The Federal Ship Financing Program (commonly referred to as Title XI based on the part of the Merchant Marine Act of 1936 that established the program) provides for a full faith and credit guarantee by the United States Government to promote the growth and modernization of the U.S. merchant marine and U.S. shipyards.
The program, authorized pursuant to 46 U.S.C. Chapter 537, provides U.S. Government guaranteed debt issued by (1) U.S. or foreign shipowners for the purpose of financing or refinancing either U.S. flag vessels or eligible export vessels constructed, reconstructed or reconditioned in U.S. shipyards and (2) U.S. shipyards for the purpose of financing advanced shipbuilding technology and modern shipbuilding technology of a privately-owned, general shipyard facility located in the U.S.
Under the Federal Credit Reform Act of 1990, appropriations to cover the estimated costs of a project must be obtained prior to the issuance of any letter of commitments for debt guarantees.
Purpose of Program
The Federal Ship Financing Program (commonly referred to as “Title XI”) promotes U.S. Merchant Marine fleet and U.S. shipyard growth and modernization. Through long term debt repayment guarantees, the Program encourages U.S. shipowners to obtain new vessels from U. S. shipyards cost effectively. It also assists U.S. shipyards with modernizing their facilities for building and repairing vessels. The repayment term allowed under the program generally is much longer and the interest rates are lower than those available from the commercial lending market because the obligations guaranteed by the U.S. Government.