regulation

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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§ 103.27

25 CFR Ch. I (4–1–06 Edition)

(c) A statement signed by the borrower, indicating that it is not delinquent on any Federal tax or other debt
obligation;
(d) The borrower’s business plan, including resumes of all principals and a
detailed discussion of the product or
service to be offered, market factors,
the borrower’s marketing strategy, and
any technical assistance the borrower
may require;
(e) A detailed description of the borrower’s equity in the business being financed, including the method(s) of
valuation;
(f) The borrower’s balance sheets and
operating statements for the preceding
3 years, or so much of that period that
the borrower has been in business;
(g) The borrower’s current financial
statement, and the financial statements of all co-makers and guarantors
of the loan (other than BIA);
(h) At least 3 years of financial projections for the borrower’s business,
consisting of pro-forma balance sheets,
operating statements, and cash flow
statements;
(i) A detailed list of all proposed collateral for the loan, including asset
values and the method(s) of valuation;
(j) A detailed list of all proposed hazard, liability, key man life, and other
kinds of insurance the borrower will
maintain on its business assets and operations;
(k) If any significant portion of the
loan will be used to finance construction, renovation, or demolition work:
(1) Written quotes for the work from
established and reputable contractors;
and
(2) To the extent available, copies of
all construction and architectural contracts for the work, plans and specifications, and applicable building permits;
(l) If the borrower is a tribe or a tribal enterprise, resolutions by the tribe
and proof of authority under tribal law
permitting the borrower to borrow the
loan amount and offer the proposed
loan collateral; and
(m) If the borrower is a business entity, resolutions by the appropriate governing officials and proof of authority
under its organizing documents permitting the borrower to borrow the loan

amount and offer the proposed loan
collateral.
§ 103.27 Can the borrower get help
preparing its loan application or
putting its loan funds to use?
A borrower may seek BIA’s assistance when preparing a loan application
or when planning business operations,
including assistance identifying and
complying with applicable laws as indicated by § 103.17(d). The borrower
should contact the BIA field or agency
office serving the area in which the
borrower’s business is to be located, or
if there is no separate field or agency
office serving the area, then the borrower should contact the BIA regional
office serving the area.

Subpart E—Loan Transfers
§ 103.28 What if the lender transfers
part of the loan to another person?
(a) A lender may transfer one or
more interests in a guaranteed loan to
another person or persons, as long as
the parties have in place an agreement
that designates one person to perform
all of the duties required of the lender
under the Program and the loan guaranty certificate. Starting on the date
of the transfer, only the person designated to perform the duties of the
lender will be entitled to exercise the
rights conferred by BIA’s loan guaranty certificate, and will from that
point forward be considered the lender
for purposes of the Program. A lender
under the Program must both service
the guaranteed loan and own at least a
10 percent interest in the guaranteed
loan. BIA will not consider more than
one person at any given time to be the
lender with respect to any loan guaranty certificate. If the person designated to perform the duties of the
lender in an agreement among loan
participants is not the original lender,
then the provisions of § 103.29(a) will
apply (relating to sale or assignment of
guaranteed loans), and the person designated to perform the duties of the
lender must give BIA notice of its interest in the loan. Failure to provide
notice in accordance with § 103.29(a)
will void BIA’s loan guaranty certificate, without further action.

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