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As of America’s support of the industry, the Bloomberg report finds that to begin with, the DOE’s loan guarantee program has been wildly misinterpreted: The government isn’t handing out loans — or money of any sort — as some Republican lawmakers have characterized it. Rather, the program is designed to hand out loan guarantees, that is, conditional agreements to pay back a private lender if a borrower, in this case, a clean energy startup company, defaults.
As the report’s author, analyst Alison Williams, writes:
“When the government agrees to a loan guarantee, it promises to pay off the debt if the borrower doesn’t. If the borrower pays the debt, the government incurs no cost for its guarantee. In energy, loan guarantees help new-to-market companies or technologies overcome the so-called “valley of death” — when a company or technology is too established to receive start-up venture capital yet not established enough to afford traditional debt financing.”