Office of Self-Governance 2018 Annual Conference Albuquerque, New Mexico April 26, 2018 Prepared By: M. Alsace LaFramboise, Southwest Zone Manager

Indian Loan Guarantee & INSURANCE Programs Interior – Assistant Secretary – Indian Affairs Energy & Economic Development Division of Capital Investment NW ZONE – DENVER, CO EASTERN ZONE – WASHINGTON, DC SW ZONE – ALBUQUERQUE, NM ALASKA ZONE – ANCHORAGE, AK Indian Loan Guarantee & INSURANCE Programs

Program Legal Authority Indian Financing Act of 1974, 25 U.S.C. 1451 et.seq. (Public Law 93-262, 88 Stat. 77), as amended The borrower must be : an Indian individual; an Indian-owned business entity, with a structure acceptable to BIA; a tribal enterprise; or a tribe Insured loans - Fast and simple - Bank approves the loan No BIA review required – up to $250,000 Lower premium fee Repayment source after liquidation BIA can insure loans of up to $250,000 without prior review or approval of the specific loan. BIA can insure loans of up to: $500,000 for an individual Indian, or More for an acceptable Indian business entity. Interest Subsidy is available for a maximum of 5 years.

Program Regulations Title 25: Indians Part 103: Loan Guaranty, Insurance and Interest Subsidy 25 CFR 103.1 – 103.45 The borrower must be : an Indian individual; an Indian-owned business entity, with a structure acceptable to BIA; a tribal enterprise; or a tribe Insured loans - Fast and simple - Bank approves the loan No BIA review required – up to $250,000 Lower premium fee Repayment source after liquidation BIA can insure loans of up to $250,000 without prior review or approval of the specific loan. BIA can insure loans of up to: $500,000 for an individual Indian, or More for an acceptable Indian business entity. Interest Subsidy is available for a maximum of 5 years.

Purpose of Program Act as financial intermediary to facilitate Indian-owned businesses that will benefit a reservation-based economy Facilitate movement of private sector debt capital into Indian Country Enhancement of credit in order to obtain better loan availability and terms

Borrower Eligibility Enrolled member of a federally recognized Tribe Tribal Enterprise Indian-Owned Business Entity Partnership Corporation or Limited Liability Corporation* Must be majority owned (51%) by Indian Individual, Tribe or Tribal Entity *Business structure must be acceptable to Indian Affairs*

Borrower’s Equity Requirement 20% percent equity in the Business Financed based on Total Project Cost Cash and/or Unencumbered Assets

Business Location Business Financed must contribute to: Economy of Reservation Tribal Service Area

Loan Terms Term based on purpose of loan – Normally based on useful life of asset Permanent working capital Line of credit - revolving Construction loan Initial Inventory Purchase Equipment purchase Real estate Lines of Credit must be paid to zero on annual basis Term cannot exceed 30 years

Interest Rates Must be reasonable Comparable to rates charged for loans to similar businesses May be variable based on an indexed prime rate that is identified in lender’s guaranty request

Loan Amounts Statute Policy No ceiling/floor for loans to acceptable business structures such as corporations, LLCs, partnerships, etc. $500,000 - Sole Proprietorship – Individuals Policy Loans to Tribal Entities & Indian Business Entities are limited by annual appropriations

Percentage of Guaranty Up to 90% of Principal and Accrued Interest Percentage of Insurance Lesser of 15% of lender’s insured portfolio or 90% of defaulted loan amount

Cost of Guaranty & Insurance Lenders pay a 2% premium based on the guaranteed portion of loan Lenders pay a 1 % premium based on 90% of insured amount of loan Lenders may pass cost on to borrower: Premium cost may be added principal amount of loan

FY 2018 Appropriation $122,500,000 Congressional Appropriations will Support Loan Guaranties and Insurance totaling $122,500,000 Nationwide

Approval Authority DCI – Washington, DC (Central Office) As recommended by Credit Committee consisting of zone employees and contractors

Lender Participation Requirements Traditional Bank Lenders Federally Chartered Institutions State Chartered Institutions Non-Bank Lenders Regularly engaged in making loans Capable of evaluating & servicing loans Acceptable to Indian Affairs

Benefits of Guaranty New Market – Indian Country Minimizes Lender’s Risk Guaranteed portion of loan: Does not count against Lender’s legal lending limit Can be sold in secondary market Meets requirements of Community Reinvestment Act Liquidation is optional in event of default

Application Process Borrower Prepare a Business Plan Shop your Loan Management Marketing Money Shop your Loan Banks Non- traditional lenders (CDFIs)

Application Process Lender Loan Guaranty Agreement – BIA Form 5-4753 Submit to DCI, Southwest Zone, Albuquerque BIA Form 5-4755 – Loan Guaranty Request Lender’s Credit Analysis to include terms conditions Justify why guaranty is needed Applicant’s Business Plan with supporting documentation

Application Process DCI - Indian Affairs Conduct independent analysis Work directly with lender to address concerns Approval/disapproval

SERVICING RESPONSIBILITIES: NORTHWEST ZONE SERVICING RESPONSIBILITIES: WISCONSIN MINNESOTA MICHIGAN IOWA KANSAS NEBRASKA SOUTH DAKOTA NORTH DAKOTA MONTANA WYOMING COLORADO IDAHO OREGON WASHINGTON

Southwest Zone Servicing Responsibilities: Utah Nevada California Arizona New Mexico Texas

SERVICING RESPONSIBILITES: EASTERN ZONE SERVICING RESPONSIBILITES: Maine New York Massachusetts Connecticut North Carolina Florida Mississippi Louisiana Oklahoma Texas Alabama

SERVICING RESPONSIBILITIES: ENTIRE STATE OF ALASKA ALASKA ZONE SERVICING RESPONSIBILITIES: ENTIRE STATE OF ALASKA

Contact Information Alsace LaFramboise, Zone Manager Telephone: 505-563-5466 Cell: 505-554-9526 alsace.laframboise@bia.gov Jerry Ryburn, Contractor Telephone: 505-563-5470 Cell: 505-681-1223 jerry.ryburn@bia.gov

1011 Indian School Road, Suite 131 Mailing Address Capital Investment Southwest Zone Indian Energy & Economic Development Assistant Secretary - Indian Affairs 1011 Indian School Road, Suite 131 Albuquerque, NM 87104 http://www.indianaffairs.gov/WhoWeAre/AS-IA/IEED/DCI/index.htm