The U.S. Department of Transportation has launched an improved RRIF Express programme (Railroad Rehabilitation and Improvement Financing Express) to expand the eligibility and provide more flexibility for long-term, low-cost loans for America’s short line and regional railways.
The new investment instrument is aimed at reducing the time and costs associated with securing loans to modernise aging freight and commuter rail infrastructure. In addition to expedited handling of loan requests, the new programme could provide loans of up to USD 150 million for qualified borrowers.
“Expanding this financing program will strengthen the short line and regional rail system, promote economic growth in rural communities, and boost America’s economic competitiveness,” the U.S. Transport Secretary Elaine Chao said.
The expanded eligibility offers a loan increase from USD 50 million to USD 150 million while covering more types of projects providing more eligibility. The pilot programme will also increase the option to finance loan amount from 40 percent to 75 percent and will increase the flexibility considering different categories of environmental review.
The notice also raises Credit Risk Premium assistance from the previous 5 per cent up to 10 per cent of the loan value, capped at USD 5 million per application.
For qualified applicants, the programme will significantly cut credit risk premium costs and advisor fees, costs that borrowers would otherwise have to pay in the traditional RRIF programme.
The RRIF Express programme was originally introduced in December 2019 to improve the traditional RRIF programme and was improved in March 2020. “It has generated substantial interest throughout the country. The modifications being introduced in this iteration combine to form a robust and significant improvement to the RRIF Express programme,” Chuck Baker, the President of the American Short Line and Regional Railroad Association (ASLRRA) said.
The Department’s Build America Bureau will administer the financial instrument to support the economic activity and improve the safety, capacity, and reliability of the freight transport sector.
The Bureau and ASLRRA are coordinating closely to provide educational training and technical assistance to help any parties interested in applying for a loan under the financial instrument.
The Bureau has provided more than USD 1.1 billion loans, supporting more than USD 1.6 billion in infrastructure investment across the country.