Direct Loan


A direct loan is a loan that is extended  by the Federal Government, which holds the loan and collects payments on the interest charged. This is distinct from a “loan guarantee” whereby the Federal Government does not provide a loan but encourages its extension by another entity by guaranteeing the repayment of the loan, or the balance on it, to that entity if the borrower defaults.

  Section 502 off  the Congressional Budget Act of 1974 (FCRA)

Section 502. Definitions.

(1) The term “direct loan” means a disbursement of funds by the Government to a non-Federal borrower under a contract that requires the repayment of such funds with or without interest. The term includes the purchase of, or participation in, a loan made by another lender and financing arrangements that defer payment for more than 90 days, including the sale of a government[1] asset on credit terms. The term does not include the acquisition of a federally guaranteed loan in satisfaction of default claims or the price support loans of the Commodity Credit Corporation.

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[1] So in original. The word “government” should be capitalized.


Deschler, Lewis (1903-1976)


Direct Spending