Federal Credit Assistance

The United States Department of Transportation has developed a number of financial tools to help project sponsors access credit to expedite the implementation of needed transportation improvement. Federal credit assistance can take one of two forms: loans, where project sponsors borrow Federal highway funds directly from a state DOT or the Federal government; and credit enhancements, where a state DOT or the Federal government makes Federal funds available on a contingent (or standby) basis. Credit enhancements help reduce risk to investors and thus allow project sponsors to borrow at lower interest rates. Loans can provide the capital necessary to proceed with a project, reduce the amount of capital borrowed from other sources and may also serve a credit enhancement function by reducing the risk borne by other investors.

The Transportation Infrastructure Finance and Innovation Act (TIFIA)

Provides Federal credit assistance in the form of direct loans, loan guarantees, and standby lines of credit to finance surface transportation projects of national and regional significance.

The Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA) is a Federal program under which USDOT provides credit assistance to major surface transportation projects of national or regional significance, including highway, transit, and rail. USDOT awards credit assistance to eligible applicants, which include state departments of transportation, transit operators, special authorities, local governments, and private entities. The program is designed to fill market gaps and leverage limited Federal resources and substantial co-investment by providing projects with supplemental or subordinate debt rather than grants.

The TIFIA credit program offers three distinct types of financial assistance designed to address the varying requirements of projects throughout their life cycles:

  • Secured (direct) loan – Offers flexible repayment terms and provides combined construction and permanent financing of capital costs. Maximum term of 35 years from substantial completion. Repayments can start up to five years after substantial completion to allow time for facility construction and ramp-up.
  • Loan guarantee – Provides full-faith-and-credit guarantees by the Federal Government and guarantees a borrower’s repayments to non-Federal lender. Loan repayments to lender must commence no later than five years after substantial completion of project.
  • Standby line of credit – Represents a secondary source of funding in the form of a contingent Federal loan to supplement project revenues, if needed, during the first 10 years of project operations, available up to 10 years after substantial completion of project.

Benefits of TIFIA assistance to public and private project sponsors include:

  • Improved access to capital markets
  • Flexible repayment terms
  • Potentially more favorable interest rates than can be found in private capital markets for similar instruments
  • Earlier completion of large, capital intensive projects that otherwise might be delayed or not built at all because of their size and complexity and the market’s uncertainty over the timing of revenues

Additional Information

Greater detail on the TIFIA program is available from the Build America Bureau. It includes:

State Infrastructure Banks (SIBs)

Allow states to capitalize revolving loan funds with regularly apportioned Federal-aid highway funds.

State Infrastructure Banks (SIBs) are revolving infrastructure investment funds for surface transportation that are established and administered by states. A SIB, much like a private bank, can offer a range of loans and credit assistance enhancement products to public and private sponsors of Title 23 highway construction projects or Title 49 transit capital projects. The requirements of Titles 23 and 49 apply to SIB repayments from Federal and non-Federal sources. All repayments are considered to be Federal funds.

SIBs give states the capacity to increase make more efficient use of its transportation funds and significantly leverage Federal resources by attracting non-Federal public and private investment. Alternatively, SIB capital can be used as collateral to borrow in the bond market or to establish a guaranteed reserve fund. Loan demand, timing of needs, and debt financing considerations are factors to be weighed by states in evaluating a leveraged SIB approach.

SIBs are capitalized with Federal-aid surface transportation funds and matching state funds. (Several states have established SIBs or separate SIB accounts capitalized solely with state funds.) As loans or other credit assistance forms are repaid to the SIB, its initial capital is replenished and can be used to support a new cycle of projects.

Additional Information

The FHWA Center for Innovative Finance Support is responsible for ensuring that the SIB pilot programs and other related innovative revenue and credit programs are effectively administered, and for providing technical assistance to the states and FHWA Division Offices with respect to these programs. View additional information on:

The Railroad Rehabilitation and Improvement Financing (RRIF) Program

Provides direct Federal loans and guarantees to support the development of railroad infrastructure.

The Railroad Rehabilitation and Improvement Financing (RRIF) program provides direct Federal loans and loan guarantees to finance development of railroad infrastructure is intended to make funding available through loans and loan guarantees for railroad capital improvements. The RRIF program was established by the Transportation Equity Act for the 21st Century (TEA-21) and amended by the Safe Accountable, Flexible and Efficient Transportation Equity Act: a Legacy for Users (SAFETEA-LU). The program was most recently amended by the Fixing America’s Surface Transportation (FAST) Act.

Under this program the FRA Administrator is authorized to provide direct loans and loan guarantees up to $35.0 billion to finance development of railroad infrastructure. Up to $7 billion is reserved for projects benefiting freight railroads other than Class I carriers.

The funding may be used to:

  • Acquire, improve, or rehabilitate intermodal or rail equipment or facilities, including track, components of track, bridges, yards, buildings and shops, and including the installation of positive train control systems;
  • Develop or establish new intermodal or railroad facilities;
  • Reimburse planning and design expenses relating to activities listed above;
  • Refinance outstanding debt incurred for the purposes listed above; and
  • Finance transit-oriented development (credit assistance only available until December 4, 2019).

Additional Information

Further information on the RRIF Program is available from the Build America Bureau.

Section 129 Loans

Federal participation in a state loan to support projects with dedicated revenue streams such as tolls, excise taxes, sales taxes, and others.

Section 129 of Title 23 allows Federal participation in a state loan to support projects with dedicated revenue streams including tolls, excise taxes, sales taxes, real property taxes, motor vehicle taxes, incremental property taxes, or other beneficiary fees.

Additional Information

Section 129 loans are managed by the FHWA Center for Innovative Finance Support. View additional information on:

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