(a) Grants and Loans.— 
A State shall use financial assistance for projects under this chapter to make a grant or lend money to the owner of rail property, or a rail carrier providing rail transportation, related to a project being assisted. The State shall decide on the financial terms of the grant or loan, except that the time for making grant advances shall comply with regulations of the Secretary of the Treasury.

(b) Holding and Use of Government’s Share.— 
The State shall place the United States Governments share of money that is repaid in an interest-bearing account. However, the Secretary of Transportation may allow a borrower to place that money, for the benefit of the State, in a bank designated by the Secretary of the Treasury under section 10 of the Act of June 11, 1942 (12 U.S.C. 265). The State shall use the money and accumulated interest to make other grants and loans under this chapter in the same manner and under the same conditions as if they were originally granted to the State by the Secretary of Transportation.

(c) Payment of Unused Money and Accumulated Interest.— 
The State may pay the Secretary of Transportation the Governments share of unused money and accumulated interest at any time. However, the State must pay the unused money and accumulated interest to the Secretary when the State ends its participation under this chapter.

(d) Encouraging Participation.— 
To the maximum extent possible, the State shall encourage the participation of shippers, rail carriers, and local communities in paying the State share of assistance costs.

(e) Retention of Contingent Interest.— 
Each State shall retain a contingent interest (redeemable preference shares) for the Governments share of amounts in a rail line receiving assistance under this chapter. The State may collect its share of the amounts used for the rail line if