2. PTAC Event February 1st-2nd, 2010 Catoosa, OK Presenter: Philip Viles, Chief, Division of Capital Investment, Office of Indian Energy and Economic Development Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 1

3. Loan Guaranty, Insurance and Interest Subsidy Program Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 2

4. Guarantees commercial Indian loans up to 90%. Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 3

5. The law governing the program is:  25 U.S.C. 1481 et seq.  25 CFR Part 103 Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 4

6. o The borrower must be : o an Indian individual, o an Indian-owned business entity, o a tribal enterprise, or o a tribe Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 5

7.  An Indian individual means:  Member of one of the 564 federally recognized tribes  An Indian-owned business entity means:  Legally established entity such as partnership, corporation, limited liability company, or joint venture that is 51% or more owned by eligible Indians Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 6

8. A borrower’s business must be at least 51% Indian owned during the entire term of the loan. A borrower’s business must contribute to the economy of a reservation or tribal service area. Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 7

9. o Borrower equity – the borrower must have 20% equity in the business- o In the form of cash or unencumbered tangible assets o To be used in the business being funded o Upon which a lender can secure a first lien Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 8

10. o Term of loan – the loan cannot be for more than 30 years, including extensions. o Interest rate – the interest rate must be reasonable, in light of rates charged in the region for loans to similar businesses. o Some policy restrictions, such as no loans for gaming, tobacco, etc. Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 9

11.  Instead of using BIA credit officers in 12 different regions, we now have four Credit Office Service Centers with DCI personnel.  Current COSCs: › Anchorage, AK › Lakewood, CO › Albuquerque, NM › Reston, VA (central office) Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 10

12. o Borrowers apply to lenders. Lenders apply to DCI if they need a guaranty. o Authorized DCI field officials can approve guarantees up to $5 million. o Applications over $5 million and applications requesting interest subsidy must be approved at the DCI central office. Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 11

13. All lenders must sign a Loan Guaranty Agreement to participate in the Loan Guaranty, Insurance and Interest Subsidy Program. Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 12

14. o Lending opportunities to Indian-owned businesses, entities and tribes o Loan security up to 90 percent o DCI allows lender to use its own loan documents – only one required DCI form o Borrower may qualify for interest subsidy to assist in cash flow for three years with the possibility of two one-year extensions Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 13

15. o Guaranteed portion does not count against lending limits o Guaranteed portion can be sold to make new loans o Lender can participate in large loans and earn servicing fees o Helps meet Community Reinvestment Act requirements o In default, liquidation by bank is optional. Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 14

16. DCI charges 2% of the guaranteed portion of the original loan amount. Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 15

17. o Reimbursement from DCI equal to a portion of the interest a borrower actually pays - Can be paid by DCI for up to 5 years o Initial three year term o Yearly renewal for two more years, if business qualifies o Interest subsidy payments are based on the difference between: o Lender’s interest rate (can be variable) o IFA interest rate (fixed over life of subsidy) Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 16

18. The borrower gets the payment. The lender has already received its full payment according to the repayment schedule. Although the lender submits the request for subsidy to DCI and DCI sends payment to the lender, the use of these funds is at the discretion of the borrower. The borrower may use the funds to reduce principal, increase operating capital, or for similar business purposes. The borrower should make arrangements with the lender on the use of these payments. Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 17

19. o Borrower applies to lender for a loan. o If necessary, lender will request a loan guaranty from DCI. o Lender applies to DCI Credit Office Service Center, or in some cases, the DCI central office. Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 18

20.  Since 1974 we have guaranteed almost $1 billion in loans.  FY ‘10 loan guaranty ceiling of $93 million  Stimulus funding of $122 million in guarantees.  Loss rate of <3% since 1992. Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 19

21.  $122 million ceiling for loan guarantees  Funds available until Sept. 30, 2010  Loan guarantees for individually-owned businesses available up to $500,000, and available to larger Indian or tribally- owned businesses for more  No casino or other gambling establishment, aquarium, zoo, golf course, or swimming pool Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 20

22. o For more information about the program, contact us at: 202-219-0740 LoanGuaranty@bia.gov http://www.bia.gov/WhoWeAre/AS-IA/IEED/DCI/index.htm Loan Guaranty, Insurance and Interest Subsidy Program -Philip Viles, Chief, Division of Capital Investment 21