Senate Approves $25 Billion Loan for AutoMakers

WASHINGTON — President George W. Bush is expected to sign a bill shortly that will give automakers a $25 billion loan to help them retool factories to build more efficient models, such as the electric Chevrolet Volt. The U.S. Senate voted over the weekend to pass a stopgap budget bill that includes a $7.5 billion appropriation to cover $25 billion in federally guaranteed low-interest loans to the auto industry.

The House of Representatives passed the bill last week. The loans, which must be repaid and are not a free bailout, are designed to help automakers retool to build more fuel-efficient vehicles to meet the stricter fuel economy rules passed last year. Under the loan rules, only vehicles that get 25 percent fuel economy than their competitors can qualify for the aid.

However, the cash flow may be impeded a bit to the Motor City, since the U.S. Energy Department said that the process of handing out money could take up to 18 months after the bill is signed.

The Detroit Free Press reported that the loans will be made at low interest rates, with about 5 percent interest, rather than the 15-20 percent that auto suppliers and automakers have access to in today's tight credit market.

Ford said the loan program is "a key enabler to Ford's plan to pursue advanced technologies and deliver leading fuel economy."

What this means to you: Detroit automakers are by no means out of the woods, but this move should ease the pressure a bit and help speed the development of more fuel-efficient cars and trucks. — Anita Lienert, Correspondent