each loan submitted (minimum 1, approximate maximum 
5).
    Estimated Average Burden per Response: 12 hours.
    Estimated Total Annual Burden Hours: (1200, 6000).
    (F) Loan Guarantee Extension: An extension of the original loan 
guarantee for a maximum period of ninety (90) days may be requested, in 
writing, by the PL using the STLP Extension Request Form. The form is 
provided by OSDBU. (See Appendix F.)
    Respondents: 100.
    Frequency: Annually.
    Estimated Average Burden per Response: \1/2\ hour.
    Estimated Total Annual Burden Hours: 50 hours.
Loan Application Process--Loan Renewal
    A current STLP participant may submit a guaranteed loan renewal 
application package, comprised of an updated loan application, with 
supporting documentation.
    (A) Updated loan application form. The application may be obtained 
directly from OSDBU, from a current PL, or online from the agency's Web 
site currently at http://osdbu.dot.gov/documents/pdf/stlp/stlpapp.pdf.
    Respondents: 100.
    Frequency: Annually, up to five years.
    Estimated Average Burden per Response: 8 hours.
    Estimated Total Annual Burden Hours: 800 hours.
    (B) Application supporting documentation. Supporting documentation 
may include, but is not limited to, the following items:
    a. Current job performance reference letter (within the past 12 
months);
    b. Evidence of current DBE and/or other eligible certification;
    c. Business tax returns for the most recent fiscal year;
    d. Business financial statements for the most recent fiscal year;
    e. If the business' last fiscal year has ended longer than 90 days 
at the time of application, then applicant must submit interim business 
financial statements to include balance sheet, P&L and updated aging 
reports of both receivables and payables;
    f. Current work in progress schedule or statement;
    g. Personal income tax returns;
    h. Personal financial statements;
    i. Signed and dated copy of transportation-related contracts to be 
used as collateral; and
    j. Updated cash flow projections;
    Respondents: 100.
    Frequency: Annually, up to five years.
    Estimated Average Burden per Response: 4 hours.
    Estimated Total Annual Burden Hours: 400 hours.
New Loan Application Process
    A potential STLP participant must submit a guaranteed loan 
application package, comprised of a loan application, with supporting 
documentation.
    (A) Completed loan application form. The application may be 
obtained directly from OSDBU, from a current PL, or online from the 
agency's Web site currently at http://osdbu.dot.gov/documents/pdf/stlp/
stlpapp.pdf.
    Respondents: 100.
    Frequency: Once.
    Estimated Average Burden per Response: 2 hours.
    Estimated Total Annual Burden Hours: 200 hours.
    (B) New loan application supporting documentation may include, but 
is not limited to, the following items:
    a. Business, trade or job performance reference letters;
    b. DBE or other eligible certification letters;
    c. Signed and dated borrower certification that all federal, state 
and local taxes are current;
    d. Business tax returns;
    e. Business financial statements;
    f. Personal income tax returns;

[[Page 49390]]

    g. personal financial statements;
    h. Schedule of work in progress;
    i. Signed and dated copy of transportation-related contracts to be 
used as collateral;
    j. Business debt schedule;
    k. Income and cash flow projections;
    l. Evidence of bonding and insurance.
    Respondents: 100.
    Frequency: Once.
    Estimated Average Burden per Response: 12 hours.
    Estimated Total Annual Burden Hours: 1200 hours.
    (e) Loan package submission: Application packages are submitted 
directly to a PL in the applicant's geographic area. The list of PLs is 
available on the OSDBU Web site: http://osdbu.dot.gov/
Default.aspx?tabid=72. In the event that there is no PL in the 
applicant's geographic area, the loan application package may be sent 
directly to OSDBU at 400 Seventh Street, SW., Room 9414, S-40, 
Attention STLP, Washington, DC 20590.
    Respondents: 100.
    Frequency: Once.
    Estimated Average Burden per Response: 1 hour.
    Estimated Total Annual Burden Hours: 100 hours.
    Public Comments Invited: You are asked to comment on any aspect of 
this information collection, including: (1) Whether the proposed 
collection is necessary for the OSDBU's performance; (2) the accuracy 
of the estimated burdens; (3) ways for OSDBU to enhance the quality, 
usefulness, and clarity of the collected information; and (4) ways that 
the burdens could be minimized without reducing the quality of the 
collected information. The agency will summarize and/or include your 
comments in the request for OMB's clearance of this information 
collection.

    Authority: The Paperwork Reduction Act of 1995; 44 U.S.C. 
Chapter 35, as amended; and 49 CFR 1.48.

List of Subjects in 49 CFR Part 22

    Loan programs--Business and Industry, Programs, Small Business, 
Transportation, Commerce.

    Issued this 24th day of July, 2008, at Washington, DC.
Mary E. Peters,
Secretary of Transportation.
    For the reasons set forth in the preamble, 49 CFR part 22 is 
proposed to be added to read as follows:

PART 22--SHORT-TERM LENDING PROGRAM (STLP)

Subpart A--General
Sec.
22.1 Purpose.
22.3 Definitions.
Subpart B--Policies Applying to STLP Loans
22.11 Eligibility criteria.
22.13 Loan terms and conditions.
22.15 Delinquency on Federal, State, and municipal debt.
22.17 Compliance with child support obligations.
22.19 Credit criteria.
Subpart C--Participating Lenders
22.21 Participation criteria.
22.23 Agreements.
22.25 Lender deliverables and delivery schedule.
22.27 Eligible reimbursements to PLs.
22.29 DOT OSDBU access to PL files.
22.31 Suspension or revocation of eligibility to participate.
22.33 Termination of participation in the STLP.
Subpart D--Loan Application Process
22.41 Application procedures.
22.43 Approvals and denials.
22.45 Allowable fees to borrowers.
Subpart E--Loan Administration
22.51 Loan closings.
22.53 Loan monitoring & servicing requirements.
22.57 Loan reporting requirements.
22.59 Loan modifications.
22.61 Loan guarantee extensions.
22.63 Loan close outs.
22.65 Subordination.
22.67 Delinquent loans and loan defaults.
22.69 Claims process.
Appendix A to Part 22--Bank Verification Loan Activation Form
Appendix B to Part 22--Bank Acknowledgement Loan Close-out Form
Appendix C to Part 22--Drug-Free Workplace Act Certification
Appendix D to Part 22--Certification Regarding Lobbying
Appendix E to Part 22--Certification Regarding Debarment, Suspension
Appendix F to Part 22--Bank Verification Extension Request Form
Appendix G to Part 22--Cooperative Agreement
Appendix H to Part 22--Guarantee Agreement

    Authority: 49 U.S.C. 332.

Subpart A--General


Sec.  22.1  Purpose.

    The purpose of the DOT OSDBU STLP is to provide financial 
assistance in the form of a short-term loan from Participating Lenders 
that is guaranteed by DOT OSDBU, to DBE's and SDBs for the execution of 
DOT funded and supported transportation related contracts.


Sec.  22.3  Definitions.

    Accounts Receivable means monies that are due to the borrower for 
work performed or services rendered under a contract, subcontract, or 
purchase order.
    Activation Date means the date that the STLP loan is established on 
the PL's books and recorded as an open loan. It is also the date that 
the borrower can begin to drawn funds form the line of credit. 
Activation date is also the date in which the DOT OSDBU guarantee 
becomes effective.
    Assigned Contract means the transportation-related contract(s), 
subcontract(s), and/or purchase order(s) that has been pledged as 
collateral to a STLP loan and perfected through an assignment form 
executed by all appropriate parties.
    Borrower is the obligor of a DOT OSDBU guaranteed loan.
    Cooperative agreement is the written agreement between DOT OSDBU 
and a PL that outlines the terms and conditions under which the lender 
may submit eligible loan requests to DOT OSDBU for consideration of its 
loan guarantee. The cooperative agreement further outlines the 
responsibilities and requirements of the lender in order to participate 
in the STLP.
    Director means Director, Office of Small and Disadvantaged Business 
Utilization, U.S. Department of Transportation.
    Disadvantaged business enterprise or DBE means a business that is 
certified as such by a recipient of DOT financial assistance as 
provided in 49 CFR part 23 or 49 CFR part 26.
    Guarantee Agreement means DOT OSDBU's written agreement with a PL 
that provides the terms and conditions under which DOT OSDBU will 
guarantee a STLP loan. It is not a contract to make a direct loan to 
the borrower.
    Loan Guarantee means the agreement of DOT OSDBU to issue a 
guarantee of payment of a specified portion of an approved STLP loan to 
the PL, under DOT OSDBU stated terms and conditions, in the event that 
the borrower defaults on the loan.
    Loan purpose means the approved uses for STLP loan proceeds. That 
is, only for short-term working capital needs related to the direct 
costs of an eligible transportation-related contract.
    Other Eligible Certifications mean the following certifications 
obtained by a borrower through the U.S. Small Business Administration 
(SBA): Small Disadvantaged Business (SDB); Section 8(a) Program 
participant; HUBZONE Empowerment Contracting Program; and Service-
Disabled Veteran Program (SDV).
    Participating Lender (PL) is a bank or other lending institution 
that has agreed to the terms of a cooperative agreement and has been 
formally accepted into the STLP by DOT OSDBU.

[[Page 49391]]

    Small and disadvantaged business (SDB) includes 8(a); small 
disadvantaged business; women-owned business, HubZone, and service-
disabled veteran-owned business.
    Socially and economically disadvantaged individual has the same 
meaning as stated in 49 CFR 26.5.
    Technical Assistance means service provided by the PL to the DBE or 
SDB that will enable the DBE or SDB to become more capable of managing 
its transportation-related contracts. Technical assistance can be 
provided by collaborating with agencies that offer small business 
management counseling such as the SBA, the U.S. Department of 
Commerce's Minority Business Development Centers (MBDCs), the Service 
Corps of Retired Executives (SCORE), Procurement Technical Assistance 
Centers (PTACs), and Small Business Development Centers (SBDCs).
    Transportation-related contract means a contract, subcontract, or 
purchase order, at any tier, for the maintenance, rehabilitation, 
restructuring, improvement, or revitalization of any of the nation's 
modes of transportation that receive DOT funding.
    Work-out means a plan that offers options to avoid loan default or 
collateral foreclosure and/or liquidation that is intended to resolve 
delinquent loans or loans in imminent default, which may include, but 
not limited to: deferring or forgiving principal or interest, reducing 
the borrower's interest rate, extending the loan maturity and the 
government guarantee to the PL, or postponing collection action.

Subpart B--Policies Applying to STLP Loans


Sec.  22.11  Eligibility criteria.

    (a) Eligible borrower. To be eligible to apply for a STLP loan 
guarantee, a borrower must meet the following requirements:
    (1) Be a for-profit entity;
    (2) Have an eligible transportation-related contract;
    (3) Demonstrate an eligible use for the desired credit;
    (4) Be an established business with experience in the 
transportation industry and trade for which the STLP loan is sought;
    (5) Be certified as a DBE or have another eligible certification 
issued by the SBA; and
    (6) Be current on all federal, state, and local tax liabilities.
    (b) Eligible Transportation-related Contract. Any fully-executed 
transportation-related contract, subcontract, or purchase order held 
directly with DOT or with grantees and recipients receiving federal 
funding from DOT for the maintenance, rehabilitation, restructuring, 
improvement or revitalization of any of the nation's modes of 
transportation shall be considered an eligible contract.
    (c) Eligibility Period. A borrower is eligible for participation in 
the STLP for a period up to a total of five (5) years. The STLP renewal 
is not automatic. The borrower has to demonstrate its continued 
eligibility and creditworthiness for STLP and must submit a complete 
application package.
    (1) The continued eligibility of any borrower who would exceed the 
period limit in paragraph (c) of this section will be determined on a 
case-by-case basis by the OSDBU Director and is subject to the 
following provisions:
    (i) The STLP loan guarantee may be reduced; and
    (ii) The STLP loan interest rate may be increased.
    (2) Should any borrower currently in the STLP become ineligible per 
paragraph (a) of this section during the term of a STLP loan, the 
failure to comply with a specific requirement must be brought to the 
immediate attention of all remaining parties.
    (3) Borrower ineligibility may result in a termination of the 
current guarantee.


Sec.  22.13  Loan terms and conditions.

    (a) Amount. The maximum face amount for an individual STLP loan may 
not exceed seven hundred and fifty thousand ($750,000) dollars, unless 
the requested increased amount is authorized by the OSDBU Director.
    (b) Interest Rates. All STLP loans shall have a variable interest 
rate.
    (1) Initial Interest Rate. The base rate guideline for STLP loans 
is the prime rate in effect on the first business day of the month in 
which the STLP loan guarantee is approved by DOT OSDBU. The prime rate 
is the rate printed in a national financial newspaper published each 
business day. The PL may increase the base rate by the maximum 
allowable percentage points currently allowed by STLP policies and 
procedures and as communicated in subsequent DOT OSDBU notices.
    (2) Frequency of Change. The first change may occur on the first 
calendar day of the month following the initial loan disbursement, 
using the above base rate in effect on the first business day of the 
month. Subsequent interest rate changes may occur no more than monthly.
    (c) Loan Structure and Term. A STLP loan shall be set up as a 
revolving line of credit. The line permits the borrower to request 
principal advances, pay them back, and then re-borrow, not to exceed 
the face value of the line of credit. PLs are required to provide DOT 
OSDBU written notification of the activation date of each line of 
credit under the STLP. The term of the federal guarantee of the line of 
credit commences on the activation date.
    (d) Repayment. Interest payments must be made monthly. The 
principal of the loan is repaid as payment from approved accounts 
receivable are received by the PL through a joint payee check system. 
The assigned contract supporting the STLP loan is the primary source of 
repayment.
    (e) Use of Loan Proceeds. STLP loans must be used to finance short-
term working capital needs, specifically direct costs generated by the 
assigned contract. Proceeds may not be used for the following purposes:
    (1) For long term working capital;
    (2) To repay delinquent State or Federal withholding taxes, local 
taxes, sales taxes or similar funds that should be held in trust or 
escrow; and/or
    (3) To provide funds for the distribution or payment to the owners, 
partners or shareholders of the business; and/or
    (4) To retire short or long-term debt.
    (f) Non-compliance by the DBE in using the STLP loan for purposes 
not consistent with these regulations will result in a non-renewal of 
the STLP loan and in forfeiture of the STLP loan guarantee to the PL on 
any ineligible principal advances requested by the borrower and made by 
the PL.
    (g) Disbursements. STLP funds may only be released to an eligible 
borrower upon the submission and verification of a valid written 
accounts receivable invoice, showing labor and/or materials amounts due 
for completed work on the contract. The PL must verify the accuracy of 
the invoice with the paying transportation government agency, if the 
borrower is a prime contractor, and/or with the prime contractor, if 
the borrower is a subcontractor. This verification must be obtained by 
the PL prior to advancing funds. No more than 85% of an approved 
accounts receivable invoice shall be advanced to the borrower by the 
PL.
    (1) Processing time. Disbursement of STLP funds to the borrower 
should be accomplished within three (3) business days of an accounts 
receivable invoice approval by the paying agency and/or prime 
contractor.
    (2) Electronic funds transfer. If the disbursement of STLP funds is 
being sent to the borrower through a local participating PL, the 
disbursement should be made by electronic funds

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transfer with the preferred method of payment being the Automated 
Clearing House (ACH) system.
    (3) Wire transfers. Wire transfers can be used if the ACH system is 
not available or if a same day disbursement is required.
    (4) Joint payee check system. A two-party payee check system is 
required in which the PL and the borrower will be the co-payees of any 
checks paid to the borrower for performance under the assigned 
contract. Alternative payment methods must have prior written approval 
by DOT OSDBU.
    (h) Personal Guarantees. Individuals who own at least a 20% 
ownership interest in the borrower shall personally guarantee the STLP 
loan. DOT OSDBU, in its discretion and in consulting with the PL, may 
require other appropriate guarantees for the loan as well.
    (i) Collateral. All advances under the STLP loan must be secured, 
at a minimum, by the assignment of the proceeds due under the 
transportation-related contract(s) being funded with loan proceeds (the 
Assigned Contract). The PL must have first lien position on the 
Accounts Receivable generated by the Assigned Contract. The PL and/or 
DOT OSDBU may request additional collateral on any loan request or loan 
guarantee request in order to mitigate the credit risk and reduce 
potential defaults and loan losses.
    (j) Key person life insurance. The assignment of existing life 
insurance policies of personal guarantors or other individuals critical 
to the borrower's operations may be required by the PL and/or DOT OSDBU 
in certain instances; and it is encouraged for those business 
applicants that do not have a management succession plan clearly in 
place or where a personal guarantee provides nominal financial strength 
to the credit.


Sec.  22.15  Delinquency on Federal, State, or municipality debt.

    (a) The borrower must not be delinquent on any Federal, State, or 
municipality debt, including tax debts. Further, none of the principals 
and/or owners of the borrower can be delinquent on any federal, state, 
or municipality debt, including personal tax debt. The borrower must 
acknowledge its status in writing as part of any STLP loan guarantee 
application. PLs and the DOT OSDBU must verify the borrower's status 
through the use of business and personal credit reports, as well as 
other appropriate federal and state databases.
    (b) If any delinquencies are determined during the application 
process, consideration of the request must be suspended until the 
delinquency is satisfactorily resolved, as determined and approved by 
the Director. If the delinquency cannot be resolved within a reasonable 
amount of time, the loan request must be declined.


Sec.  22.17  Compliance with child support obligations.

    Any holder of 50% or more of the ownership interest in the 
recipient of a STLP Loan must certify that he or she is not more than 
60 days delinquent on any obligation to pay child support arising 
under:
    (a) An administrative order;
    (b) A court order;
    (c) A repayment agreement between the holder and a custodial 
parent; or
    (d) A repayment agreement between the holder and a State agency 
providing child support enforcement services.


Sec.  22.19  Credit criteria.

    An applicant for a STLP loan must be creditworthy and demonstrate 
an ability to repay the loan as well as satisfactory handling of the 
repayment of past and current debts. The PL and DOT OSDBU shall 
consider:
    (a) Character, reputation, and credit history of the applicant, its 
principals and owners, and all other guarantors;
    (b) Experience and depth of key management in the industry;
    (c) Financial strength of the business;
    (d) Past earnings, projected earnings and cash flow, and work in 
progress;
    (e) Ability to repay the loan;
    (f) Sufficient equity to operate on a sound financial basis; and
    (g) Capacity to perform under the transportation-related 
contract(s).

Subpart C--Participating Lenders


Sec.  22.21  Participation criteria.

    A lender who participates in the STLP must meet the following 
criteria:
    (a) It must operate as a lending institution certified by the 
Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, 
Office of the Comptroller of the Currency, Office of Thrift 
Supervision, Community Development Corporation (CDC), or Community 
Development Financial Institution (CDFI), for at least five (5) years;
    (b) It must demonstrate a philosophy and history of lending to 
small, disadvantaged and women-owned businesses in their communities. 
Information will be requested by the Director on the number of short-
term loans made to companies listed in Sec.  22.11(a)(5). The PL shall 
submit information showing its efforts in relationship to its overall 
portfolio;
    (c) It must demonstrate experience in administering monitored lines 
of credit, such as construction loans, accounts receivable financing, 
and/or contract financing. for at least two years. Such experience 
should be held by any PL representative managing, reviewing or 
authorizing STLP loan portfolios;
    (d) It must have at least two (2) years experience with other 
federal government lending programs such as U.S. Small Business 
Administration (SBA), Agriculture Rural Development, Bureau of Indian 
Affairs (BIA), Economic Development Administration (EDA), Department of 
Housing and Urban Development (HUD), Export Import Bank of the United 
States and/or state loan programs.
    (e) It must have at least a satisfactory or better Community 
Reinvestment Act (CRA) rating;
    (f) It must designate a PL representative to effectively administer 
the STLP loan portfolio;
    (g) It must have the ability to evaluate, process, close, disburse, 
service and liquidate STLP loans;
    (h) It must demonstrate the ability to implement, monitor and 
manage a two-party payee check system, in which the PL and borrower are 
joint payees of any checks paid to the borrower for performance under 
the assigned contract(s);
    (i) It must submit a current SBA Form 1624 or equivalent, stating 
that the lender is not currently debarred or suspended from 
participation in a government contract or delinquent on a government 
debt (see appendix E to part 22);
    (j) It must execute a certification of compliance concerning a 
drug-free workplace (see Appendix C to Part 22); and
    (k) It must execute a Certificate Regarding Lobbying in compliance 
with Section 1352, Title 21, U.S. Code (see appendix D to part 22).


Sec.  22.23  Agreements.

    (a) DOT OSDBU may enter into a cooperative agreement with a lender 
that meets the criteria defined in Sec.  22.21 in order for the lender 
to become a participant in the STLP. Such an agreement does not 
obligate DOT OSDBU to participate in any specific proposed loan that a 
lender may submit. The existence of a cooperative agreement does not 
limit the rights of DOT OSDBU to deny a specific loan or establish 
general policies. (See appendix G to part 22 ).
    (b) The cooperative agreement is generally for a minimum period of 
twenty-four (24) months. DOT OSDBU will consider the cooperative 
agreement for renewal at the end of the designated term. If a 
cooperative agreement has

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expired, no further applications for the STLP shall be submitted to DOT 
OSDBU by the PL until a new cooperative agreement is executed by both 
parties.
    (c) Unless instructed otherwise by DOT OSDBU, after the expiration 
of the cooperative agreement, the PL will complete the documentation of 
any loans which have been given final DOT OSDBU approval prior to 
expiration of the cooperative agreement.
    (d) Following the expiration of the cooperative agreement, the PL 
may, subject to the written concurrence of DOT OSDBU, sell its STLP 
loans to another bank or to another PL that assumes the original rights 
and responsibilities to fund, service and collect the loan or loans.


Sec.  22.25  Lender deliverables and delivery schedule.

    All PLs must adhere to certain required periodic reports, 
submissions, and other actions that are outlined in the cooperative 
agreement and the loan guarantee agreements, as well as to the required 
due dates to DOT OSDBU.


Sec.  22.27  Eligible reimbursements to PLs.

    PLs will be reimbursed by DOT OSDBU for reasonable expenses and 
costs that are incurred in the processing, administration, and 
monitoring of a STLP loan. The PL will be reimbursed as follows:
    (a) Processing/Underwriting fee. A fee, as specified in the 
cooperative agreement will be reimbursed by DOT OSDBU, with a minimum 
fee of not less than one thousand ($1,000), per approved STLP loan 
guarantee, provided that DOT OSDBU receives proper notification of the 
activation date of the STLP loan.
    (b) Additional Administrative fee: For total loan amounts of 
$150,000.00 or less, the PL can request an additional one-half (\1/2\) 
percent administrative fee for the increased loan monitoring and 
administrative assistance required to process the loan. The request 
must be supported with the information specified in the cooperative 
agreement.
    (c) Travel expenses. For any pre-approved travel expenses, the PL 
will be reimbursed for certain costs, provided that paragraphs (c)(1), 
(2), and (3) of this section are met:
    (1) A written request for travel, along with a statement of the 
purpose of the travel and proposed cost estimate, is submitted for DOT 
OSDBU for its approval no less than ten (10) business days prior to 
travel; and
    (2) A travel invoice accompanied by a written report explaining the 
findings of the travel is submitted to DOT OSDBU no later than thirty 
(30) days following the approved travel.
    (3) Payment or reimbursement for travel shall be in accordance with 
the Joint Travel Regulations, Federal Travel Regulations and DOD FAR 
31.205.46.
    (d) Attorney fees. Legal fees incurred by the PL may be eligible 
for reimbursement. Prior written approval from DOT OSDBU is required. 
Attorney fees will be reimbursed on a pro-rata basis in proportion to 
the percentage of the government loan guarantee in relation to the 
total loan amount.


Sec.  22.29  DOT OSDBU access to PLs files.

    A PL must allow the authorized representatives of DOT OSDBU, as 
well as representatives of the Office of Inspector General (OIG) and 
General Accountability Office (GAO), access to its STLP loan files to 
review, inspect, and copy all records and documents pertaining to DOT 
OSDBU guaranteed loans. Record retention of all relevant documents and 
other materials is specified in the cooperative agreement between DOT 
OSDBU and the PL.


Sec.  22.31  Suspension or revocation of eligibility to participate.

    (a) DOT OSDBU may suspend or revoke the eligibility of a PL to 
participate in the STLP by giving written notice in accordance with the 
terms and conditions cited in the cooperative agreement. Such notice 
may be given because of a violation of DOT OSDBU regulations; a breach 
of any agreement with DOT OSDBU; a change of circumstance resulting in 
the PL's inability to meet operational requirements; or a failure to 
engage in prudent lending practices. A suspension or revocation will 
not invalidate a loan guarantee previously approved by DOT OSDBU, 
providing that the specific loan was handled in accordance with its 
guarantee agreement, the cooperative agreement and/or these 
regulations.
    (b) The written notice to suspend or revoke participation in the 
STLP will specify the corrective actions that the PL must take, as well 
as the time period allowed for cure, prior to DOT OSDBU considering a 
termination of the cooperative agreement.


Sec.  22.33  Termination of participation in the STLP.

    (a) DOT OSDBU Termination for Convenience. DOT OSDBU may terminate 
a cooperative agreement for the convenience of the government, and 
without cause, upon prior written notice of thirty (30) days of its 
intent to terminate. Upon termination, DOT OSDBU shall remain liable on 
the pro-rata share of the loan guarantee(s) received by the PL which 
received the Director's final approval, prior to the effective date of 
termination.
    (b) Participating Lender's Termination. The PL may terminate a 
cooperative agreement with written notice of sixty (60) days to DOT 
OSDBU of its intent to terminate. Upon termination, DOT OSDBU shall 
remain liable on the pro-rata share of the loan guarantee(s) received 
by the PL which received the Director's final approval, prior to the 
effective date of termination.
    (c) DOT OSDBU Termination for Cause. DOT OSDBU may terminate a 
cooperative agreement, in whole or in part, at any time before the 
expiration of the term of the cooperative agreement or the expiration 
of any renewal term of the cooperative agreement, and without allowing 
any cure period as described in Sec.  22.23 of this part, if it 
determines that the PL failed to comply with any terms and conditions 
of its cooperative agreement and such failure cannot be reasonably 
addressed. DOT OSDBU shall promptly notify the PL in writing of this 
determination and the reasons for the termination, together with the 
effective date of termination.
    (d) DOT OSDBU may also terminate for cause any cooperative 
agreement with a PL that fails to comply with the corrective actions 
requested in a written notice of suspension of revocation within the 
specified cure period, in accordance with the terms and conditions 
further described in the cooperative agreement.

Subpart D--Loan Application Process


Sec.  22.41  Application procedures.

    (a) A STLP loan guarantee request application package shall consist 
of the DOT OSDBU Application for Loan Guarantee and supporting 
documentation as outlined below at (b). The application can be obtained 
directly from the office of DOT OSDBU, from a current PL, or online 
from the agency's Web site currently at http://osdbu.dot.gov/documents/
pdf/stlp/stlpapp.pdf. 
    (b) Supporting documentation may include, but is not limited to, 
the following items: Business, trade or job performance reference 
letters; current DBE or SDB eligibility certification letters and/or 
affidavit; signed and dated borrower certification that all federal, 
state and local taxes are current; business tax returns; business 
financial statements; personal income tax returns; personal financial 
statements; schedule of work in progress; signed and dated copy of 
transportation-related contracts; business debt schedule; income and 
cash flow projections; and evidence of bonding and insurance. It also 
includes, from the PL, the lender's internal credit

[[Page 49394]]

approval memo and analysis; and other third-party credit verifications 
obtained.
    (c) Application packages are submitted directly to a PL, which will 
perform its own credit review. The PL must initially approve or decline 
the loan based upon its internal analysis of the request. Loans 
approved by the PL are then forwarded to DOT OSDBU for its STLP 
eligibility review and independent credit review, and for presentation 
to the DOT OSDBU Loan Committee. All loan approvals shall require the 
final approval of the Director, or the Director's designee, for the 
issuance of a Government Loan Guarantee.


Sec.  22.43  Approval or denial.

    If a loan guarantee is approved by DOT OSDBU, a Guarantee Agreement 
will be issued to the PL. If a loan guarantee is declined by the PL, 
the PL is responsible for communicating the reasons for the decline to 
the applicant. If a loan guarantee is declined by the DOT OSDBU, DOT 
OSDBU will be responsible for communicating the reasons for the decline 
to the applicant. The PL must notify the applicant, in writing, the 
reasons for the decline; and a copy of this notification must be sent 
to DOT OSDBU. (see form DOT  F 2314-1)


Sec.  22.45  Allowable fees to borrowers.

    (a) Application fees. The PL may charge the applicant a non-
refundable loan application fee, as determined from time to time by DOT 
OSDBU, for each STLP loan application processed, whether a new loan 
request or a renewal request.
    (b) Reasonable closing expenses. The PL may collect reasonable 
closing expenses from the borrower, provided that full disclosure of 
such fees is made to the borrower prior to the loan closing date. These 
expenses include necessary out-of-pocket expenses to third parties such 
as filing and recordation fees, as well as loan closing document 
preparation fees, whenever the PL charges similar fees to its non STLP 
borrowers.

Subpart E--Loan Administration


Sec.  22.51  Loan closings.

    (a) The PL must promptly close all STLP loans in accordance with 
the terms and conditions approved by DOT OSDBU in its Guarantee 
Agreement. The PL must report circumstances concerning any STLP loans 
not closed within a reasonable time period after DOT OSDBU approval.
    (b) The PL uses its own internal loan closing documents and must 
use standard banking practices and procedures to ensure proper 
execution of the debt and perfection of the collateral. The PL must 
forward copies of all executed closing documents and filings to DOT 
OSDBU within the time period specified in the cooperative agreement.


Sec.  22.53  Loan monitoring and servicing requirements.

    The PL must review STLP principal advance requests, process loan 
disbursements, and payments, and maintain contact with the borrower 
during the term of the loan. The PL must monitor the progress of the 
project being financed and the borrower's continued compliance with the 
terms and conditions of the loan. The PL must promptly report any 
material adverse change in the financial condition or business 
operations of the borrower to DOT OSDBU.


Sec.  22.57  Loan reporting requirements.

    The STLP is subject to the requirements of the Federal Credit 
Reform Act of 1990 (FCRA) that includes certain budgeting and 
accounting requirements for Federal credit programs. To fulfill the 
requirements of FCRA, the PL must provide DOT OSDBU prompt written 
notification of the activation date (form  DOT F 2302-1), and 
the date the loan is repaid and closed (form  DOT F 2304-1). 
To fulfill this requirement, the PL must submit a monthly report to the 
DOT OSDBU covering the previous month's STLP loans in process and those 
that are active.


Sec.  22.59  Loan modifications.

    Any modification to the terms of the DOT OSDBU guarantee agreement 
must have prior written approval of the Director, and executed in 
writing as an Addendum to the original guarantee agreement.


Sec.  22.61  Loan guarantee extensions.

    An extension of the original loan guarantee may be requested, in 
writing, by the PL using form  DOT F 2310-1. The request must 
comply with the terms and conditions described in the guarantee 
agreement and with the STLP policies and procedures. All extension 
requests must be approved by the Director. The maximum extension period 
for a loan guarantee is ninety (90) days.


Sec.  22.63  Loan close outs.

    Upon full repayment of the STLP loan, or upon expiration of the 
loan guarantee, the PL must submit an executed loan guarantee close-out 
form  DOT F 2304-1 to DOT OSDBU.


Sec.  22.65  Subordination.

    DOT OSDBU must not be placed in a subordinate position to any other 
debt.


Sec.  22.67  Delinquent loans and loan defaults.

    (a) The PL must bring to the immediate attention of the Director 
and delinquent STLP loans. The PL and DOT OSDBU are jointly responsible 
for establishing collection procedures and must exercise due diligence 
with respect to collection of delinquent debt. The PL is responsible 
for initiating actions to recover such debt. DOT OSDBU must approve any 
compromise of a claim, resolution of a dispute, suspension or 
termination of collection action, or referral for litigation. A work-
out solution will only be considered if it is expected to minimize the 
cost to the federal government in resolving repayment delinquencies 
and/or loan default. They must only be used when the borrower is likely 
to be able to repay the loan under the terms of the work-out, and if 
the cost of establishing the work-out plan is less than the costs of 
loan default and/or foreclosure.
    (b) In an appropriate situation, DOT OSDBU may authorize the PL to 
undertake legal action deemed necessary to collect delinquent loans and 
DOT will reimburse the PL on a pro rata basis in proportion to the loan 
guarantee percentage for the associated fees and costs, with prior 
authorization from the Director. Penalties and late fees are not 
eligible for reimbursement. Any legal action undertaken by the PL 
without OSDBU authorization, will not be eligible for a pro rata basis 
reimbursement of the associated fees and costs. Net recoveries 
applicable to accrued interest must be applied on a pro rata basis in 
proportion to the formula used during the term of the loan.


Sec.  22.69  Claim process.

    After reasonable efforts have been exhausted to collect on a 
delinquent debt, the PL may demand in writing that DOT OSDBU honor its 
loan guarantee, provided however that the maximum liability of DOT 
OSDBU shall not at any time exceed the guaranteed amount. The borrower 
must be in default for no less than thirty (30) days, and the PL must 
have made written demand for payment from the borrower, in accordance 
with the guarantee agreement.
BILLING CODE 4910-9X-P

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Attachment G to Part 22--Cooperative Agreement

COOPERATIVE AGREEMENT BETWEEN THE UNITED STATES DEPARTMENT OF 
TRANSPORTATION AND [BANK]--------

1. Recital of Purpose

    The principal purpose of this Agreement is to carry out the 
United States Department of Transportation (DOT)'s Short Term 
Lending Program (STLP), a loan guarantee program to enhance the 
lending opportunities for disadvantaged business enterprises (DBEs) 
and other certified small and disadvantaged businesses (SDBs) in 
order to increase the number of DBEs and SDBs that engage in 
transportation-related contracts and to strengthen the competitive 
and productive capabilities of the DBEs and SDBs that currently do 
business with DOT, its grantees, recipients, their contractors and 
subcontractors. This Agreement is not intended to and does not 
create any rights in third parties to receive loans or any other 
funds from [BANK] or DOT. All rights and obligations under the 
Agreement run only to the parties.
    This Agreement is intended by the parties to be construed as a 
Cooperative Agreement, under 31 United States Code (U.S.C.), Section 
6305, and shall be in no way construed as a procurement contract.

2. Authority

    DOT is authorized under 49 U.S.C. 332, to develop support 
mechanisms, including financial assistance programs that will enable 
DBEs and SDBs to take advantage of transportation-related business 
opportunities. [BANK] is authorized under its charter and by-laws to 
enter into this Cooperative Agreement.

3. Definitions

    3.1 For the purpose of this Agreement, the term ``Disadvantaged 
Business Enterprise'' (``DBE''), includes a for profit small 
business concern that is owned and controlled by a socially and 
economically disadvantaged individual, including women and, is set 
forth at 49 Code of Federal Regulations (CFR) (23 and 26); Safe, 
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy 
for Users (SAFETEA-LU); and corresponding sections of the Aviation 
Investment and Reform Act for the 21st Century, as amended by any 
regulations and interpretations issued there-under. For the purpose 
of the Agreement, the term Small and Disadvantaged Business 
(``SDB'') includes: Small disadvantaged business (SDB), Section 8 
(a) program; HUBZONE Empowerment Contracting Program, and Service 
Disabled Veteran owned business, under the U.S. Small Business 
Administration.
    3.2 For the purpose of this Agreement, the term 
``transportation-related contract'' is defined as a contract for the 
maintenance, rehabilitation, restructuring, improvement, or 
revitalization of any of the nation's modes of transportation with 
any public or commercial provider of transportation through any 
Federal, State or local transportation agency. The transportation 
contract can be a prime contract or subcontract at any tier, awarded 
by DOT or by a State or local recipient of DOT funds.
    3.3 For the purpose of this Agreement, the term ``Participating 
Lender'' (PL) is defined as a banking or lending institution, or 
other approved organization which has agreed to and has been 
formally accepted as a Participating Lender in the DOT Short-Term 
Lending Program.

4. Terms

    4.1 The [BANK] shall make loans to qualifying DBEs and SDBs that 
request financial assistance to perform transportation-related 
contracts. The maximum loan face amount for any individual loan or 
line of credit will be $750,000.00 unless the written consent of the 
Director, OSDBU, is received. Loans will be secured at a minimum by 
assignment of the proceeds of the transportation-related contracts 
supporting the loan request and by a recorded first lien security 
position in such proceeds. (See Section 11 regarding maintenance of 
DOT funds in a first lien position.) Other collateral may be 
required based upon assessments of risk and collateral availability 
performed by [BANK] and DOT.
    4.2 The [BANK] agrees to review and give due consideration to 
all loan applications submitted directly by the applicant or 
forwarded by DOT. Generally DOT will refer the application to the 
Participating Lender located closest to the applicant; however, DOT 
may at its sole discretion forward applications to any Participating 
Lender.
    4.3 DOT will guarantee up to seventy-five (75) percent of the 
outstanding and unpaid principal amount of the loan, interest on the 
principal amount of the loan, and interest on any due and unpaid 
amounts owing by the Borrower to the Bank, provided however that the 
maximum liability of DOT shall not at any time exceed the guaranteed 
amount. In the event a DBE or SDB defaults on a loan made under this 
Agreement, the loss will be borne on the same pro rata basis of 
distribution.
    4.4 The [BANK] agrees that in any and all matters concerning the 
DOT Short Term Lending Program it will conform to the policy and 
procedures as described in the DOT STLP Loan Policies and Procedures 
Manual and subsequent regulations implementing this manual. [BANK] 
and DOT will be responsible for decisions as to which DBE or SDB 
applicants will or will not receive loans. All decisions will 
require the final approval of the OSDBU Director, or the Director's 
designee, after the loan application has been recommended for 
approval by [BANK]'s loan committee or by its designated senior 
official. Funds shall be loaned at the Prime Rate that is defined as 
New York Prime and published daily in the Wall Street Journal, 
adjusted on the first day of each calendar month for the ensuing 
month. Up to an additional two (2) points can be added to the Prime 
Rate to cover administrative fees of managing the STLP Program.
    4.5 The DBE or SDB borrower shall be able to make draws against 
the line of credit during the term of the loan and shall be required 
to repay all remaining principal and interest no later than the date 
of receipt of the final payment under its transportation-related 
contract(s). In the event that the contract is terminated for any 
reason, maturity of the loan will be accelerated and no further 
advances will be made.
    4.6 The use of the two-payee check system will be required in 
which the [BANK] and the DBE or SDB will be the payees of any 
relevant check paid to the DBE or SDB for work performed under a 
secured transportation-related contract(s).
    4.7 Application forms required for DOT guaranteed loans can be 
obtained from the Participating Lender, and are also available on 
the OSDBU webpage: http://osdbu.dot.gov/documents/pdf/stlp/
stlpapp.pdf. Applications should be submitted directly to [BANK]. 
The [BANK] will perform the loan application review and process the 
loan for completeness. The [BANK] must initially approve or decline 
the loan based upon its independent review. Loans approved by the 
[BANK] will then be forwarded to DOT and will require the final 
approval of the OSDBU Director, or the Director's designee for a DOT 
guarantee. Questions regarding program eligibility and

[[Page 49402]]

policy will be referred to OSDBU for resolution. Any DBEs or SDBs 
rejected for a loan will be sent a letter of explanation, with a 
copy to OSDBU.
    4.8 Determination that the final loan documents conform to the 
terms of the loan approval; that loan documentation is complete and 
has been properly executed; and that loan disbursement is completed 
is the sole right and responsibility of the [BANK]. The [BANK] will 
promptly close the loans in accordance with conditions specified by 
DOT in the transmittal of its approval and any other conditions upon 
which the DOT and the [BANK] may have agreed in writing. The [BANK] 
shall report the circumstances behind any loans not closed within 15 
business days after receipt of final approval by OSDBU. The [BANK] 
must execute applications which have been finally approved by DOT 
and the [BANK] and must ensure the necessary completion and 
perfection of documents under standard banking practice and 
procedure. These documents will include as applicable; the note, 
assignment of payments, notice of assignment of payments, personal 
guaranties, necessary UCC filings, and any other collateral or 
security documents completed during the execution of the loan. 
Additionally, each borrower for which the DOT guarantee exceeds 
$150,000 must execute a Certification Regarding Lobbying concurrent 
with execution of the closing documents. This certification is 
incorporated into this Cooperative Agreement as Attachment B.
    4.9 The [BANK] will forward copies of all executed closing 
documents and filings to DOT no later than 15 business days after 
execution of closing documents and filings.
    4.10 [BANK] may only release loan funds to a certified applicant 
(DBE or SDB, as defined in Section 3.1) upon the award of a 
transportation-related contract as determined by DOT.
    4.11 [BANK] shall be in a first position on any contract 
proceeds and receivables that the STLP line has financed. STLP funds 
shall not be placed in a subordinate position to any other debt, 
except if so required by a DOT authorized surety bonding company and 
approved by the OSDBU Director, or his/her designee. It shall be the 
responsibility of the [BANK] to ensure that the security interests 
in the proceeds of any contract funded under this Agreement are 
properly recorded as minimum security for the loan. The [BANK] is 
also responsible for maintaining regular and sufficient contact with 
the borrower in order to monitor and ensure the progress of the 
project being financed and compliance with the terms of the 
financing, and to detect any material adverse change in the 
condition of the borrower, and shall be reported in the monthly 
report to OSDBU.
    4.12 [BANK] may collect an application fee of $150.00 from the 
applicant for each loan application or renewal.
    4.13 For each loan successfully executed, DOT will pay [BANK[] 
an underwriting fee of one (1) percent of the face amount of the 
approved loan with a minimum fee of not less than $1,000.00 per 
approved loan. [BANK] can charge the applicant not more than Prime 
plus two (2) percent for the interest rate on the loan. For total 
loan amounts of $150,000.00 or less, the PL may charge an additional 
half (1/2) percent administration fee for the monitoring and 
technical assistance required. Payment of the underwriting fees will 
be made upon a written request for payment by the [BANK] and receipt 
by OSDBU of a copy of a signed loan activation form and a copy of 
the executed note.
    4.14 [BANK] must fully fund each loan. If a second bank has 
participated in the loan, the distribution of the underwriting fee 
shall be negotiated by the banks.
    4.15 DOT's guarantee shall be established by a Guarantee 
Agreement executed by the [BANK] and DOT for each new loan, loan 
modification, or loan renewal.
    4.16 The [BANK] and DOT shall be jointly responsible for 
establishing collection procedures and shall exercise due diligence 
with respect to collection of delinquent debt. The [BANK] will be 
responsible for initiating actions to recover such debt. DOT must 
approve in writing any compromise of a claim, resolution of a 
dispute, suspension or termination of collection action, or referral 
for litigation. In an appropriate situation, DOT may authorize the 
[BANK] to undertake any legal action to collect unpaid loans and the 
DOT will reimburse [BANK] on a pro rata basis in proportion to the 
loan guarantee for the associated fees and costs with prior written 
authorization from the OSDBU Director. Should litigation become 
necessary, the Department of Justice shall be responsible for its 
conduct, and the [BANK] and DOT shall cooperate in providing 
evidence and other support to its efforts. Net recoveries applicable 
to principal and accrued interest shall be applied on a pro rata 
basis in proportion to the loan guarantee commitments.
    4.17 The [BANK] shall maintain a fiduciary duty to administer 
all loans approved under STLP in a manner that is consistent with 
the terms of this Agreement and the procedures established 
thereunder.

5. Deliverables and Delivery Schedule

    5.1 Within five (5) business days of the activation of a 
guaranteed loan, [BANK] will submit a completed and signed Loan 
Activation Form to OSDBU).
    5.2 Within five (5) business days of the close-out or renewal of 
a guaranteed loan, [BANK] will submit a completed and signed Loan 
Close-out Form to OSDBU.
    5.3 For loans in excess of $100,000.000, a personal site 
inspection of the facilities of the loan applicant must be conducted 
by the [BANK] prior to disbursement of funds.
    5.4 Monthly Reports. [BANK] shall provide a report by the 10th 
of each month covering the previous month's activity, according to 
the attached templates (Attachments C1 and C2). The report will 
include: (a) A status of the review of all pending applications; (b) 
a summary of loans executed and outstanding, including the 
borrowers' name, loan amount, maturity date, balance outstanding, 
and accrued interest; (c) a statement for each loan as to whether 
the loan is current and performing satisfactorily; (d) for each loan 
determined delinquent and not performing properly, a summary of 
action taken; and, (e) the date(s) of any loans that have closed 
out; and, (f) any relevant information that DOT may request.
    5.5 Call Reports or Thrift Financial Reports. [BANK] shall 
provide two copies of its quarterly Reports of Condition and Income 
(Federal Financial Institutions Examination Council--FFIEC Form 
041), or quarterly Thrift Financial Reports (Office of Thrift 
Supervision--OTS Form 1313) within 60 days after the close of each 
calendar quarter.
    5.6 Regulatory Enforcement Actions. The [BANK] shall promptly 
notify the OSDBU Director, of any regulatory enforcement actions 
involving the Bank.
    5.7 Community Reinvestment Act (CRA). [BANK] shall provide the 
OSDBU Director a copy of its current CRA rating and shall promptly 
advise of any negative changes thereto. Delivery of all items or 
other notices or correspondence relevant to this Agreement shall be 
addressed as follows: Director, Office of Small and Disadvantaged 
Business Utilization, U.S. Department of Transportation, 1200 New 
Jersey Avenue SE, S-40, W56-497, Washington, DC 20590.
    5.8 The PL shall notify OSDBU within 10 (ten) business days of 
any personnel changes regarding signatory officials of the PL, as 
well as any significant occurrences within the PL's organization 
which may affect this agreement, such as mergers, buyouts, or 
expansions.

6. Audit, Investigation and Review

    DOT's Inspector General and the Comptroller General of the 
United States and/or Director, OSDBU, or Director's designee may at 
all reasonable times investigate, audit and review in the offices of 
[BANK]. [BANK] shall provide to such parties access to all 
documents, papers, books, and records relevant to such audit or 
review.

7. Record Retention

    The [BANK] shall retain all documents, files, books, and records 
relevant to the execution and implementation of the terms of this 
Agreement for a period of not less than three years from the date of 
termination of this Agreement or payment in full from the borrower; 
except, if any litigation, collection action, or audit is commenced. 
In these cases, records and other materials shall be retained until 
the litigation, collection action, or audit is judicially or 
administratively final.

8. Duration of Agreement

    This Agreement shall be in effect for a period of two (2) years 
from the date of the execution of this Agreement. An annual option 
to renew the Agreement for additional periods, not to exceed two (2) 
years, may be granted at the discretion of DOT.

9. Expiration of Agreement

    Except in the event that DOT has offered its annual option to 
renew this Agreement for additional periods and the [BANK] has 
accepted such an offer, after expiration of this Agreement, no 
further applications will be furnished by DOT for approval. Unless 
instructed otherwise by DOT, after expiration of the Agreement, 
[BANK] shall complete the

[[Page 49403]]

documentation of any loans which have been recommended to DOT for 
approval and in which DOT has given final approval prior to 
expiration of the Agreement. Following expiration of the Agreement, 
[BANK] may, subject to the written concurrence of DOT, sell its 
loans to another bank or to another Participating Lender which shall 
assume the original [BANK] 's rights and responsibilities to fund, 
service and collect the loan or loans.

10. Suspension of Agreement

    DOT may suspend this Agreement by giving a Notice of Suspension 
in writing to [BANK] and by instructing [BANK] in writing not to 
disburse funds (including the granting of additional loans and the 
making of loan commitments), pending [BANK] 's action to correct 
violations of the terms and conditions of this Cooperative 
Agreement. Failure by [BANK] to take corrective actions specified in 
the Notice of Suspension within thirty (30) days of the date of 
receipt of said notice may result in termination of the Agreement.

11. Termination

    11.1 DOT Termination for Cause. DOT may terminate this 
Cooperative Agreement, in whole or in part, at any time before the 
expiration of the one year term of the Agreement or the expiration 
of any renewal term of the Agreement, and without affording a thirty 
(30) day cure period under the Suspension provision, if it 
determines that the [BANK] failed to comply with terms and 
conditions of the Agreement and such failure cannot be reasonably 
addressed. DOT shall promptly notify [BANK] in writing of the 
determination and the reasons for the termination, together with the 
effective date of termination.
    11.2 DOT Termination for Convenience. DOT may terminate this 
Cooperative Agreement for the convenience of the Government and 
without cause, upon prior written notice of thirty (30) days to 
[BANK] of DOT's intention to terminate. Upon termination, DOT shall 
remain liable on the pro rata share of the loan guarantee(s) made by 
[BANK] , which have been finally approved by DOT prior to the 
effective date of termination.
    11.3 Bank Termination. [BANK] may terminate the Agreement with 
written notice of sixty (60) days to DOT of [BANKS]'s intention to 
terminate. Upon termination, DOT shall remain liable only as to loan 
guarantee(s) written by [BANK] which have been approved by DOT, 
prior to the effective date of termination.

12. DOT's Representative

    The Director, OSDBU, shall represent DOT under the Agreement and 
may exercise all rights secured to DOT by the Agreement. Decisions 
by the Director to exercise DOT's rights under this Agreement shall 
be final and binding on DOT. The Director may delegate these 
responsibilities to any other DOT employee on written notice to 
[BANK].
    [BANK'S REPRESENTATIVE] shall represent [BANK] under the 
Agreement and may exercise all rights secured to [BANK] by the 
Agreement. Decisions by this representative to exercise [BANK]'s 
rights under this Agreement shall be final and binding on [BANK]. 
[BANK] may delegate these responsibilities to any other [BANK] 
employee upon written notice to DOT. [BANK]'s address for receipt of 
notices and other correspondence for the purpose of this Agreement 
will be:

13. Miscellaneous Conditions

    13.1 As a condition of receipt of any DOT guarantee under the 
Agreement, [BANK] assures DOT that they will abide by the provisions 
of Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et 
seq., and DOT's implementing regulations, 49 CFR 21; Section 504 of 
the Rehabilitation Act of 1973, 29 U.S.C. 794, and DOT's 
implementing regulations, 49 CFR 27; the Age Discrimination Act of 
1975, 42 U.S.C. 6101-7, and any Federal implementing regulations; 
and Section 905 of the Railroad Revitalization and Regulatory Reform 
Act of 1976, 45 U.S.C. 803 (re-codified in 49 U.S.C. 332). [BANK] 
also assures DOT that they will comply with all other applicable 
Federal laws and regulations.
    13.2 In order to enter into this Agreement, [BANK] shall be 
designated as a depository and financial agent of the Government 
under 31 CFR Part 202.
    13.3 All notices, approvals, reports, or other correspondence 
contemplated by this Agreement must be in writing and served 
personally, by facsimile, by e-mail, or by first class mail. If 
given by personal service, the notice shall be effective on the date 
of delivery; if given by mail, the notice shall be effective upon 
receipt. Either party may change its mailing address by giving 
notice of such change.
    13.4 [BANK] shall execute a Drug-Free Workplace Act 
certification concurrent with execution of this Cooperative 
Agreement.
    13.5 [BANK] shall maintain a written code of standards of 
conduct governing the performance of their employees engaged in the 
award and administration of DOT loan guarantee, a copy of which must 
be made available to DOT upon request. No employee, officer or agent 
of the [BANK] shall participate in the selection, or in the award or 
administration of a contract supported by DOT funds if a conflict of 
interest, real or apparent, would be involved. Such a conflict would 
arise when:
    (a) The employee, officer or agent,
    (b) Any member of his or her immediate family,
    (c) His or her partner, or
    (d) An organization which employs, or is about to employ, any of 
the above, has a financial or other interest in the firm selected 
for award.
    [BANK]'s officers, employees or agents shall neither solicit nor 
accept gratuities, favors or anything of monetary value from loan 
applicants or potential applicants, or parties applying for any DOT 
short term loans. To the extent permitted by State or local law or 
regulations, such standards of conduct shall provide for penalties, 
sanctions, or other disciplinary actions for violations of such 
standards by [BANK] agents.
    13.6 In accordance with Section 319 of Public Law 101-121, 
[BANK] shall be prohibited from using Federal appropriated funds for 
lobbying the Executive or Legislative Branches of the Federal 
Government in connection with a specific contract, grant, or loan 
and shall disclose lobbying activities. [BANK] shall execute a 
Certificate Regarding Lobbying concurrent with execution of this 
Cooperative Agreement.
    13.7 This document embodies the entire Agreement between [BANK] 
and DOT. This Agreement may be amended, altered, or any of its 
provisions waived only in writing and signed by both parties.
    This Cooperative Agreement is entered into this ---- day of ----
---- 20----, by the United States Department of Transportation at 
Washington, District of Columbia.

By:--------------------------------------------------------------------

Director, Office of Small and
Disadvantaged Business Utilization
U.S. Department of Transportation

This Cooperative Agreement is entered into by [BANK] and in witness 
whereof, the undersigned has caused the signature of its officer 
below-named and its corporate seal duly attested to be affixed 
hereto this ---- day of --------, 20----, intending to be legally 
bonding hereby.

[BANK]

(SEAL)
(Bank ABA/RTN) --------/--------

By:--------------------------------------------------------------------

Title:-----------------------------------------------------------------

Appendix H to Part 22--Guarantee Agreement

DEPARTMENT OF TRANSPORTATION OFFICE OF SMALL AND DISADVANTAGED BUSINESS 
UTILIZATION SHORT TERM LENDING PROGRAM

GUARANTEE AGREEMENT

    This GUARANTEE AGREEMENT dated as of [DATE] (this Agreement) is 
made by the United States Department of Transportation (DOT) and 
[NAME OF BANK], a National Banking Corporation, its successors and 
permitted assigns [NAME OF BANK] concerning the Bank's extension of 
a [AMOUNT OF LOAN/WORDS] ($LOAN AMOUNT) Loan (Loan) to [NAME OF 
BORROWER], [STATE IN WHICH INCORPORATED] Corporation, (Borrower).

Section 1. Guarantee

    1.01 The Guarantee. Subject to the terms and conditions set 
forth in this Agreement, DOT hereby guarantees, irrevocably and 
unconditionally (except to the extent expressly provided in Sections 
1.02, 1.03, 1.04, 1.05 or by applicable law) to the Bank payment of 
seventy five percent (75%) of the outstanding and unpaid principal 
amount of the loan, interest on the principal amount of the loan and 
interest on any due and unpaid amounts owing by the Borrower to the 
Bank, provided however that the maximum liability of DOT shall not 
at any time exceed [GUARANTEE AMOUNT/WORDS], the Guaranteed Amount.
    1.02 Coverage of the Guarantee and Compliance with STLP 
Cooperative Agreement and STLP Policies and Procedures Manual.

[[Page 49404]]

    (a) The Guarantee is entitled to the full faith and credit of 
the United States of America. The Guarantee constitutes a guarantee 
of payment and not of collection. In no event shall the liability of 
the DOT on the Guarantee exceed the Guaranteed Amount.
    (b) If the [NAME OF BANK] fails to comply with this Guarantee 
Agreement and STLP Cooperative Agreement and STLP Policies and 
Procedures Manual in the making or servicing of any STLP loan, the 
Guarantee shall not be effective and shall automatically terminate. 
Denial of liability on the Guarantee shall only occur if DOT 
determines that the [NAME OF BANK] has engaged in negligence, 
misconduct, or failed to comply with this Guarantee Agreement the 
STLP Cooperative Agreement, or STLP Policies and Procedures Manual.
    1.03 Term of the Guarantee. The Guarantee will be effective for 
one year from the Date of Activation of the Loan. Any requests for 
renewals or extensions of the expiration date must be sent by the 
[NAME OF BANK], in writing, to the DOT no later than thirty (30) 
days prior to the original expiration date. Renewal periods of one 
year may be considered; however, they will be handled as a new loan 
guaranty request. Extension periods up to ninety (90) days may be 
granted with reason and at the DOT's sole discretion incorporating 
any addendums that contain conditions on the loan approval. If a 
renewal is not in place by the end of the 90 day extension, the 
Guarantee will expire on the last day of the extension period. It is 
further agreed that all principal advances made to the Borrower by 
[NAME OF BANK] in accordance with Paragraph 1.02 (b.) and prior to 
the Expiration Date will be guaranteed by the DOT until collected.
    1.04 Timely Demand. In the event that the [NAME OF BANK] fails 
to make demand on DOT within the time period required in Section 
2.02(vi), the Guarantee of the unpaid installment of principal and/
or interest as to which such timely demand was not made shall 
automatically terminate with respect thereto. This termination shall 
be without prejudice to the right of the [NAME OF BANK] to make 
demand on DOT under this Agreement in respect of any other due and 
unpaid installment(s) of principal or interest.
    1.05 Prohibited Amendment or Transfers. In the event that the 
Bank, without DOT's prior written consent, agrees to any material 
amendment, modification, or waiver or assigns, conveys, sells, or 
otherwise transfers any interest in or right or obligation under 
this Agreement or the Loan, or any Note, then DOT shall have the 
right to terminate the Guarantee by providing written notice to the 
Bank.
    1.06 No Acceleration. In the event that, without the prior 
written consent of DOT, the Bank declares all or any part of the 
Borrower's indebtedness under the Loan to be immediately due and 
payable or to be due and payable upon the demand of the Bank, then 
DOT shall have the right to terminate the Guarantee with respect to 
all or a portion of the Guaranteed Amount. The automatic 
acceleration of the Loan or any Note as a result of a bankruptcy or 
insolvency event does not constitute such an event. Any termination 
of the Guarantee by DOT shall be deemed effective as of the date of 
the declaration by the Bank.

Section 2. Claim Procedures

    2.01 Failure to Pay. In the event that (i) the Borrower for any 
reason fails to pay in full any installment of principal (other than 
any proposed voluntary prepayment) or interest under the Loan or any 
Note for more than thirty (30) calendar days after the due date of 
such installment; and (ii) a period of fifteen (15) calendar days 
has elapsed since written demand for payment was made by the Bank on 
the Borrower (which demand may be omitted only if and to the extent 
that the making thereof would be prohibited by any applicable law), 
then the Bank may make demand on DOT under this agreement for 
payment (subject to Sections 1.03., 1.04, 1.05) of the Guaranteed 
Amount.
    2.02 Demand on DOT. The Bank's demand on DOT must: (i) Be in 
writing; (ii) be made only by the Bank; (iii) identify the 
installment(s) of principal and/or interest unpaid as of the date of 
such demand; (iv) include a copy of the Bank's written demand for 
payment on the Borrower (or in the event that such demand was 
omitted in accordance with law, evidence of the applicable law); (v) 
include an Assignment and Certification in the form of Annex A; (vi) 
be made not later than sixty (60) calendar days from the due date of 
the unpaid installment(s) of principal and /or interest on which the 
Bank's demand for payment is based.
    2.03 Assignment to DOT. On and as of the date on which DOT pays 
the Guaranteed Amount, DOT shall become subrogated to, and the Bank 
shall be deemed to have assigned to DOT, without recourse and 
without need for any further action, the Guaranteed Percentage of 
the Bank's right, title, and interest in and to the principal of and 
interest on the Loan and each Note in respect thereof and to such 
extent, DOT shall have the right to enforce or participate in any 
claim (including without limitation, any claim in bankruptcy), right 
or remedy that the Bank then has or may thereafter acquire against 
the Borrower under the Loan or the Note. In addition to the 
Assignment and Certification required, the Bank shall, upon request 
by DOT, promptly execute and deliver such documents and take such 
other actions as DOT may reasonably request to evidence or give 
effect to such subrogation and assignment, it being understood and 
agreed that the execution and delivery of any such document or the 
taking of any such action shall not be a condition to DOT's 
obligation to pay the Guaranteed Amount.
    2.04 Payment by DOT.
    (a) Within forty-five (45) Business Days after the date on which 
the Bank shall have properly documented its demand on DOT for 
payment pursuant to Section 2.02 (the ``Demand Date''), the DOT 
shall, subject to Sections 1.03, 1.04 and 1.05, pay the Guaranteed 
Amount to the Bank in a single payment calculated as of the date of 
actual payment thereof by DOT.
    (b) Payment of the Guaranteed Amount due under this Agreement 
shall be made by DOT to the Bank, and such payment to the Bank shall 
discharge fully and completely DOT's liability under this Agreement. 
After the Demand Date, any funds received by the Bank or DOT from or 
on behalf of the Borrower in respect of any of the Borrower's 
obligations under the Loan Agreement or Note shall be applied in 
accordance with the terms of the Loan Agreement or Note.
    2.05 DOT Payment Does Not Discharge Borrower. Any statute or 
judicial decision to the contrary notwithstanding, no payment by DOT 
to the Bank under this Agreement shall be deemed to reduce, 
discharge, satisfy or terminate any obligation of Borrower under the 
Loan Agreement or any Note.

Section 3. Miscellaneous

    3.01 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND 
CONSTRUED IN ACCORDANCE WITH THE FEDERAL LAW OF THE UNITED STATES OF 
AMERICA IF AND TO THE EXTENT SUCH FEDERAL LAW IS APPLICABLE, AND 
OTHERWISE IN ACCORDANCE WITH THE LAW OF THE STATE OF [STATE WHERE 
BANK LOCATED].
    3.02 Benefit of Agreement. This Agreement shall be binding upon 
and inure to the benefit of and be enforceable by the respective 
successors and permitted assigns of the parties hereto.
    3.03 Entire Agreement. This Agreement contains the entire 
agreement among the parties hereto regarding the subject matter 
hereof. In the event that any term of the Loan Agreement or any Note 
conflicts with any term of this Agreement, the terms and provisions 
of this Agreement shall control to the extent of such conflict.
    3.04 Amendment or Waiver. This Agreement may not be changed, 
discharged or terminated (except as expressly provided herein) 
without the written consent of the parties hereto, and no provision 
hereof may be waived without the written consent of the party to be 
bound thereby.
    3.05 Counterparts. This Agreement may be signed in separate 
counterparts, each of which shall be deemed to be an original and 
all of which together shall constitute one and the same instrument.
    3.06 Severability. To the extent permitted by applicable law, 
the illegality or unenforceability of any provision of this 
Agreement shall not in any way affect or impair the legality or 
enforceability of the remaining provisions of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to 
be duly executed, in duplicate, this [DAY] of [MONTH], [YEAR].

-----------------------------------------------------------------------

[NAME OF BANK]

United States Department of Transportation

[NAME OF OFFICIAL]
[TITLE OF OFFICIAL]

Annex A--Form of Assignment and Certification

    This Assignment and Certification is made pursuant to the terms 
of the Guarantee Agreement dated as of [DATE] (the ``Agreement'') 
between the United States Department of Transportation (DOT) and 
[NAME OF BANK], a National Banking Corporation (Bank). Capitalized 
terms used herein and not otherwise defined herein shall have the 
meanings assigned in the Agreement.

[[Page 49405]]

    1. Assignment. For value received, the Bank hereby assigns to 
DOT, without recourse, all of its right, title and interest in and 
to the principal of and interest on the Loan and under the Loan 
Agreement and each Note in respect thereof, to the extent, and only 
to the extent, of the Bank's Guaranteed Percentage of the Loan 
represented by the Guaranteed Amount paid by DOT to the Bank.
    2. Certifications. The Bank hereby certifies that (a) the 
Guaranteed Amount demanded to be paid by DOT to the Bank is properly 
calculated and due and owing to the Bank under the terms of the 
Agreement and (b) it has not, without the prior written consent of 
DOT:
    (i) Agreed to any material amendment, written modification or 
written waiver in violation of Section 1.04 of the Agreement; or
    (ii) Assigned, conveyed, sold or otherwise transferred any 
interest in or right or obligation under this Agreement, or any Note 
in violation of Section 1.05 the Agreement; or
    (iii) Accelerated or caused the Agent to accelerate all or any 
part of the Loan or any Note in violation of Section 1.06 of the 
Agreement;
    3. Acknowledgment. The Bank acknowledges and agrees that this 
Assignment and Certification is subject to the terms of the 
Agreement, including, without limitation, the following:
    (a) Any funds received by the Bank or DOT from or on behalf of 
the Borrower in respect of any of the Borrower's obligations under 
the Loan Agreement or Note shall be applied in accordance with the 
terms of the Loan Agreement or Note.
    (b) The Bank shall, upon request by DOT, execute and deliver 
such documents and take such other actions as DOT may reasonably 
request to establish, preserve or enforce the rights, title and 
interest of DOT in, to and under the Loan Agreement and each Note, 
and any right or remedy that DOT has or may acquire against the 
Borrower thereunder, it being understood and agreed that the 
execution and delivery of any such document or the taking of any 
such action shall not be a condition to DOT's obligation to pay the 
Guaranteed Amount.

    IN WITNESS WHEREOF, the Bank has caused this instrument to be 
duly executed and delivered this [DAY] of [MONTH], [YEAR].

By:--------------------------------------------------------------------

(Signature)
(SEAL) Name:-----------------------------------------------------------

(Print)
Attest-----------------------------------------------------------------
Title:-----------------------------------------------------------------

Secretary
-----------------------------------------------------------------------
[NAME OF BANK]

[FR Doc. E8-19049 Filed 8-20-08; 8:45 am]

BILLING CODE 4910-9X-C
