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.
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