The Federal Railroad Administration yesterday turned down a request for a $5.75 million government-guaranteed loan to Auto-Train Corp.

A spokesman for the bankrupt railroad called the decision "a major blow" but said Auto-Train will continue to run its trains carrying tourists and their cars between surburban Lorton and Sanford, Fla.

Auto-Train filed for reorganization in bakruptcy last September and a week ago asked the federal government for help. The company asked for a prompt decision, saying it badly needs funds to pay operating expenses and repair its rolling stock.

Federal Railroad Administrator John M. Sullivan said he turned down the application for three reasons:

Auto-Train is not considered to be an essential transportation service, the cessation of which would endanger the public welfare.

"Figures supplied by Auto-Train do not demonstrate the company can become self-sustaining.

"If the company were liquidated, the proceeds from the sale would not cover the claims of the federal government."

All three criteria cited by Sullivan must be met before a railroad can get a government-guaranteed loan, said an FRA official.

Auto-Train can resubmit the loan applications, and spokesman Thomas Tucker said that is one option the railroad is considering. The company might also seek additional private financing, he added.

Auto-Train officials admitted they were stung by the rejection. The loan application has been in preparation for several months. FRA officials had worked closely with Murray Drabkin, the Washington attorney appointed by the federal bankruptcy court as trustee of Auto-Train.

Drabkin has said he was confident that with the government-guaranteed loan Auto-Train could be put back on its feet. The railroad has lost money for much of its 10-year history, but Drabkin has slashed the company's operating costs dramatically.

Drabkin has considered trying to sell the railcar repair operation and its facilities and also reportedly has discussed sale of the entire Auto-Train operation. The railroad is several million dollars in debt, but Drabkin has yet to tell the federal bankruptcy court just how much the company owes its creditors.

The government-backed loan would not been used to pay off old debts but rather would have gone primarily for improvements in equipment to enable the trains to carry more passengers and earn more money.