4 th ANNUAL PARTNERS IN ACTION CONFERENCE BARABOO

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

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 GUARANTY & 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

Program Regulations Title 25: Indians Part 103: Loan Guaranty, Insurance and Interest Subsidy 25 CFR 103. 1 – 103. 45

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

Borrower Eligibility • • Enrolled member of a federally recognized Tribe Tribal Enterprise Indian-Owned Business Entity Ø Ø Ø 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: ü Economy of Reservation ü Tribal Service Area

Loan Terms • Term based on purpose of loan – Normally based on useful life of asset Ø Ø Ø 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 103. 15

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 Ø $500, 000 - Sole Proprietorship – Individuals • Policy Ø 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 ØProjected Income is less than industry norm üAfter Interest and Taxes üAfter 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 Ø Lenders may pass cost on to borrower: üPremium 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 ØLimited to 5% of the annual appropriation • DCI – Washington, DC (Central Office) Ø Loans over 5% of annual appropriation (Loan amounts are limited by annual appropriation)

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

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

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

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

Application Process DCI - Indian Affairs Ø Conduct independent analysis Ø Work directly with lender to address concerns Ø 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 La. Framboise, Acting Zone Manager Telephone: 505 -563 -5466 Cell: 505 -554 -9526 alsace. laframboise@bia. gov

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/Who. We. Are/AS-IA/IEED/DCI/index. htm