Sec.

286.1

PART 286-INDIAN BUSINESS DEVELOPMENT PROGRAM

Definitions.

286.2 Purpose.

286.3 Eligible applicants.

286.4 Eligible economic enterprises. 286.5-286.6 [Reserved]

286.7 Location of enterprise.

286.8 Priority criteria.

286.9 Environmental and flood disaster

As used in this Part 286:

(a) "Secretary” means the Secretary of the Interior.

(b) "Commissioner" means the Commissioner of Indian Affairs or his authorized representative.

(c) "Area Director" means the Bureau official in charge of an Area Office or his authorized representative.

(d) "Superintendent" means the Bureau official in charge of a Bureau Agency office or other local office reporting to an Area Director.

(e) "Indian" means any person who is a member of any Indian tribe, band, group, pueblo or community which is recognized by the Federal Government as eligible for services from the Bureau of Indian Affairs and any Native as defined in paragraph (f) of this section.

(f) "Native" means a citizen of the United States who is a person of onefourth degree or more Alaska Indian

(including Tsimshian Indians not enrolled in the Metlakatla Indian Community), Eskimo, or Aleut blood, or combination thereof. The term includes any Native as so defined either or both of whose adoptive parents are not Natives. It also includes in the absence of proof of a minimum blood quantum, any citizen of the United States who is regarded as an Alaska Native by the Native village or Native group of which he claims to be a member and whose father or mother is (or, if deceased, was) regarded as Native by any village or group.

(g) "Tribe" means any Indian tribe, band, group, pueblo or community and any Native village or Native group (including corporations organized by Kenai, Juneau, Sitka and Kodiak) as defined in paragraphs (h) and (i) of this section, which is recognized by the Federal Government as eligible for services from the Bureau of Indian Affairs.

(h) "Native village" means any tribe, band, clan, group, village, community, or association in Alaska listed in sections 11 and 16 of the Alaska Native Claims Settlement Act (85 Stat. 688), or which meets the requirements of the Act, and which the Secretary determines was, on the 1970 census enumeration date (as shown by the census or other evidence satisfactory to the Secretary, who shall make findings of fact in each instance), composed of twenty-five or more Natives.

(i) "Native group" means any tribe, band, clan, village, community, or village association of Natives in Alaska composed of less than twenty-five Natives, who comprise a majority of the residents of the locality.

(j) "Reservation" means Indian reservations, unterminated California rancherias, public domain Indian allotments, former Indian reservations in Oklahoma, and land held by incorporated Native groups, regional corporations, and village corporations under the provisions of the Alaska Native Claims Settlement Act (85 Stat. 688).

(k) "Economic enterprise" means any Indian-owned, commercial, industrial, agricultural, or business activity

established or organized for the purpose of profit, provided that eligible Indian ownership constitutes not less than fifty-one percent of the enterprise.

(1) "Organization" means the governing body of any Indian tribe, as defined in paragraph (g) of this section, or entity established or recognized by such governing body for the purpose of the Indian Financing Act of 1974 (88 Stat. 77).

(m) “Other organizations" means any non-Indian individual, firm, corporation, partnership, or association.

(n)Personally operated enterprise" means a business activity personally owned and operated, and managed by an individual grantee on a full or parttime basis, with or without hired labor.

(0) Profits" means the net income earned after deducting operating expenses from operating revenues.

the

(p) "Grantee(s)" means recipient(s) of a nonreimbursable grant under this part.

(q) "Cooperative Association" means an association of individuals organized pursuant to state, federal or tribal law, for the purpose of owning and operating an economic enterprise for profit with profits distributed or allocated to patrons who are members of the organization.

(r) "Corporation" means an entity organized pursuant to state, federal, or tribal law, with or without stock, for the purpose of owning and operating an economic enterprise.

(s) "Partnership" means two or more persons engaged in the same business, sharing its profits and risks, organized pursuant to State, Federal, or Tribal law.

§ 286.2 Purpose.

The purpose of this Part 286 is to prescribe the regulations and procedures under which non-reimbursable grants may be made to eligible applicants to stimulate and increase Indian entrepreneurship and employment through establishment, acquisition or expansion of profit-making Indianowned economic enterprises which will contribute to the economy of a reservation.

§ 286.3 Eligible applicants.

Applications for grants may be accepted only from individual Indians, Indian tribes, Indian partnerships, corporations or cooperative associations authorized to do business under State, Federal, or Tribal law. These applicants must have a form of organization acceptable to the Commissioner and unable to meet their total financing needs from their own resources and by loans from other sources such as banks, Farmers Home Administration, Small Business Administration, Production Credit Associations, and Federal Land Banks. Associations, corporations or partnerships shall be at least fifty-one percent owned by eligible Indians or an eligible Indian tribe. This Indian ownership must actively participate in the management and operation of the economic enterprise by representation on the board of directors of a corporation or cooperative association proportionate to the Indian ownership which will enable the Indian owner(s) to control management decisions. The legal organization documents will provide for the number of Indians which are to be on the board of directors, how they along with other directors will be elected or appointed and qualifications required as a condition for becoming a member of the board of directors. The legal organization documents shall provide safeguards which will prevent Indian ownership and control from decreasing below fifty-one percent. Evidence of Indian ownership in a cooperative association or corporation will be evidenced by stock ownership, if stock is or has been issued, or by other evidence satisfactory to the Commissioner. Partnerships will be evidenced by written partnership agreements which show the percentage of Indian ownership, role and authority in making management decisions in controlling the operation of the economic enterprise.

§ 286.4 Eligible economic enterprises.

An economic enterprise as defined in § 286.1(k) is eligible to receive equity capital through non-reimbursable grants if it is or will be self-sustaining and profit-oriented and will create em

ployment for Indians. In the case of Indian-owned cooperative associations, they must distribute or allocate profits for later distribution, to members who are patrons, unless prohibited from doing so by law.

§§ 286.5-286.6 [Reserved]

§ 286.7 Location of enterprise.

To be eligible for a grant an economic enterprise must be located on an Indian reservation or located where it makes or will make an economic contribution to a nearby reservation by providing employment to tribal members residing thereon or by expending a portion of its income for materials or services on the reservation. Economic enterprises which are or will be operated on a reservation must comply with the requirements of applicable rules, resolutions or ordinances adopted by the governing body of the tribe, if applicable.

§ 286.8 Priority criteria.

The following priority will be used in selecting economic enterprises grant funding:

for

(a) First priority. First priority will be given to economic enterprises located on a reservation that will:

(1) Utilize Indian resources, both natural and human.

(2) Create the highest ratio of Indian jobs to the total amount of dollars to be invested, including market value of materials and equipment contributed to the project.

(3) Create the highest ratio of income to a tribe or its members in relation to the total amount of dollars to be invested, including market value of materials or equipment contributed to the project.

(3) Generate the most non-Bureau financing.

§ 286.9 Environmental and flood disaster

protection.

Grant funds will not be advanced until there is assurance of compliance with any applicable provisions of the Flood Disaster Protection Act of 1973 (Pub. L. 93-234), the National Environmental Policy Act (Pub. L. 91-190), 42 U.S.C. 4321 and Executive Order 11514.

§ 286.10 Preservation of historical and archeological data.

The Commissioner before approving a grant where the grant funds and/or the loan funds will be used to finance activities involving excavations, road construction, and land development or involving the disturbance of land on known or reported historical or archeological sites, will take appropriate action to assure compliance with applicable provisions of the Act of June 27, 1960 (74 Stat. 220 (16 U.S.C. 469)), as amended by the Act of May 24, 1974 (Pub. L. 93-291, 88 Stat. 174), relating to the preservation of historical and archeological data.

§ 286.11 Management and technical assist

ance.

(a) Concurrent with the approval of a grant to finance an Indian economic enterprise, the Commissioner will insure that competent management and technical assistance is available to the grantee consistent with the grantee's knowledge and experience and the nature and complexity of the economic enterprise being financed. Assistance may be provided by available Bureau of Indian Affairs staff, other

(b) Second priority. Second priority will be given to projects located in the immediate vicinity of a reservation that will:

tribes, or other sources which the Commissioner considers competent to provide needed assistance. It is intended that contracting for management and technical assistance be used only

(2) Create the highest ratio of Indian jobs to the total amount of dollars to be invested, including market value of materials and equipment contributed to the project.

able without cost. Contracts entered into in order to provide grantees with competent management and technical assistance shall be in accordance with applicable sections of the Federal Procurement Regulations and the Buy

Indian Act of April 30, 1908, chapter 153 (35 Stat. 71) as amended June 25, 1910, chapter 431, section 25, (36 Stat. 861).

(b) The lender providing the loan funds under § 286.17(b) to finance an economic enterprise will include with the grantee's application the need for equity capital, the lender's evaluation of the applicant's need for management and technical assistance, specific areas of need and whether the lender will provide such assistance to the applicant.

§ 286.12 Content of application.

Applications shall be on a form prescribed by the Commissioner which shall at the minimum include:

(a) Total capital requirement, including operating capital required until such time as the cash generated from operations will be sufficient to make the enterprise self-sustaining.

(b) Amount of total financing required as well as what is obtainable from other sources, including the applicant's personal resources, and a statement of terms and conditions under which any borrowed portion is obtainable.

(c) Capital deficiency, which will be the basis for the amount of grant requested.

(d) Pro forma balance sheets and operating statements showing estimated expenses, income and net profit from operations for three years following receipt of the requested grant.

(e) Annual operating statements and balance sheets, audited if available, for the prior two years or applicable years for enterprises already in operation. (f) Current financial consisting of a balance sheet and operating statement.

statements,

(g) A plan of operation which shall be acceptable to the lender making the loan and the Commissioner.

§§ 286.13-286.14 [Reserved]

§ 286.15 Application procedures.

Applications are to be submitted to the Superintendent having administrative jurisdiction over the reservation on which an enterprise will be or is located. If the enterprise site is near two or more reservations, application

is to be made to the Superintendent having administrative jurisdiction over the reservation nearest to the location of the enterprise which the enterprise will benefit economically.

§ 286.16 Grant approval authority.

Applications for grants require approval by the Commissioner.

§ 286.17 Grant limitations and requirements.

(a) Grants will be made to assist in establishing new economic enterprises, or in purchasing or expanding established ones. However, a grant may be made only when in the opinion of the Commissioner the applicant is unable to obtain adequate financing from other sources such as banks, Farmers Home Administration, Production Credit Associations, Federal Land Banks and, is also unable to obtain a guaranteed or insured loan under Title II of the Indian Financing Act of 1974 (88 Stat. 77). Prior to making any grant, the Commissioner shall assure that, where practical, the applicant has reasonably made available for loan security and/or for input into the economic enterprise collateral or funds from his own resources. If the information in an application indicates that it may be possible for the applicant to obtain financing without a grant, the Commissioner will require the applicant to furnish letters from two customary lenders in the area, if available, who are making loans for similar purposes, showing whether or not they will make a loan to the applicant for the total financing needed without a grant.

(b) A grant may be made only to an applicant who is able to obtain at least 60 percent of the necessary financing from other sources.

(c) No grant in excess of $50,000 may be made to any applicant.

(d) Revolving loan funds as prescribed in Title I of the Indian Financing Act of 1974 and guaranteed or insured loans as prescribed in Title II of said Act may not be used as the sources of the loan portion of the total financing requirement if financing from other governmental or institutional lenders is available on reasona

ble terms and conditions. If a loan is not available from other sources, guaranteed or insured loans under the provisions of Title II of said Act may then be considered. If a guaranteed or insured loan is not available loans under the provisions of Title I of said Act may then be considered. Applicants for a loan from either source must meet the eligibility requirements for such loans.

(e) A grant will not be approved unless there is assurance the applicant can and will be provided with needed competent technical and management assistance commensurate with nature of the enterprise to be funded and the knowledge and management skills of the applicant.

the

(f) Grant funds may not be used for refinancing or debt consolidation unless approval is justified and required due to the applicant's financial position and is clearly to the advantage of the grant applicant.

(g) Ordinarily, not more than one grant will be made for a project. Nevertheless, in certain circumstances a second grant may be made to the same applicant for a new project or expansion of the original project. An addition grant will not be approved for an economic enterprise previously funded under the provisions of Title IV of the Indian Financing Act of 1974 except for expanding a successful enterprise, provided the total of grants made shall not exceed $50,000. Information to be submitted with the application will include at a minimum the following:

(1) Use made of the prior grant. Where practical, evidence of such use shall be furnished.

(2) Evidence of competent management.

(3) Maintenance of adequate accounting records.

(4) That the operation is profitable as evidenced by operating statements and balance sheets prepared from the accounting records.

(5) That expansion will increase the net profit and/or increase Indian employment.

(h) An application for a second grant will not be approved if the applicant: (1) has not complied with the reporting requirements in connection with

the first grant, or (2) has not followed the plan of operation, if any, developed for the management and operation of the economic enterprise, or (3) did not follow and use the management and technical assistance furnished, or (4) is in violation of one or more provisions of the loan agreement entered into between the applicant and the lender who furnished the loan portion of the financing in connection with the first grant.

(i) An applicant for an expansion grant must meet the same eligibility requirements as an original applicant. § 286.18 Written notice.

The applicant for a grant which is disapproved will be notified by letter, stating the reasons for disapproval and the right of appeal pursuant to 25 CFR 2. A copy of the letter will be sent to the prospective lender.

[39 FR 44748, Dec. 27, 1974. Redesignated at 47 FR 13328, Mar. 30, 1982; 48 FR 13414, Mar. 31, 1983]

§ 286.19 [Reserved]

§ 286.20 Disbursement of grant funds.

Unless otherwise provided by an agreement between a lender and the grantee, the Commissioner may in his discretion advance grant funds directly to a grantee. He may require the funds to be deposited in a special account at the appropriate Agency headquarters office or deposited in a joint account in a bank and disbursed as needed by the grantee. The terms of a lender's loan agreement may require the lender's approval before disbursement of the funds. Grant funds will not be disbursed to a grantee until the Commissioner has been informed by the lender that a loan has been approved for the grantee in the amount of the loan financing needed.

§ 286.21 Return of unused funds.

Grantees will be required to return unused grant funds to the Commissioner if the economic enterprise for which the grant was approved is not initiated, i.e., lease obtained, if needed, construction started, equipment purchased or other, within the time stated in the grant agreement. The