Chrysler Loan Guarantee Program

completed

Chrysler was in financial distress with poor quality cars, declining market share, and negative cash flow. The company was unable to secure loans from major banks and was borrowing from small banks and international sources. To save Chrysler, federal assistance was sought in the form of loan guarantees. After six months of meeting stringent conditions involving banks, suppliers, states, labor unions, management, and Canada, Chrysler qualified for $1.5 billion in federal loan guarantees, allowing it to borrow from private banks with government-backed risk guarantees. This program helped Chrysler avoid bankruptcy and led to the development of successful vehicles like K-cars, the minivan, and the Jeep Cherokee.