25 Cfr 103

Bureau of Indian Affairs, Interior

Pt. 103

will accompany the request for advance.
(f) Loan funds will be advanced only
as needed to pay obligations incurred
under approved contracts for expert assistance. The funds will be deposited in
a separate account, shall not be commingled with other funds of the borrower, and shall not be disbursed for
any other purpose.
(g) Loans shall bear interest at the
rate of 51⁄2 percent per annum from the
date funds are advanced until the loan
is repaid.
(h) The principal amount of the loan
advanced plus interest shall be repayable from the proceeds of any judgment
received by the borrower at the time
funds from the award become available
to make the payment.
(77 Stat. 301 (25 U.S.C. 70n–1 to 70n–7))
[40 FR 3587, Jan. 23, 1975. Redesignated at 47
FR 13327, Mar. 30, 1982. Further redesignated
at 57 FR 46472, Oct. 8, 1992]

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§ 101.25

(1076–0020), Office of Management and
Budget, Washington, DC 20503.
[54 FR 34975, Aug. 23, 1989. Redesignated at 57
FR 46472, Oct. 8, 1992]

PART 103—LOAN GUARANTY, INSURANCE, AND INTEREST SUBSIDY
Subpart A—General Provisions
Sec.
103.1 What does this part do?
103.2 Who does the Program help?
103.3 Who administers the Program?
103.4 What kinds of loans will BIA guarantee or insure?
103.5 What size loan will BIA guarantee or
insure?
103.6 To what extent will BIA guarantee or
insure a loan?
103.7 Must the borrower have equity in the
business being financed?
103.8 Is there any cost for a BIA guaranty or
insurance coverage?

Subpart B—How a Lender Obtains a Loan
Guaranty or Insurance Coverage

Information collection.

(a) The collections of information
contained in §§ 101.3, 101.4, 101.12, and
101.25 have been approved by the Office
of Management and Budget under 44
U.S.C. 3501 et seq. and assigned clearance number 1076–0020. The information
will be used to rate applicants in accordance with the terms and conditions
set forth in section 103 of the Indian Financing Act, as amended. Response is
required to obtain a benefit in accordance with 25 U.S.C. 1451.
(b) Public reporting burden for this
information is estimated to vary from
15 minutes to 3 hours per response,
with an average of one hour per response, including the time for reviewing instructions, searching existing
data sources, gathering and maintaining the data needed, and completing
and reviewing the collection of information. Send comments regarding this
burden estimate or any other aspects
of this collection of information, including suggestions for reducing the
burden, to the Information Collection
Clearance Officer, Bureau of Indian Affairs, Mailstop 337–SIB, 18th and C
Streets NW., Washington, DC 20240; and
the Paperwork Reduction Project

103.9 Who applies to BIA under the Program?
103.10 What lenders are eligible under the
Program?
103.11 How does BIA approve lenders for the
Program?
103.12 How does a lender apply for a loan
guaranty?
103.13 How does a lender apply for loan insurance coverage?
103.14 Can BIA request additional information?
103.15 Are there any prohibited loan terms?
103.16 How does BIA approve or reject a loan
guaranty or insurance application?
103.17 Must the lender follow any special
procedures to close the loan?
103.18 How does BIA issue a loan guaranty
or confirm loan insurance?
103.19 When must the lender pay BIA the
loan guaranty or insurance premium?

Subpart C—Interest Subsidy
103.20 What is interest subsidy?
103.21 Who applies for interest subsidy payments, and what is the application procedure?
103.22 How does BIA determine the amount
of interest subsidy?
103.23 How does BIA make interest subsidy
payments?
103.24 How long will BIA make interest subsidy payments?

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§ 103.1

25 CFR Ch. I (4–1–11 Edition)

Subpart D—Provisions Relating to Borrowers
103.25 What kind of borrower is eligible
under the Program?
103.26 What must the borrower supply the
lender in its loan application?
103.27 Can the borrower get help preparing
its loan application or putting its loan
funds to use?

Subpart E—Loan Transfers
103.28 What if the lender transfers part of
the loan to another person?
103.29 What if the lender transfers the entire loan?

Subpart F—Loan Servicing Requirements
103.30 What standard of care must a lender
meet?
103.31 What loan servicing requirements
apply to BIA?
103.32 What sort of loan documentation does
BIA expect the lender to maintain?
103.33 Are there reporting requirements?
103.34 What if the lender and borrower decide to change the terms of the loan?

Subpart G—Default and Payment by BIA
103.35 What must the lender do if the borrower defaults on the loan?
103.36 What options and remedies does the
lender have if the borrower defaults on
the loan?
103.37 What must the lender do to collect
payment under its loan guaranty certificate or loan insurance coverage?
103.38 Is there anything else for BIA or the
lender to do after BIA makes payment?
103.39 When will BIA refuse to pay all or
part of a lender’s claim?
103.40 Will BIA make exceptions to its criteria for denying payment?
103.41 What happens if a lender violates provisions of this part?
103.42 How long must a lender comply with
Program requirements?
103.43 What must the lender do after repayment in full?

Subpart H—Definitions and Miscellaneous
Provisions

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103.44 What certain terms mean in this
part.
103.45 Information collection.
AUTHORITY: 25 U.S.C. 1498, 1511.
SOURCE: 66 FR 3867, Jan. 17, 2001, unless
otherwise noted.

Subpart A—General Provisions
§ 103.1

What does this part do?

This part explains how to obtain and
use a BIA loan guaranty or loan insurance agreement under the Program,
and who may do so. It also describes
how to obtain and use interest subsidy
payments under the Program, and who
may do so.
§ 103.2

Who does the Program help?

The purpose of the Program is to encourage eligible borrowers to develop
viable Indian businesses through conventional lender financing. The direct
function of the Program is to help
lenders reduce excessive risks on loans
they make. That function in turn helps
borrowers secure conventional financing that might otherwise be unavailable.
§ 103.3

Who administers the Program?

Authority for administering the Program ultimately rests with the Secretary, who may exercise that authority directly at any time. Absent a direct exercise of authority, however, the
Secretary delegates Program authority
to BIA officials through the U.S. Department of Interior Departmental
Manual. A lender should submit all applications and correspondence to the
BIA office serving the borrower’s location.
§ 103.4 What kinds of loans will BIA
guarantee or insure?
In general, BIA may guarantee or insure any loan made by an eligible lender to an eligible borrower to conduct a
lawful business organized for profit.
There are several important exceptions:
(a) The business must contribute to
the economy of an Indian reservation
or tribal service area recognized by
BIA;
(b) The borrower may not use the
loan for relending purposes;
(c) If any portion of the loan is used
to refinance an existing loan, the borrower must be current on the existing
loan; and
(d) BIA may not guarantee or insure
a loan if it believes the lender would be

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Bureau of Indian Affairs, Interior

§ 103.10

willing to extend the requested financing without a BIA guaranty or insurance coverage.

reasonable estimated value of the borrower’s assets after completion of the
construction or renovation.

§ 103.5 What size loan will BIA guarantee or insure?
BIA can guarantee or insure a loan or
combination of loans of up to $500,000
for an individual Indian, or more for an
acceptable Indian business entity,
Tribe, or tribal enterprise involving
two or more persons. No individual Indian may have an outstanding principal balance of more than $500,000 in
guaranteed or insured loans at any
time. BIA can limit the size of loans it
will guarantee or insure, depending on
the resources BIA has available.

§ 103.8 Is there any cost for a BIA
guaranty or insurance coverage?

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§ 103.6 To what extent will BIA guarantee or insure a loan?
(a) BIA can guarantee up to 90 percent of the unpaid principal and accrued interest due on a loan.
(b) BIA can insure up to the lesser of:
(1) 90 percent of the unpaid principal
and accrued interest due on a loan; or
(2) 15 percent of the aggregate outstanding principal amount of all loans
the lender has insured under the Program as of the date the lender makes a
claim under its insurance coverage.
(c) BIA’s guaranty certificate or loan
insurance agreement should reflect the
lowest guaranty or insurance percentage rate that satisfies the lender’s risk
management requirements.
(d)
Absent
exceptional
circumstances, BIA will allow no more
than:
(1) Two simultaneous guarantees
under the Program covering outstanding loans from the same lender to
the same borrower; or
(2) One loan guaranty under the Program when the lender simultaneously
has one or more outstanding loans insured under the Program to the same
borrower.
§ 103.7 Must the borrower have equity
in the business being financed?
The borrower must be projected to
have at least 20 percent equity in the
business being financed, immediately
after the loan is funded. If a substantial portion of the loan is for construction or renovation, the borrower’s equity may be calculated based upon the

BIA charges the lender a premium for
a guaranty or insurance coverage.
(a) The premium is:
(1) Two percent of the portion of the
original loan principal amount that
BIA guarantees; or
(2) One percent of the portion of the
original loan principal amount that
BIA insures, without considering the 15
percent aggregate outstanding principal limitation on the lender’s insured
loans.
(b) Lenders may pass the cost of the
premium on to the borrower, either by
charging a one-time fee or by adding
the cost to the principal amount of the
borrower’s loan. Adding the premium
to the principal amount of the loan
will not make any further premium
due. BIA will guarantee or insure the
additional principal to the same extent
as the original approved principal
amount.

Subpart B—How a Lender Obtains
a Loan Guaranty or Insurance
Coverage
§ 103.9 Who applies to BIA under the
Program?
The lender is responsible for determining whether it will require a BIA
guaranty or insurance coverage, based
upon the loan application it receives
from an eligible borrower. If the lender
requires a BIA guaranty or insurance
coverage, the lender is responsible for
completing and submitting a guaranty
application or complying with a loan
insurance agreement under the Program.
§ 103.10 What lenders
under the Program?

are

(a) Except as specified in paragraph
(b) of this section, a lender is eligible
under the Program, and may be considered for BIA approval, if the lender is:
(1) Regularly engaged in the business
of making loans;

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§ 103.11

25 CFR Ch. I (4–1–11 Edition)

(2) Capable of evaluating and servicing loans in accordance with reasonable and prudent industry standards;
and
(3) Otherwise reasonably acceptable
to BIA.
(b) The following lenders are not
qualified to issue loans under the Program:
(1) An agency or instrumentality of
the Federal Government;
(2) A lender that borrows money from
any Federal Government source, other
than the Federal Reserve Bank System, for purposes of relending;
(3) A lender that does not include the
interest on loans it makes in gross income, for purposes of chapter 1, title 26
of the United States Code; and
(4) A lender that does not keep any
ownership interest in loans it originates.

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§ 103.11 How does BIA approve lenders
for the Program?
(a) BIA approves each lender by entering into a loan guaranty agreement
and/or a loan insurance agreement with
it. BIA may provide up to three different levels of approval for a lender
making guaranteed loans, depending on
factors such as:
(1) The number of loans the lender
makes under the Program;
(2) The total principal balance of the
lender’s Program loans;
(3) The number of years the lender
has been involved with the Program;
(4) The relative benefits and opportunities the lender has given to Indian
business efforts through the Program;
and
(5) The lender’s historical compliance
with Program requirements.
(b) BIA will consider a lender’s loan
guaranty agreement and/or loan insurance agreement suspended as of:
(1) The effective date of a change in
the lender’s corporate structure;
(2) The effective date of a merger between the lender and any other entity,
when the lender is not the surviving
entity; or
(3) The start of any legal proceeding
in which substantially all of the lender’s assets may be subject to disposition through laws governing bankruptcy, insolvency, or receivership.

(c) A change in a lender’s name, without any other change specified under
paragraph (b) of this section, will not
cause a suspension of the lender’s loan
guaranty agreement and/or loan insurance agreement. The lender should notify BIA of its name change as soon as
possible.
(d) If a lender’s loan guaranty agreement and/or loan insurance agreement
is suspended under paragraph (b) of
this section, the lender, or its successor in interest, must enter into a
new loan guaranty agreement and/or
loan insurance agreement with BIA in
order to secure any new BIA loan guarantees or insurance coverage.
(e) The suspension of a loan guaranty
agreement and/or loan insurance agreement does not affect the validity of
any guaranty certificate or insurance
coverage in effect before the date of
the suspension. Any such certificate or
insurance coverage will remain governed by applicable terms of the suspended loan guaranty agreement and/or
loan insurance agreement.
§ 103.12 How does a lender apply for a
loan guaranty?
To apply for a loan guaranty, a BIAapproved lender must submit to BIA a
loan guaranty application request
form, together with each of the following:
(a) A written explanation from the
lender indicating why it needs a BIA
guaranty for the loan, and the minimum loan guarantee percentage it
will accept;
(b) A copy of the borrower’s complete
loan application;
(c) A description of the borrower’s equity in the business being financed;
(d) A copy of the lender’s independent
credit analysis of the borrower’s business, repayment ability, and loan collateral (including insurance);
(e) An original report from a nationally-recognized credit bureau, dated
within 90 days of the date of the lender’s loan guaranty application package,
outlining the credit history of the borrower, and to the extent permitted by
law, each co-maker or guarantor of the
loan (if any);
(f) A copy of the lender’s loan commitment letter to the borrower, showing at a minimum the proposed loan

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Bureau of Indian Affairs, Interior

§ 103.15

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amount, purpose, interest rate, schedule of payments, and security (including insurance requirements), and the
lender’s terms and conditions for funding;
(g) The lender’s good faith estimate
of any loan-related fees and costs it
will charge the borrower, as authorized
under this part;
(h) If any significant portion of the
loan will be used to finance construction, renovation, or demolition work,
the lender’s:
(1) Insurance and bonding requirements for the work;
(2) Proposed draw requirements; and
(3) Proposed work inspection procedures;
(i) If any significant portion of the
loan will be used to refinance or otherwise retire existing indebtedness:
(1) A clear description of all loans
being paid off, including the names of
all makers, cosigners and guarantors,
maturity dates, payment schedules,
uncured delinquencies, collateral, and
payoff amounts as of a specific date;
and
(2) A comparison of the terms of the
loan or loans being paid off and the
terms of the new loan, identifying the
advantages of the new loan over the
loan being paid off.
§ 103.13 How does a lender apply for
loan insurance coverage?
BIA-approved lenders can make loans
insured under the Program in two
ways, depending on the size of the loan:
(a) For loans in an original principal
amount of up to $100,000 per borrower,
the lender can make each loan in accordance with the lender’s loan insurance agreement, without specific prior
approval from BIA.
(b) For loans in an original principal
amount of over $100,000, the lender
must seek BIA’s specific prior approval
in each case. The lender must submit a
loan insurance coverage application request form, together with the same information required for a loan guaranty
under § 103.12, except for the information required by § 103.12(a).
(c) The lender must submit a loan insurance application package even for a
loan of less than $100,000 if:
(1) The total outstanding balance of
all insured loans the lender is extend-

ing to the borrower under the Program
exceeds $100,000; or
(2) the lender makes a request for interest subsidy, pursuant to § 103.21.
§ 103.14 Can BIA request additional information?
BIA may require the lender to provide additional information, whenever
BIA believes it needs the information
to properly evaluate a new lender,
guaranty application, or insurance application. After BIA issues a loan guaranty or insurance coverage, the lender
must let BIA inspect the lender’s
records at any reasonable time for information concerning the Program.
§ 103.15 Are there any prohibited loan
terms?
A loan agreement guaranteed or insured under the Program may not contain:
(a) Charges by the lender styled as
‘‘points,’’ loan origination fees, or any
similar fees (however named), except
that if authorized in the loan agreement, the lender may charge the borrower a reasonable annual loan servicing fee that:
(1) Is not included as part of the loan
principal; and
(2) Does not bear interest;
(b) Charges of any kind by the lender
or by any third party except for the
reasonable and customary cost of legal
and architectural services, broker commissions, surveys, compliance inspections, title inspection and/or insurance,
lien searches, appraisals, recording
costs, premiums for required hazard, liability, key man life, and other kinds
of insurance, and such other charges as
BIA may approve in writing;
(c) A loan repayment term of over 30
years;
(d) Payments scheduled less frequently than annually;
(e) A prepayment penalty, unless the
terms of the penalty are clearly specified in BIA’s loan guaranty or loan insurance conditions;
(f) An interest rate greater than what
BIA considers reasonable, taking into
account the range of rates prevailing in
the private market for similar loans;
(g) A variable interest rate, unless
the rate is tied to a specific prime rate

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§ 103.16

25 CFR Ch. I (4–1–11 Edition)

published from time to time by a nationally recognized financial institution or news source;
(h) An increased rate of interest
based on default;
(i) A fee imposed for the late repayment of any installment due, except for
a late fee that:
(1) Is imposed only after the borrower
is at least 30 days late with payment;
(2) Does not bear interest; and
(3) Equals no more than 5 percent of
the late installment;
(j) An ‘‘insecurity’’ clause, or any
similar provision permitting the lender
to declare a loan default solely on the
basis of its subjective view of the borrower’s changed repayment prospects;
(k) A requirement that the borrower
take title to any real or personal property purchased with loan proceeds by a
title instrument containing restrictions on alienation, control or use of
the property, unless otherwise required
by applicable law; or
(l) A requirement that a borrower
which is a tribe provide as security a
general assignment of the tribe’s trust
income. If otherwise lawful, a tribe
may provide as loan security an assignment of trust income from a specific
source.

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§ 103.16 How does BIA approve or reject a loan guaranty or insurance
application?
(a) BIA reviews each guaranty or insurance application, and may evaluate
each loan application independently
from the lender. BIA bases its loan
guaranty or insurance decisions on
many factors, including compliance
with this part, and whether there is a
reasonable prospect of loan repayment
from business cash flow, or if necessary, from liquidating loan collateral. Lenders are expected to obtain a
first lien security interest in enough
collateral to reasonably secure repayment of each loan guaranteed or insured under the Program, to the extent
that collateral is available.
(b) BIA approves applications by
issuing an approval letter, followed by
the procedures in § 103.18. If the guaranty or insurance application is incomplete, BIA may return the application
to the lender, or hold the application
while the lender submits the missing

information. If BIA denies the application, it will provide the lender with a
written explanation, with a copy to the
borrower.
§ 103.17 Must the lender follow any
special procedures to close the
loan?
(a) BIA officials or their representatives may attend the closing of any
loan or loan modification that BIA
agrees to guarantee or insure. For
guaranteed loans, and insured loans
that BIA must individually review
under this part, the lender must give
BIA notice of the date of closing at
least 5 business days before closing occurs.
(b) At or prior to closing, the lender
must obtain appropriate, satisfactory
title and/or lien searches for each asset
to be used as loan collateral.
(c) At or prior to closing, the lender
must obtain recent appraisals for all
real property and improvements to be
used as collateral for the loan, to the
extent required by law.
(d) At or prior to closing, the lender
must document that the lender and
borrower have complied with all applicable Federal, State, local, and tribal
laws implicated by financing the borrower’s business, for example by securing:
(1) Copies of all permits and licenses
required to operate the borrower’s
business;
(2) Environmental studies required
for construction and/or business operations under NEPA and other environmental laws;
(3) Archeological or historical studies
required by law; and
(4) Certification by a registered surveyor or appropriate BIA official indicating that the proposed business will
not be located in a special flood hazard
area, as defined by applicable law.
(e) The lender must supply BIA with
copies of all final, signed loan closing
documents within 30 days following
closing. To the extent applicable, loan
closing documents must include the
following:
(1) Promissory notes;
(2) Security agreements, including
pledge and similar agreements, and related financing statements (together

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§ 103.21

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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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25 CFR Ch. I (4–1–11 Edition)

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]

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§ 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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§ 103.28

(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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(b) Transferring any interest in an
insured loan to another person will
void the insurance coverage for that
loan, except where the transfer is effected by a merger.
§ 103.29 What if the lender transfers
the entire loan?
(a) A lender may transfer all of its
rights in a guaranteed loan to any
other person. The acquiring person
must send BIA written notice of the
transfer, describing the borrower, the
loan, BIA’s loan guaranty certificate
number, and the acquiring person’s
name and address. Starting on the date
of the transfer, only the acquiring person 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. The acquiring person must service the guaranteed loan and otherwise perform all
of the duties required of the lender
under the Program and the loan guaranty certificate. Except when a transfer is effected by a merger, any failure
by the acquiring person to send BIA
proper notice of the transfer within 30
calendar days of the transfer date will
void BIA’s loan guaranty certificate,
without further action.
(b) Transferring an insured loan to
another person will void the insurance
coverage for that loan, except where
the transfer is effected by a merger.
(c) If a lender is not the surviving entity after a merger, the lender’s successor must notify BIA in writing of
the change within 30 calendar days of
the merger. The lender also must reapply to become an approved lender
under the Program, as indicated in
§ 103.11.

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Subpart F—Loan Servicing
Requirements
§ 103.30 What standard of care must a
lender meet?
Lenders must service all loans guaranteed or insured under the Program in
a commercially reasonable manner, in
accordance with standards and procedures adopted by prudent lenders in the
BIA region in which the borrower’s
business is located, and in accordance
with this part. If the lender fails to fol-

low any of these standards, BIA may
reduce or eliminate entirely the
amount payable under its guaranty or
insurance coverage to the extent BIA
can reasonably attribute the loss to
the lender’s failure. BIA also may deny
payment completely if the lender gets
a loan guaranty or insurance coverage
through fraud, or negligently allows a
borrower’s fraudulent loan application
or use of loan funds to go undetected.
In particular, and without limitation,
lenders must:
(a) Check and verify information contained in the borrower’s loan application, such as the borrower’s eligibility,
the authority of persons acting on behalf of the borrower, and the title status of any proposed collateral;
(b) Take reasonable precautions to
assure that loan proceeds are used as
specified in BIA’s guaranty certificate
or written insurance approval, or if not
so specified, then in descending order
of importance:
(1) BIA’s written loan guaranty approval;
(2) The loan documents;
(3) The terms of the lender’s final
loan commitment to the borrower; or
(4) The borrower’s loan application;
(c) When feasible, require the borrower to use automatic bank account
debiting to make loan payments;
(d) Require the borrower to take title
to real and personal property purchased with loan proceeds in the borrower’s own name, except for real property to be held in trust by the United
States for the benefit of a borrower
that is a tribe;
(e) Promptly record all security interests and subsequently keep them in
effect. Lenders must record all mortgages and other security interests in
accordance with State and local law,
including the laws of any tribe that
may have jurisdiction. Lenders also
must record any leasehold mortgages
or assignments of income involving individual Indian or tribal trust land
with the BIA office having responsibility for maintaining records on that
trust land;
(f) Assure, to the extent reasonably
practicable, that the borrower and any
guarantor of the loan (other than BIA)
keep current on all taxes levied on real

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§ 103.32

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and personal property used in the borrower’s business or as collateral for the
loan, and on all applicable payroll
taxes;
(g) Assure, to the extent reasonably
practicable, that all required insurance
policies remain in effect, including hazard, liability, key man life, and other
kinds of insurance, in amounts reasonably necessary to protect the interests
of the borrower, the borrower’s business, and the lender;
(h) Assure, to the extent reasonably
practicable, that the borrower remains
in compliance with all applicable Federal, State, local and tribal laws, including environmental laws and laws
concerning the preservation of historical and archeological sites and data;
(i) Assure, to the extent reasonably
practicable, that the borrower causes
any construction, renovation, or demolition work funded by the loan to proceed in accordance with approved construction contracts and plans and specifications, which must be sufficient in
scope and detail to adequately govern
the work;
(j) Reserve for itself and BIA the
right to inspect the borrower’s business
records and all loan collateral at any
reasonable time;
(k) Promptly notify the borrower in
writing of any material breach by the
borrower of the terms of its loan, with
specific instructions on how to cure the
breach and a deadline for doing so;
(l) Participate in any probate, receivership, bankruptcy, or similar proceeding involving the borrower and any
guarantor or co-maker of the borrower’s debt, to the extent necessary to
maintain the greatest possible rights
to repayment; and
(m) Otherwise seek to avoid and mitigate any potential loss arising from
the loan, using at least that level of
care the lender would use if it did not
have a BIA loan guaranty or insurance
coverage.
§ 103.31 What loan servicing requirements apply to BIA?
Once a lender extends a loan that is
guaranteed or insured under the Program, BIA has no responsibility for decisions concerning it, except for:
(a) Any approvals required under this
part;

(b) Any decisions reserved to BIA
under conditions of BIA’s guaranty certificate or insurance coverage; and
(c) Decisions concerning a loan that
the lender has assigned to BIA or to
which BIA is subrogated by virtue of
paying a claim based on a guaranty
certificate or insurance coverage.
§ 103.32 What sort of loan documentation does BIA expect the lender to
maintain?
For every loan guaranteed or insured
under the Program, the lender must
maintain:
(a) BIA’s original loan guaranty certificate or insurance coverage approval
letter, if applicable;
(b) Original signed and/or certified
counterparts of all final loan documents, including those listed in § 103.17
(concerning documents required for
loan closing), all renewals, modifications, and additions to those documents, and signed settlement statements;
(c) Originals or copies, as appropriate, of all documents gathered by
the lender under §§ 103.12, 103.13 and
103.26 (concerning information submitted by the borrower in its loan application, and information supplied to
BIA in the lender’s loan guaranty or
insurance coverage application);
(d) Originals or copies, as appropriate, of all applicable insurance binders or certificates, including without
limitation hazard, liability, key man
life, and title insurance;
(e) A complete and current history of
all loan transactions, including dated
disbursements, payments, adjustments,
and notes describing all contacts with
the borrower;
(f) Originals or copies, as appropriate,
of all correspondence with the borrower, including default notices and
evidence of receipt;
(g) Originals or copies, as appropriate, of all correspondence, notices,
news items or other information concerning the borrower, whether gathered by the lender or furnished to it,
containing material information about
the borrower and its business operations;
(h) Originals or copies, as appropriate, of all advertisements, notices,
title instruments, accountings, and

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25 CFR Ch. I (4–1–11 Edition)

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other documentation of efforts to liquidate loan collateral; and
(i) Originals or copies, as appropriate,
of all notices, pleadings, motions, orders, and other documents associated
with any legal proceeding involving the
lender and the borrower or its assets,
including without limitation judicial
or non-judicial foreclosure proceedings,
suits to collect payment, bankruptcy
proceedings, probate proceedings, and
any settlement associated with threatened or actual litigation.
§ 103.33 Are there reporting requirements?
(a) The lender must periodically report the borrower’s loan payment history so that BIA can recalculate the
government’s
contingent
liability.
Loan payment history reports must be
quarterly unless BIA provides otherwise for a particular loan. These reports can be in any format the lender
desires, as long as they contain:
(1) The lender’s name;
(2) The borrower’s name;
(3) A reference to BIA’s Loan Guaranty Certificate or Loan Insurance
Agreement number;
(4) The lender’s internal loan number; and
(5) The date and amount of all loan
balance activity for the reporting period.
(b) If applicable, the lender must supply a calculation of any interest subsidy payments that are due, as indicated in § 103.23.
(c) If there is a transfer of any or all
of the lender’s ownership interest in
the loan, the party receiving the ownership interest may be required to notify BIA, as indicated in §§ 103.28 and
103.29.
(d) If there is a default on the loan,
the lender must notify BIA, as indicated in §§ 103.35 and 103.36.
(e) If the borrower ceases to qualify
for a BIA-guaranteed or insured loan
under § 103.25(b), the lender must
promptly notify BIA even if the lender
does not pursue default remedies under
§§ 103.35 and 103.36. This notice allows
BIA to eliminate the guaranty or insurance coverage from its active recordkeeping system.
(f) If the loan is prepaid in full, the
lender must promptly notify BIA in

writing so that BIA can eliminate the
guaranty or insurance coverage from
its active recordkeeping system.
(g) If a lender changes its name, it
should notify BIA in accordance with
§ 103.11(c).
§ 103.34 What if the lender and borrower decide to change the terms of
the loan?
(a) The lender must obtain written
BIA approval before modifying a loan
guaranteed or insured under the Program, if the change will:
(1) Increase the borrower’s outstanding principal amount (if a term
loan), or maximum available credit (if
a revolving loan).
(i) BIA will approve or disapprove a
loan increase based upon the lender’s
explanation of the borrower’s need for
additional funding, and updated information of the sort required under
§§ 103.12, 103.13, and 103.26, as applicable.
(ii) Upon approval by BIA and payment of an additional guaranty or insurance premium in accordance with
§§ 103.8 and 103.19 and this section, the
entire outstanding loan amount, as
modified, will be guaranteed or insured
(as the case may be) to the extent BIA
specifies. The lender must pay the additional premium only on the increase
in the outstanding principal amount of
the loan (if a term loan) or the increase
in the credit limit available to the borrower (if a revolving loan).
(iii) Lenders may not increase the
outstanding principal amount of a loan
guaranteed or insured under the Program if a significant purpose of doing
so would be to allow the borrower to
pay accrued loan interest it otherwise
would have difficulty paying.
(2) Permanently adjust the loan repayment schedule.
(3) Increase a fixed interest rate, convert a fixed interest rate to an adjustable interest rate, or convert an adjustable interest rate to a fixed interest
rate.
(4) Allow any changes in the identity
or organizational structure of the borrower.
(5) Allow any material change in the
use of loan proceeds or the nature of
the borrower’s business.
(6) Release any collateral taken as
security for the loan, except items sold

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§ 103.36

in the ordinary course of business and
promptly replaced by similar items of
collateral, such as inventory.
(7) Allow the borrower to move any
significant portion of its business operations to a location that is not on or
near an Indian reservation or tribal
service area recognized by BIA.
(8) Be likely to materially increase
the risk of a claim on BIA’s guaranty
or insurance coverage, or materially
reduce the aggregate value of the collateral securing the loan.
(9) Cure a default for which BIA is to
receive notice under § 103.35(b).
(b) In the case of an insured loan, the
amount of which will not exceed
$100,000 when combined with all other
insured loans from the lender to the
borrower, the lender need not obtain
BIA’s prior approval to make any of
the loan modifications indicated in
§ 103.34(a), except as provided in
§ 103.21(b). However, all loan modifications must remain consistent with the
lender’s loan insurance agreement with
BIA, and in the event of an increase in
the borrower’s outstanding principal
amount (if a term loan), or maximum
available credit (if a revolving loan),
the lender must send BIA an additional
premium payment in accordance with
§§ 103.8, 103.19 and this section. The
lender must pay the additional premium only on the increase in the outstanding principal amount of the loan
(if a term loan) or the increase in the
credit limit available to the borrower
(if a revolving loan). To the extent a
loan modification changes any of the
information supplied to BIA under
§ 103.18(b)(3), the lender also must
promptly notify BIA of the new information.
(c) Subject to any applicable BIA
loan guaranty or insurance coverage
conditions, a lender may extend additional loans to a borrower without BIA
approval, if the additional loans are
not to be guaranteed or insured under
the Program.

otherwise meet the standard of care established for the lender in this part.
The lender’s notice to the borrower
should be sent as soon as possible after
the default, but in any event before the
lender’s notice to BIA under paragraph
(b) of this section. For purposes of the
Program, ‘‘default’’ will mean a default
as defined in this part.
(b) The lender also must send written
notice of the default to BIA by certified mail (return receipt requested),
or by a nationally-recognized overnight
delivery service (signature of recipient
required) within 60 calendar days of the
default, unless the default is fully
cured before that deadline. This notice
is required even if the lender grants the
borrower
a
forbearance
under
§ 103.36(a). One purpose of the notice is
to give BIA the opportunity to intervene and seek assistance for the borrower, even though BIA has no duty,
either to the lender or the borrower, to
do so. Another purpose of the notice is
to permit BIA to plan for a possible
loss claim from the lender, under
§ 103.36(d). The lender’s notice must
clearly indicate:
(1) The identity of the borrower;
(2) The applicable Program guaranty
certificate or insurance agreement
number;
(3) The date and nature of all bases
for default;
(4) If a monetary default, the amount
of past due principal and interest, the
date through which interest has been
calculated, and the amount of any late
fees, precautionary advances, or other
amounts the lender claims;
(5) The nature and outcome of any
correspondence or other contacts with
the borrower concerning the default;
and
(6) The precise nature of any action
the borrower could take to cure the default.

Subpart G—Default and Payment
by BIA

§ 103.36 What options and remedies
does the lender have if the borrower defaults on the loan?

§ 103.35 What must the lender do if the
borrower defaults on the loan?
(a) The lender must send written notice of the default to the borrower, and

(a) The lender may grant the borrower a temporary forbearance, even
beyond any default cure periods specified in the loan documents, if doing so

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§ 103.36

25 CFR Ch. I (4–1–11 Edition)

is likely to result in the borrower curing the default. However, BIA must approve in writing any forbearance or
other agreement that:
(1) Permanently modifies the terms
of the loan in any manner indicated by
§ 103.34(a);
(2) Would allow the borrower’s default to extend beyond the deadline established in § 103.36(d) for the lender to
elect a remedy; or
(3) Is not likely to result in the borrower curing the default.
(b) The lender may make precautionary advances on the borrower’s
behalf during the default, if doing so is
reasonably necessary to ensure that
loan recovery prospects do not significantly deteriorate. Items for which the
lender may make precautionary advances include, for example:
(1) Hazard, liability, or key man life
insurance premiums;
(2) Security measures to safeguard
abandoned business assets;
(3) Real or personal property taxes;
(4) Corrective actions required by
court or administrative orders; or
(5) Essential maintenance.
(c) BIA will guaranty or insure the
amount of precautionary advances
from the date of each advance to the
same extent as other amounts due
under the loan, if:
(1) The borrower has demonstrated
its inability or unwillingness to make
the payment or perform the duty that
jeopardizes loan recovery, including by
undue delay in making the payment or
performing the duty;
(2) The total expense of all precautionary advances by the lender does
not at the time of the advance exceed
10 percent of the outstanding principal
balance of the loan;
(3) Where loan document provisions
do not require the borrower to repay
precautionary
advances
(however
termed) when made by the lender, or
where the total expense of all precautionary advances by the lender will
exceed 10 percent of the outstanding
principal balance of the loan when
made, the lender secures BIA’s prior
written approval; and
(4) The lender properly claims and
documents all precautionary advances,
if and when it submits a claim for loss
under § 103.37.

(d) If the default remains uncured,
the lender must send BIA a written notice by certified mail (return receipt
requested), or by a nationally-recognized overnight delivery service (signature of recipient required) within 90
calendar days of the default to select
one of the following remedies:
(1) In the case of a guaranteed loan,
the lender may submit a claim to BIA
for its loss;
(2) In the case of either a guaranteed
or insured loan, the lender may liquidate all collateral securing the loan,
and upon completion, if it has a residual loss on the loan, it may submit a
claim to BIA for that loss; or
(3) The lender may negotiate a loan
modification agreement with the borrower to permanently change the
terms of the loan in a manner that will
cure the default. If the lender chooses
this remedy, it may take no longer
than 45 calendar days from the date
BIA receives the notice of remedy selection to finalize a loan modification
agreement and secure BIA’s written approval of it, unless BIA specifically extends this deadline in writing. However, the lender may at any time before
the expiration of the 45-day period (or
any extension thereof) change its
choice of remedy by sending BIA a notice
otherwise
complying
with
§ 103.36(d)(1) or (2). If the lender fails to
send BIA a notice changing its choice
of remedy and does not finalize an approved loan modification agreement
within the 45-day period (or any extension thereof), the lender’s only permissible remedy under the Program will be
to pursue the procedure specified in
§ 103.36(d)(2).
(e) Failure by the lender to provide
BIA with notice of the lender’s election
of remedy within 90 calendar days of
the default, as indicated in § 103.36(d),
will invalidate BIA’s loan guaranty
certificate or insurance coverage for
that particular loan, absent an express
waiver of this provision by BIA. BIA
may preserve the validity of a loan
guaranty certificate or insurance coverage through waiver of this provision
only when BIA determines, in its discretion, that:
(1) The lender consistently has acted
in good faith, and

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§ 103.37

(2) The lender’s failure to provide
timely notice either:
(i) Has not caused any actual or potential prejudice to BIA; or
(ii) Was the result of the lender relying upon specific written advice from a
BIA official.

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§ 103.37 What must the lender do to
collect payment under its loan
guaranty certificate or loan insurance coverage?
(a) For guaranteed loans, the lender
must submit a claim for its loss on a
form approved by BIA.
(1) If the lender makes an immediate
claim under § 103.36(d)(1), it must send
BIA the claim for loss within 90 calendar days of the default by certified
mail (return receipt requested), or by a
nationally-recognized overnight delivery service (signature of recipient required). The lender’s claim for loss may
include interest that has accrued on
the outstanding principal amount of
the loan only through the date it submits the claim.
(2) If the lender elects first to liquidate the collateral securing the loan
under § 103.36(d)(2), and has a residual
loss after doing so, it must send BIA
the claim for loss within 30 calendar
days of completing all liquidation efforts. The lender must perform collateral liquidation as expeditiously and
thoroughly as is reasonably possible,
within the standards established by
this part. The lender’s claim for loss
may include interest that has accrued
on the outstanding principal amount of
the loan only through the earlier of:
(i) The date it submits the claim;
(ii) The date the lender gets a judgment of foreclosure or sale (or the nonjudicial equivalent) on the principal
collateral securing the loan; or
(iii) One hundred eighty calendar
days after the date of the default.
(b) For insured loans, after liquidating all loan collateral, the lender
must submit a claim for its loss (if
any) on a form approved by BIA. The
lender must send BIA the claim for loss
by certified mail (return receipt requested), or by a nationally-recognized
overnight delivery service (signature of
recipient required) within 30 calendar
days of completing all liquidation efforts. The lender must perform collat-

eral liquidation as expeditiously and
thoroughly as is reasonably possible,
within the standards established by
this part. The lender’s claim for loss
may include interest that has accrued
on the outstanding principal amount of
the loan through the earlier of:
(1) The date it submits the claim;
(2) The date the lender gets a judgment of foreclosure or sale (or the nonjudicial equivalent) on the principal
collateral securing the loan; or
(3) One hundred eighty calendar days
after the date of the default.
(c) Whenever the lender liquidates
loan collateral under § 103.36(d)(2), it
must vigorously pursue all reasonable
methods of collection concerning the
loan collateral before submitting a
claim for its residual loss (if any) to
BIA. Without limiting the generality of
the preceding sentence, the lender
must:
(1) Foreclose, either judicially or
non-judicially, all rights of redemption
the borrower or any co-maker or guarantor of the loan (other than BIA) may
have in collateral under any mortgage
securing the loan;
(2) Gather and dispose of all personal
property pledged as collateral under
the loan, in accordance with applicable
law;
(3) Exercise all set-off rights the
lender may have under contract or applicable law;
(4) Make demand for payment on the
borrower, all co-makers, and all guarantors of the loan (other than BIA);
and
(5) Participate fully in all bankruptcy proceedings that may arise involving the borrower and any co-maker
or guarantor of the loan. Full participation might include, for example, filing a proof of claim in the case, attending creditors’ meetings, and seeking a
court order releasing the automatic
stay of collection efforts so that the
lender can liquidate affected loan collateral.
(d) BIA may require further information, including without limitation copies of any documents the lender is to
maintain under § 103.32 and all documentation of liquidation efforts, to
help BIA evaluate the lender’s claim
for loss.

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§ 103.38

25 CFR Ch. I (4–1–11 Edition)

(e) BIA will pay the lender the guaranteed or insured portion of the lender’s claim for loss, to the extent the
claim is based upon reasonably sufficient evidence of the loss and compliance with the requirements of this
part. BIA will render a decision on a
claim for loss within 90 days of receiving all information it requires to properly evaluate the loss.
§ 103.38 Is there anything else for BIA
or the lender to do after BIA makes
payment?
When BIA pays the lender on its
claim for loss, the lender must sign and
deliver to BIA an assignment of rights
to its loan agreement with the borrower, in a document acceptable to
BIA. Immediately upon payment, BIA
is subrogated to all rights of the lender
under the loan agreement with the borrower, and must pursue collection efforts against the borrower and any comaker and guarantor, as required by
law.

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§ 103.39 When will BIA refuse to pay
all or part of a lender’s claim?
BIA may deny all or part of a lender’s claim for loss when:
(a) The loan is not guaranteed or insured as indicated in § 103.18;
(b) The guarantee or insurance coverage has become invalid under
§§ 103.28, 103.29, or 103.36(e);
(c) The lender has not met the standard of care indicated in § 103.30;
(d) The lender presents a claim for a
residual loss after attempting to liquidate loan collateral, and:
(1) The lender has not made a reasonable effort to liquidate all security for
the loan;
(2) The lender has taken an unreasonable amount of time to complete its
liquidation efforts, the probable consequence of which has been to reduce
overall prospects of loss recovery; or
(3) The lender’s loss claim is inflated
by unreasonable liquidation expenses
or unjustifiable deductions from collateral liquidation proceeds applied to the
loan balance; or
(e) The lender has otherwise failed in
any material respect to follow the requirements of this part, and BIA can
reasonably attribute some or all of the
lender’s loss to that failure.

§ 103.40 Will BIA make exceptions to
its criteria for denying payment?
(a) BIA will not reduce or deny payment solely on the basis of §§ 103.39(c)
or (e) when the lender making the
claim for loss:
(1) Is a person to whom a previous
lender transferred the loan under
§§ 103.28 or 103.29 before maturity for
value;
(2) Notified BIA of its acquisition of
the loan interest as required by §§ 103.28
or 103.29;
(3) Had no involvement in or knowledge of the actions or circumstances
that would have allowed BIA to reduce
or deny payment to a previous lender;
and
(4) Has not itself violated the standards set forth in §§ 103.39(c) or (e).
(b) If BIA makes payment to a lender
under this section, it may seek reimbursement from the previous lender or
lenders who contributed to the loss by
violating §§ 103.39(c) or (e).
§ 103.41 What happens if a lender violates provisions of this part?
In addition to reducing or eliminating payment on a specific claim for
loss, BIA may either temporarily suspend, or permanently bar, a lender
from making or acquiring loans under
the Program if the lender repeatedly
fails to abide by the requirements of
this part, or if the lender significantly
violates the requirements of this part
on any single occasion.
§ 103.42 How long must a lender comply with Program requirements?
(a) A lender must comply in general
with Program requirements during:
(1) The effective period of its loan
guaranty agreement or loan insurance
agreement; and
(2) Whatever additional period is necessary to resolve any outstanding loan
guaranty or insurance claims or coverage the lender may have.
(b) Except as otherwise required by
law, a lender must maintain records
with respect to a particular loan for 6
years after either:
(1) The loan is repaid in full; or
(2) The lender accepts payment from
BIA for a loss on the loan, pursuant to
a guaranty certificate or an insurance
agreement.

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Bureau of Indian Affairs, Interior

§ 103.44

(c) At any time 2 years or more following one of the events specified in
paragraphs (b)(1) or (2) of this section,
a lender may convert its records for
corresponding loans to any electronic
format that is readily retrievable and
that provides an accurate, detailed
image of the original records. Upon
converting its records in this manner,
the lender may dispose of its original
loan records.
(d) This section does not restrict any
claims BIA may have against the lender or any other party arising from the
lender’s participation in the Program.
§ 103.43 What must the lender do after
repayment in full?
The lender must completely and
promptly release of record all remaining collateral for a guaranteed or insured loan after the loan has been paid
in full. The release must be at the lender’s sole cost. In addition, if the loan is
prepaid the lender must notify BIA in
accordance with § 103.33(f).

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Subpart H—Definitions and
Miscellaneous Provisions
§ 103.44 What certain terms mean in
this part.
BIA means the Bureau of Indian Affairs within the United States Department of the Interior.
Default means:
(1) The borrower’s failure to make a
scheduled loan payment when it is due;
(2) The borrower’s failure to meet a
material condition of the loan agreement;
(3) The borrower’s failure to comply
with any other condition, covenant or
obligation under the terms of the loan
agreement within applicable grace or
cure periods;
(4) The borrower’s failure to remain
at least 51 percent Indian owned, as
provided in § 103.25(b);
(5) The filing of a voluntary or involuntary petition in bankruptcy listing
the borrower as debtor;
(6) The imposition of a Federal,
State, local, or tribal government lien
on any assets of the borrower or assets
otherwise used as collateral for the
loan, except real property tax liens imposed by law to secure payments that
are not yet due;

(7) Any default defined in the loan
agreement, to the extent the definition
is not inconsistent with this part.
Equity means the value, after deducting all debt, of the borrower’s tangible
assets in the business being financed,
on which a lender can perfect a first
lien security interest. It can include
cash, securities, or other cash equivalent instruments, but cannot include
the value of contractual options, the
right to pay below market rental rates,
or similar rights if those rights:
(1) Are unassignable; or
(2) Can expire before maturity of the
loan.
Indian means a person who is a member of a tribe as defined in this part.
Loan agreement means the collective
terms and conditions under which the
lender extends a loan to a borrower, as
reflected by the documents that evidence the loan.
Mortgage means a consensual lien on
real or personal property in favor of
the lender, given by the borrower or a
co-maker or guarantor of the loan
(other than BIA), to secure loan repayment. The term ‘‘mortgage’’ includes
‘‘deed of trust.’’
NEPA means the National Environmental Policy Act of 1969, 42 U.S.C.
4321 et seq.
Person means any individual or distinct legal entity.
Program means the BIA’s Loan Guaranty, Insurance, and Interest Subsidy
Program, established under 25 U.S.C.
1481 et seq., 25 U.S.C. 1511 et seq., and
this part 103.
Reservation means any land that is an
Indian
reservation,
California
rancheria, public domain Indian allotment, pueblo, Indian colony, former Indian reservation in Oklahoma, or land
held by an Alaska Native corporation
under the provisions of the Alaska Native Claims Settlement Act (85 Stat.
688), as amended.
Secretary means the Secretary of the
United States Department of the Interior, or his authorized representative.
Tribe means any Indian or Alaska Native tribe, band, nation, pueblo,
rancheria, village, community or corporation that the Secretary acknowledges to exist as an Indian tribe, and
that is eligible for services from BIA.

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§ 103.45

25 CFR Ch. I (4–1–11 Edition)

§ 103.45 Information collection.
(a) The information collection requirements of §§ 103.11, 103.12, 103.13,
103.14, 103.17, 103.21, 103.23, 103.26, 103.32,
103.33, 103.34, 103.35, 103.36, 103.37, and
103.38 have been approved by the Office
of Management and Budget under 44
U.S.C. 3501 et seq., and assigned approval number 1076–0020. The information will be used to approve and make
payments on Federal loan guarantees,
insurance agreements, and interest
subsidy awards. Response is required to
obtain a benefit.
(b) The burden on the public to report this information is estimated to
average from 15 minutes to 2 hours per
response, including the time for reviewing instructions, gathering and
maintaining data, and completing and
reviewing the information collection.
Direct comments regarding the burden
estimate or any other aspect of this information collection to the Information Collection Control Officer, Bureau
of Indian Affairs, MS 4613, 1849 C
Street, NW., Washington, DC 20240.

PART 111—ANNUITY AND OTHER
PER CAPITA PAYMENTS
Sec.
111.1
111.2
111.3
111.4
111.5

Persons to share payments.
Enrolling non-full-blood children.
Payments by check.
Election of shareholders.
Future payments.

AUTHORITY: 5 U.S.C. 301.

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SOURCE: 22 FR 10549, Dec. 24, 1957, unless
otherwise noted. Redesignated at 47 FR 13327,
Mar. 30, 1982.

§ 111.1 Persons to share payments.
In making all annuity and other per
capita payments, the funds shall be
equally divided among the Indians entitled thereto share and share alike.
The roll for such payments should be
prepared on Form 5–322, 1 in strict alphabetical order by families of husband, wife, and unmarried dependent
minor children. Unless otherwise instructed,
(a) Indians of both sexes may be considered adults at the age of 18 years;
1 Forms may be obtained from the Commissioner of Indian Affairs, Washington, D.C.

(b) Deceased enrollees may be carried
on the rolls for one payment after
death;
(c) Where final rolls have been prepared constituting the legal membership of the tribe, only Indians whose
names appear thereon are entitled to
share in future payments, after-born
children being excluded and the shares
of deceased enrollees paid to the heirs
if determined or if not determined
credited to the estate pending determination; and
(d) The shares of competent Indians
will be paid to them directly and the
shares of incompetents and minors deposited for expenditure under the individual Indian money regulations.
CROSS REFERENCES: For regulations pertaining to the determination of heirs and approval of wills, see part 15 and subpart G of
part 11 of this chapter. For individual Indian
money regulations, see part 115 of this chapter.

§ 111.2 Enrolling
dren.

non-full-blood

Where an Indian woman was married
to a white man prior to June 7, 1897,
and was at the time of her marriage a
recognized member of the tribe even
though she left it after marriage and
lived away from the reservation, the
children of such a marriage should be
enrolled—and, also in the case of an Indian woman married to a white man
subsequent to the above date but who
still maintains her affiliation with the
tribe and she and her children are recognized members thereof; however,
where an Indian woman by marriage
with a white man after June 7, 1897,
has, in effect, withdrawn from the tribe
and is no longer identified with it, her
children should not be enrolled. In case
of doubt all the facts should be submitted to the Bureau of Indian Affairs,
Washington, D.C., for a decision.
§ 111.3

Payments by check.

All payments should be made by
check. In making payments to competent Indians, each check should be
drawn to the order of the enrollee and
given or sent directly to him. Powers
of attorney and orders given by an Indian to another person for his share in

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