(a) MARAD will undertake a due diligence investigation of every Application it receives to determine if, in MARAD's sole judgment, an Application is both:

(1) Qualified for financing because the Vessel Project or Shipyard Project is deemed an acceptable credit risk (the Applicant's ability to repay a Note will be the primary basis for MARAD's approval); and

(2) Eligible for financing because it meets applicable requirements, including statutory requirements for economic soundness, and in these regulations for Vessel Projects in § 298.15, and Shipyard Projects in § 298.17 of this part.

(b) MARAD will approve eligible and qualified Applicants by evaluating the information obtained during the Application and due diligence process.

(c) MARAD, at its sole discretion, may decline or delay approval of any financing or disbursement to any Applicant found to have pending legal actions or unresolved claims.

(d) MARAD may require any terms and conditions on approvals that MARAD, in its sole discretion, believes to be necessary and appropriate.

(e) Credit decision and approval. (1) MARAD will inform Applicants that it is willing to approve an application by issuing a summary of business terms or term sheet that describes the terms and conditions of the financing for a Project. Such terms and conditions are at MARAD's sole discretion and will be incorporated in the Financing Documents. Non-acceptance of any terms and conditions may result in denial of the Application.

(2) Any Application MARAD determines is ineligible will be denied.

(3) Upon acceptance of the term sheet by the Applicant, MARAD will issue a letter to the Applicant advising that the Project is approved subject to the availability of appropriations.