WASHINGTON – A federal loan program could help bring about a financial turnaround for the century-old Bangor and Aroostook Railroad, which is a vital freight link for northern Maine industries.

The low-interest loan program created by Congress in 1998 could save B&A and other short-line railroads across the United States that bring freight from rural areas to commercial hubs.

Federal administrators recently eased the loan conditions to speed money to troubled rail companies. Lawmakers also are working on a grant program for the same purpose.

B&A President Fred Yocum said he probably won’t take advantage of the federal loan program because the rail line is on the market. But the availability of financial help may make the Maine company more attractive to a buyer.

“It’s a plus,” Yocum said, adding that a buyer may be identified within weeks.

Federal grants and loans provide opportunities for upgrades that increase the marketability of the railroad property.

The railroad, which employs 350 people and has 436 miles of track, has had trouble paying locomotive leases, property taxes and even utility bills. It’s been for sale since January.

Its owner, Iron Horse Railways, is hoping to find a buyer rather than abandon the tracks and file for bankruptcy protection. Much is at stake in keeping the trains running, including paper mills, potato farms and other companies that employ thousands of workers in remote parts of Maine.

“If they close, the mills in the northern part of the state would be in trouble,” said Chalmers Hardenbergh, who publishes Atlantic Northeast Rails and Ports newsletter in Yarmouth.

Rail supporters warn that if railroads fail, domestic freight would move to rural roads that aren’t equipped to handle the weight or traffic. B&A carries about 100,000 carloads of freight each year.