$25 Billion Loan Program Signed By President Bush ~ Hybrid Car Review
Hybrid Car Review: $25 Billion Loan Program Signed By President Bush

Wednesday, October 01, 2008

$25 Billion Loan Program Signed By President Bush

President Bush signed the bill that authorizes $25 billion in loans to car makers willing to work on increasing their fuel efficiency. But don't expect the car makers to celebrate just yet.

The Energy Department is supposed to write up the rules to govern the operation in the next 60 days, but already the Dept is saying it will take longer than that.

Automakers and auto suppliers with fewer than 500 employees hope they can get at the money early next year, but Energy Secretary Samuel Bodman is saying it could take as long as 18 months to clear the requirements.

A $7.5 billion measure is included to initiate the industry loan program. The initiative was passed last year, but was not funded until now.

The $25 billion in low interest loans is intended to help the automakers reach the new CAFE standards in fuel efficiency. The money can be used to pay up to 30 percent of the cost of new or retooled component or assembly plants for advanced-technology vehicles. Preference would be given to older plants, at least 20 years old, even if they're closed.

The money must be used for the development of vehicles getting at least 25 percent better fuel economy than existing vehicles in their size class.

The money must be used for investment in the US. The loans themselves can be deferred up to five years, and can be made for up to 25 years. The interest rate is set at about 5 percent, as opposed to the 15% they would normally have to pay.

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