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What is a Loan Guarantee?

A loan guarantee is a contractual obligation between the government, private creditors and a borrower—such as banks and other commercial loan institutions—that the Federal government will cover the borrower’s debt obligation in the event that the borrower defaults.

DOE’s Loan Programs Office is designed to allow the Federal government to share some of the financial risks of projects that employ new technologies that are not yet supported in the commercial marketplace or where private investment has been inhibited.