regulation

§ 103.18

25 CFR Ch. I (4–1–06 Edition)

with BIA’s written approval of any assignment of specific tribal trust assets
under § 103.15(l), or of any security interest in an individual Indian money
account);
(3) Mortgage instruments or deeds of
trust (together with BIA’s written approval, if required by 25 U.S.C. 483a, or
if the mortgage is of a leasehold interest in tribal trust property);
(4) Guarantees (other than from BIA);
(5) Construction contracts, and plans
and specifications;
(6) Leases related to the business (together with BIA’s written approval, if
required under 25 CFR part 162);
(7) Attorney opinion letters;
(8) Resolutions made by a Tribe or
business entity;
(9) Waivers or partial waivers of sovereign immunity; and
(10) Similar instruments designed to
document the loan, establish the basis
for a security interest in loan collateral, and comply with applicable law.
(f) Unless BIA indicates otherwise in
writing, the lender must close a guaranteed or insured loan within 90 days
of any approval provided under § 103.16.
§ 103.18 How does BIA issue a loan
guaranty or confirm loan insurance?
(a) A loan is guaranteed under the
Program when all of the following
occur:
(1) BIA issues a signed loan guaranty
certificate bearing a series number, an
authorized signature, a guaranty percentage rate, the lender’s name, the
borrower’s name, the original principal
amount of the loan, and such other
terms and conditions as BIA may require;
(2) The loan closes and funds;
(3) The lender pays BIA the applicable loan guaranty premium; and
(4) The lender meets all of the conditions listed in the loan guaranty certificate.
(b) A loan is insured under the Program when all of the following occur:
(1) The loan’s purpose and terms
meet the requirements of the Program
and the lender’s loan insurance agreement with BIA;
(2) The loan closes and funds;
(3) The lender notifies BIA of the borrower’s identity and organizational

structure, the amount of the loan, the
interest rate, the payment schedule,
and the date on which the loan closing
and funding occurred;
(4) The lender pays BIA the applicable loan insurance premium;
(5) If over $100,000 or if the loan requires interest subsidy, BIA approves
the loan in writing; and
(6) If over $100,000 or if the loan requires interest subsidy, the lender
meets all of the conditions listed in
BIA’s written loan approval.
§ 103.19 When must the lender pay BIA
the loan guaranty or insurance premium?
The premium is due within 30 calendar days of the loan closing. If not
paid on time, BIA will send the lender
written notice by certified mail (return
receipt requested), or by a nationallyrecognized overnight delivery service
(signature of recipient required), stating that the premium is due immediately. If the lender fails to make the
premium payment within 30 calendar
days of the date of BIA’s notice, BIA’s
guaranty certificate or insurance coverage with respect to that particular
loan is void, without further action.

Subpart C—Interest Subsidy
§ 103.20 What is interest subsidy?
Interest subsidy is a payment BIA
makes for the benefit of the borrower,
to reimburse part of the interest payments the borrower has made on a loan
guaranteed or insured under the Program. It is available to borrowers
whose projected or historical earnings
before interest and taxes, after adjustment for extraordinary items, is less
than the industry norm.
§ 103.21 Who applies for interest subsidy payments, and what is the application procedure?
(a) An eligible lender must request
interest subsidy payments on behalf of
an eligible borrower, after determining
that the borrower qualifies. Typically,
the lender should include a request for
interest subsidy at the time it applies
for a guaranty or insurance coverage
under the Program. A request for interest subsidy must be supported by the
information required in §§ 103.12 and

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Bureau of Indian Affairs, Interior

§ 103.26

103.13 (relating to loan guaranty and
insurance coverage applications). BIA
approves, returns, or rejects interest
subsidy requests in the same manner
indicated in § 103.16, based on the factors in § 103.20 and BIA’s available resources.
(b) BIA’s approval of interest subsidy
for an insured loan may provide for
specific limitations on the manner in
which the lender and borrower can
modify the loan.
§ 103.22 How does BIA determine the
amount of interest subsidy?
Interest subsidy payments should
equal the difference between the lender’s rate of interest and the rate determined in accordance with 25 U.S.C.
1464. BIA will fix the amount of interest subsidy as of the date it approves
the interest subsidy request.
[66 FR 3867, Jan. 17, 2001, as amended at 67
FR 63543, Oct. 15, 2002]

§ 103.23 How does BIA make interest
subsidy payments?
The lender must send BIA reports at
least quarterly on the borrower’s loan
payment history, together with a calculation of the interest subsidy then
due. The lender’s reports and calculation do not have to be in any specific
format, but in addition to the calculation the reports must contain at least
the information required by § 103.33(a).
Based on the lender’s reports and calculation, BIA will send interest subsidy
payments to the borrower in care of
the lender. The payments belong to the
borrower, but the borrower and lender
may agree in advance on how the borrower will use interest subsidy payments. BIA may verify and correct interest subsidy calculations and payments at any time.
§ 103.24 How long will BIA make interest subsidy payments?
(a) BIA will issue interest subsidy
payments for the term of the loan, up
to 3 years. If interest subsidy payments
still are justified, the lender may apply
for up to two 1-year extensions of this
initial term. BIA will make interest
subsidy payments on a single loan for
no more than 5 years.
(b) BIA will choose the date from
which it calculates interest subsidy

years, usually the date the lender first
extends the loan funds. Interest subsidy payments will apply to all loan
payments made in the calendar years
following that date.
(c) Interest subsidy payments will
not be due for any loan payment made
after the corresponding loan guaranty
or insurance coverage stops under the
Program,
regardless
of
the
circumstances.

Subpart D—Provisions Relating to
Borrowers
§ 103.25 What kind of borrower is eligible under the Program?
(a) A borrower is eligible for a BIAguaranteed or insured loan if the borrower is:
(1) An Indian individual;
(2) An Indian-owned business entity
organized under Federal, State, or tribal law, with an organizational structure reasonably acceptable to BIA;
(3) A tribe; or
(4) A business enterprise established
and recognized by a tribe.
(b) To be eligible for a BIA-guaranteed or insured loan, a business entity
or tribal enterprise must be at least 51
percent owned by Indians. If at any
time a business entity or tribal enterprise becomes less than 51 percent Indian owned, the lender either may declare a default as of the date the borrower stopped being at least 51 percent
Indian owned and exercise its remedies
under this part, or else continue to extend the loan to the borrower and
allow BIA’s guaranty or insurance coverage to become invalid.
[66 FR 3867, Jan. 17, 2001; 66 FR 46307, Sept. 4,
2001]

§ 103.26 What must the borrower supply the lender in its loan application?
The lender may use any form of loan
application it chooses. However, the
borrower must supply the lender the
information listed in this section in
order for BIA to process a guaranty or
insurance coverage application:
(a) The borrower’s precise legal
name, address, and tax identification
number or social security number;
(b) Proof of the borrower’s eligibility
under the Program;

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