4 th ANNUAL PARTNERS IN ACTION CONFERENCE BARABOO, WI JUNE 24, 2015 Prepared By: Alsace LaFramboise, Acting Southwest Zone Manager

INDIAN LOAN GUARANTY & 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

Program Legal Authority Indian Financing Act of 1974, 25 U.S.C et.seq. (Public Law , 88 Stat. 77), as amended

Program Regulations Title 25: Indians Part 103: Loan Guaranty, Insurance and Interest Subsidy 25 CFR –

Purpose of Program Facilitate access to financing otherwise not available by:  Guarantying loans made by conventional and non- conventional lenders to Indian-owned businesses  Guaranty reduces lender risk if borrower defaults  Encourages Indian owned businesses on reservations

Borrower Eligibility Enrolled member of a federally recognized Tribe 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 can not exceed 30 years Prohibited loan terms – See 25 CFR

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

Loan Amounts Statute  $500,000 - Sole Proprietorship – Individuals Policy  Loans to Tribal Entities & Indian Business Entities are limited by annual appropriations

Interest Subsidy Borrower is rebated for a portion of interest paid Requested by Lender at time of loan application Must be approved by Central Office If approved, 3 years only May apply for an extension – no subsidy beyond 5 years

Interest Subsidy Eligibility Borrowers  Projected Income is less than industry norm After Interest and Taxes After adjustments for extraordinary items

Percentage of Guaranty Up to 90% of Principal and Accrued Interest

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

2015 Appropriation Congressional Appropriations will Support Guaranties totaling $100,510,479 Nationwide

Approval Authority DCI – Southwest Zone – Albuquerque  Limited to 5% of the annual appropriation DCI – Washington, DC (Central Office)  Loans over 5% of annual appropriation (Loan amounts are limited by annual appropriation)

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 Management Marketing Money  Shop your Loan Banks Non- traditional lenders (CDFIs)

Application Process Lender  Loan Guaranty Agreement – BIA Form  Submit to DCI, Southwest Zone, Albuquerque BIA Form – 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

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

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

ALASKA ZONE SERVICING RESPONSIBILITIES: ENTIRE STATE OF ALASKA

Contact Information Alsace LaFramboise, Acting Zone Manager Telephone: Cell:

Mailing Address Capital Investment Southwest Zone Indian Energy & Economic Development Assistant Secretary - Indian Affairs 1011 Indian School Road, Suite 131 Albuquerque, NM