To amend the Urban Mass Transportation Act of 1964 to authorize grants and loans to private nonprofit organizations to assist them in providing transportation service meeting the special needs of elderly and handicapped persons.

Authorizes grants and loans to State and local public bodies and agencies thereof and to private nonprofit organizations to assist them in providing transportation services meeting the special needs of elderly and handicapped persons. Authorizes the Secretary of Transportation to use two percent of the annual appropriation for transportation research, development, and demonstration projects, to finance the programs of this Act.