What is a Guaranteed Obligation? A Comprehensive Legal Overview
Definition & meaning
A guaranteed obligation refers to any loan or debt that a borrower has for an eligible project, where the Department of Energy (DOE) guarantees part or all of the payment of principal and interest. This guarantee is established through a Loan Guarantee Agreement under the relevant federal laws. Essentially, it provides assurance to lenders that they will receive repayment, reducing the risk associated with financing innovative projects.
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This term is primarily used in the context of federal financing programs aimed at supporting innovative energy projects. It is relevant in areas such as energy law and financing regulations. Users may encounter guaranteed obligations when seeking funding for projects that utilize new technologies. Legal forms related to loan agreements and guarantees can help individuals and organizations navigate this process effectively.
Key Legal Elements
Real-World Examples
Here are a couple of examples of abatement:
Example 1: A renewable energy company secures a loan to develop a solar energy project. The DOE guarantees 80% of the loan, reducing the lender's risk and making it easier for the company to obtain financing.
Example 2: A startup focused on energy-efficient technologies applies for a loan guarantee from the DOE to fund its innovative product development. (hypothetical example)
Relevant Laws & Statutes
Key statutes include:
10 CFR 609 - Loan Guarantees for Projects that Employ Innovative Technologies
The Energy Policy Act of 2005, which established the framework for these guarantees.
Comparison with Related Terms
Term
Definition
Difference
Loan Guarantee
A promise made by a third party to cover a loan if the borrower defaults.
A guaranteed obligation specifically refers to loans for eligible projects backed by the DOE.
Debt Obligation
A legal commitment to repay borrowed money.
A guaranteed obligation is a specific type of debt obligation with a government guarantee.
Common Misunderstandings
What to Do If This Term Applies to You
If you are considering applying for a loan that may involve a guaranteed obligation, start by researching eligible projects and understanding the requirements set by the DOE. You can explore US Legal Forms for templates that can assist in preparing your loan application and related documents. If your situation is complex, consulting with a legal professional may be beneficial.
Quick Facts
Typical fees: Varies based on the lender and project.
Jurisdiction: Federal, under the Department of Energy.
Possible penalties: Defaulting on the loan may lead to legal action and loss of the guarantee.
Key Takeaways
FAQs
A guaranteed obligation is a loan or debt for an eligible project, backed by a guarantee from the DOE for repayment.
Borrowers engaged in projects that meet the DOE's eligibility criteria can qualify.
You can apply by preparing the necessary documentation and submitting it to the DOE as part of the loan application process.
