(a) Application fee. A non-refundable $1,000 filing fee is required to be submitted with an Application.

(b) Commitment fee. A non-refundable commitment fee is a fee due in advance of the execution of the Financing Documents. Before MARAD executes any Financing Documents, an Applicant must pay a commitment fee based on the amount of the Note to be guaranteed by MARAD calculated as follows:

(1) one-quarter ( 1/4) of one percent of the amount of the Note approved for a MARAD Guarantee, or $250,000, whichever is less, minus -

(2) the cost of any professional services fees required to be paid by the Applicant as part of the due diligence process in § 298.11 of this part.

(c) Guarantee Fee. A Guarantee Fee will be due and payable at the Note Closing and will be based on the repayment provisions for the Note. The Guarantee Fee is fully payable when due and will not be refunded. The minimum and maximum range of rates for the Guarantee Fee are set forth in section 53714(b)(S) of the Act with the specific rate for the Applicant determined based on the credit risk at the time of the Nate Closing and calculated as follows:

(1) Generally. The Guarantee Fee rate will be based on the entity MARAD considers to be the primary source of creditworthiness (the Ultimate Credit) for a Project, including:

(i) A long-term time charter (where the charter hire represents the primary source of payment of interest and principal with respect to the Note),

(ii) A parent or affiliate guarantee of the Note,

(iii) The Borrower, or

(iv) The bareboat charterer.

(2) Adjustments. MARAD may make such adjustments to its computation of creditworthiness of the Ultimate Credit considered necessary to reflect more accurately the financial condition of the ultimate credit.

(3) Rating determination. MARAD will determine creditworthiness of the Ultimate Credit using information, forms, statements, and reports on file with MARAD prior to the date on which the Guarantee Fee is to be paid. Utilizing this data, MARAD will assign an internal designation for the credit risk of the Ultimate Credit, e.g., higher risk, medium risk, or lower risk.

(4) Calculation of the Guarantee Fee. The Guarantee Fee is calculated using the average principal amount of the Note estimated to be outstanding for each fiscal year during the expected amortization period of the Note. In calculating the present value used in determining the amount of the Guarantee Fee to be paid, MARAD uses a discount rate contained in the President's most recently submitted budget that MARAD converts to a bond equivalent rate.

(5) Proration of Guarantee Fee. The Guarantee Fee will be prorated where a Project delivery is scheduled to occur during the annual period with respect to which payment of said Guarantee Fee is being made, as follows:

(i) Undelivered project. If the Guarantee Fee relates to an undelivered Project, the predelivery rate is applicable to the average outstanding principal amount of the Note for the period from the date of the Note Closing to the delivery date, and the delivered rate is applicable for the balance of the annual period in which the delivery occurs.

(ii) Multiple Vessels. If the Guarantee Fee relates to more than one Vessel, the amount of the outstanding Note will be allocated to each Vessel proportionately based on the Actual Cost of each Vessel with the amount for each Vessel determined by using the rate that is applicable under paragraph (c)(2) or (3) of this section. The Guarantee Fee will be the aggregate of the amounts calculated for each Vessel.

(d) Modification, assumption, or substitution fee. A non-refundable fee is due and payable by the Borrower at the time of the request to MARAD to approve the modification or assumption of a financing or the substitution of a Borrower. The fee is one quarter ( 1/4) of one percent of the outstanding principal balance of the Note at the time of the request. MARAD may waive all or some of the modification or assumption fee when the primary purpose of the modification or assumption will benefit the United States.

(e) Monitoring Fee. An annual monitoring fee may be charged by MARAD for Borrowers that requires additional monitoring for program compliance including regular review of more complex financing covenants.