UPDATE 1-US closes $529 mln loan for Fisker Automotive

* Loan to support electric vehicle production

* Fisker to build cars at former General Motors plant

* GM, Chrysler still seek technology loans from US gov't

WASHINGTON, April 23 (Reuters) - Fisker Automotive closed a $529 million U.S. Energy Department loan on Friday designed to help the company build electric vehicles.

The California-based start-up plans to assemble plug-in hybrids at a Wilmington, Delaware, plant that was recently closed by General Motors Co [GM.UL].

Fisker estimates that development of the Karma full-sized sports sedan will create 2,000 jobs and spur hiring at parts suppliers and service providers.

The financing came from a congressionally approved $25 billion program for helping automakers retool factories and make other changes needed to produce electric and other advanced technology vehicles as a way of reducing U.S. oil dependence.

Fisker expects to reach full production in 2015. Its cars are powered by electric motors charged by a lithium-ion battery.

The Obama administration has awarded billions in grants and other financing for U.S. companies to develop the next generation battery technology.

GM expects its plug-in Volt to roll off the assembly line later this year. Nissan Motor Co 7201.T> is also producing a battery powered car, the Leaf.

Nissan is receiving $1.6 billion in advanced technology financing for new construction and facility upgrades in Smyrna, Tennessee.

Earlier this month, the U.S. government assigned a "zero" emissions rating to electric cars, making it more attractive for automakers to start making them as a way to meet more stringent fuel efficiency standards that take effect in 2012.

Ford received an advanced technology loan in September to transform factories in five states.

Ford for now is focusing on making more efficient gasoline engines and transmissions and adopting other steps to reduce vehicle weight and drag. It also plans to build an electric vehicle.

Another start-up, sports car maker Tesla Motors, will use $465 million in Energy Department loans to help finance a manufacturing facility for its Model S electric sedan. Tesla already produces the Roadster.

GM and Chrysler have applied for billions in advanced technology funding, which only goes to companies the government believes will be financially viable. GM and Chrysler are trying to find their footing in a challenging sales market after restructuring in bankruptcy last year.

Both companies, which combined received more than $60 billion in taxpayer bailout and bankruptcy financing in 2009, reported financial progress this week. (Reporting by John Crawley; editing by Andre Grenon)