loans which are considered to be uncollectible. Usually a chargeoff includes both principal and interest and provides for cessation of interest accruals on the principal balance owing as of the date of the chargeoff. (b) Action to chargeoff a loan will be in the form of a resolution enacted by the committee or body authorized and responsible for actions on loan matters for the relending organization. Before action is taken to chargeoff a loan as uncollectible, the lender will make an effort, to the extent feasible, to liquidate the security given for a loan and apply the net proceeds as a repayment on the balance of principal and interest owed. The charge off of a loan by a relending organization as uncollectible will not reduce the principal balance owed to the United States. A chargeoff will not release the borrower of the obligation or the responsibility to make payments when his or her financial situation will permit. Chargeoff action will not release the lender of responsibility to continue its efforts to collect the loan. § 101.19 Assignment of loans. A borrower of a direct loan from the United States may not assign the loan agreement or any interest in it to a third party without the consent of the Commissioner. Relending organizations which are conducting relending programs may not assign the loan agreements of borrowers, or any interest therein, to third parties without the approval of the Commissioner and the borrower. § 101.20 Relending by borrower. (a) A relending organization may reloan funds loaned to it by the United States with the approval of the Commissioner. The Commissioner may authorize such lenders to approve applications for particular types of loans up to a specified amount. (b) Loans shall be secured by such securities as the lender and the Commissioner may require. With the Commissioner's approval, mortgages of individually held trust or restricted land, leasehold interests, chattels, crops grown on trust or restricted land, and assignments of trust income may all be taken as security for loans. (c) Title to personal property purchased with loans received from relending organizations using revolving loan funds in its relending program shall be taken in the name of the borrower. (d) The term of a loan made by a relending organization conducting a relending program shall not extend beyond the maturity date of its loan from the United States, unless an exception is approved by the Commissioner and the organization has funds available from which to make scheduled repayment on its loan from the United States. Loans made will be scheduled for repayment at the earliest possible date consistent with the purpose for which a loan is made and the indicated repayment capacity of the borrower. (e) Securing documents or financing statements shall be filed or recorded in accordance with federal or state law except those customarily filed in Bureau of Indian Affairs offices. Mortgages on documented vessels will be filed at the custom house designated as the home port of the vessel as shown on the marine document. [40 FR 3587, Jan. 23, 1975. Redesignated at 47 FR 13327, Mar. 30, 1982. Further redesignated and amended at 57 FR 46472, Oct. 8, 1992] § 101.21 Repayments on United States direct loans. Repayments on United States direct loans shall be made to the authorized collection officer of the Bureau of Indian Affairs who shall issue an official receipt for the repayment and deposit the collection into the revolving loan fund. Collections will first be applied to pay interest to date of payment and the balance applied on the principal installment due. Collections on loans made by relending organizations which have been declared in default in which the Commissioner has taken control of the assets of the program (including loans made with balances owing) will be made to an authorized collection officer of the Bureau of Indian Affairs who shall issue a receipt to the payor and deposit the collection in the United States revolving loan fund. The relending organization's loan from the United States will be credited with the amounts collected from its borrowers, with the collections applied first on interest accrued and the balance applied to the principal. Payments on United States direct loans may be made in advance of due dates without penalty. [40 FR 3587, Jan. 23, 1975. Redesignated at 47 FR 13327, Mar. 30, 1982. Further redesignated at 57 FR 46472, Oct. 8, 1992] § 101.22 Repayments on loans made by relending organizations. Repayments on loans made by a relending organization conducting a relending program will be made to the officers of the lending organization or individuals designated and authorized in a declaration of policy and plan of operation. Collections on loans and other income to a relending program will be deposited in the lender's revolving loan account as designated in a declaration of policy and plan of operation. Collections on loans will be first applied to pay interest to date of payment with the balance applied to the principal. [40 FR 3587, Jan. 23, 1975. Redesignated at 47 FR 13327, Mar. 30, 1982. Further redesignated at 57 FR 46472, Oct. 8, 1992] § 101.23 Approval of articles of association and bylaws. Articles of association and bylaws of relending organizations and cooperative associations require approval of the Commissioner if they make application for a revolving credit loan. [40 FR 3587, Jan. 23, 1975. Redesignated at 47 FR 13327, Mar. 30, 1982. Further redesignated at 57 FR 46472, Oct. 8, 1992] § 101.24 Loans for expert assistance for preparation and trial of Indian claims. (a) Loans may be made to Indian tribes, bands and other identifiable groups of Indians from funds authorized and appropriated under the provisions of section 1 of the Act of November 4, 1963 (Pub. L. 88-168, 77 Stat. 301; 25 U.S.C. 70n-1), as amended by the Act of September 19, 1966 (Pub. L. 89-592, 80 Stat. 814) and section 2 of the Act of May 24, 1973 (Pub. L. 93-37, 87 Stat. 73). Loan proceeds may only be used for the employment of expert assistance, other than the assistance of counsel, for the preparation and trial of claims pending before the Indian Claims Commission. Applications for loans will be sub mitted on forms approved by the Commissioner and shall include a justification of the need for a loan. The justification shall include a statement from the applicant's claims attorney regarding the need for a loan. The application will be accompanied by a statement signed by an authorized officer of the applicant certifying that the applicant does not have adequate funds available to obtain and pay for the expert assistance needed. The Superintendent and the Area Director will attest to the accuracy of the statement or point out any inaccuracies. Loans will be approved by issuance of a commitment order by the Commissioner. (b) No loan shall be approved if the applicant has funds available on deposit in the United States Treasury or elsewhere in an amount adequate to obtain the expert assistance needed or if, in the opinion of the Commissioner, the fees to be paid the experts are unreasonable on the basis of the services to be performed by them. (c) Contracts for the employment of experts are subject to the provisions of 25 U.S.C. 81 and require approval by the Commissioner. (d) Vouchers or claims submitted by experts for payment for services rendered and reimbursement for expenses will be in accordance with the provisions of the expert assistance contract and shall be sufficiently detailed and itemized to permit an audit to determine that the amounts are in accordance with the contract. Vouchers or claims shall be reviewed by the borrower's claims attorney who will certify on the last page of the voucher or by attachment thereto, that the services have been rendered and payment is due the expert and that expenses and charges for work performed are in accordance with the provisions of the contract. (e) Requests for advances under the loan agreement shall be accompanied by a certificate signed by an authorized officer of the borrower certifying that the borrower does not have adequate funds available from its own financial resources with which to pay the expert. The Superintendent and Area Director will attest to the accuracy of the statement or point out inaccuracies. A copy of the voucher or claim from the expert will accompany the request for ad vance. (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 52 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] § 101.25 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 (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. 103.2 Who does the Program help? 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 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? 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 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 willing to extend the requested financing without a BIA guaranty or insurance coverage. § 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. § 103.6 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. reasonable estimated value of the borrower's assets after completion of the construction or renovation. § 103.8 Is there any cost for a BIA guaranty or insurance coverage? 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 are eligible under the Program? (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; |