Managing Cash Flow Strategies for Business Growth
Ways to increase sales revenue, negotiate better deals with vendors, plan for seasonal fluctuations, and consider using credit cards for cash flow management. Learn about Small Business Administration loan programs and access to capital for business expansion.
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Presentation Transcript
Office of Self-Governance 2018 Annual Conference Albuquerque, New Mexico April 26, 2018 Prepared By: M. Alsace LaFramboise, Southwest Zone Manager
Interior Assistant Secretary Indian Affairs Energy & Economic Development Division of Capital Investment NW ZONE DENVER, CO EASTERN ZONE WASHINGTON, DC SW ZONE ALBUQUERQUE, NM ALASKA ZONE ANCHORAGE, AK INDIAN LOAN GUARANTEE INDIAN LOAN GUARANTEE & INSURANCE PROGRAMS & INSURANCE PROGRAMS
Program Program Legal Authority Legal Authority Indian Financing Act of 1974, 25 U.S.C. 1451 et.seq. (Public Law 93-262, 88 Stat. 77), as amended
Program Regulations Program Regulations Title 25: Indians Part 103: Loan Guaranty, Insurance and Interest Subsidy 25 CFR 103.1 103.45
Purpose of Program Act as financial intermediary to facilitate Indian- owned businesses that will benefit a reservation- based economy Facilitate movement of private sector debt capital into Indian Country Enhancement of credit in order to obtain better loan availability and terms
Borrower Eligibility Enrolled member of a federally recognized Tribe Tribe Tribal Enterprise Indian-Owned Business Entity Partnership Corporation or Limited Liability Corporation* Must be majority owned (51%) by Indian Individual, Tribe or Tribal Entity *Business structure must be acceptable to Indian Affairs*
Borrowers Equity Requirement 20% percent equity in the Business Financed based on Total Project Cost Cash and/or Unencumbered Assets
Business Location Business Financed must contribute to: Economy of Reservation Tribal Service Area
Loan Terms Term based on purpose of loan Normally based on useful life of asset Permanent working capital Line of credit - revolving Construction loan Initial Inventory Purchase Equipment purchase Real estate Lines of Credit must be paid to zero on annual basis Term cannot exceed 30 years
Interest Rates Must be reasonable Comparable to rates charged for loans to similar businesses May be variable based on an indexed prime rate that is identified in lender s guaranty request
Loan Amounts Statute No ceiling/floor for loans to acceptable business structures such as corporations, LLCs, partnerships, etc. $500,000 - Sole Proprietorship Individuals Policy Loans to Tribal Entities & Indian Business Entities are limited by annual appropriations
Percentage of Guaranty Up to 90% of Principal and Accrued Interest Percentage of Insurance Lesser of 15% of lender s insured portfolio or 90% of defaulted loan amount
Cost of Guaranty & Insurance Lenders pay a 2% premium based on the guaranteed portion of loan Lenders pay a 1 % premium based on 90% of insured amount of loan Lenders may pass cost on to borrower: Premium cost may be added principal amount of loan
FY 2018 Appropriation Congressional Appropriations will Support Loan Guaranties and Insurance totaling $122,500,000 Nationwide
Approval Authority DCI Washington, DC (Central Office) As recommended by Credit Committee consisting of zone employees and contractors
Lender Participation Requirements Traditional Bank Lenders Federally Chartered Institutions State Chartered Institutions Non-Bank Lenders Regularly engaged in making loans Capable of evaluating & servicing loans Acceptable to Indian Affairs
Benefits of Guaranty New Market Indian Country Minimizes Lender s Risk Guaranteed portion of loan: Does not count against Lender s legal lending limit Can be sold in secondary market Meets requirements of Community Reinvestment Act Liquidation is optional in event of default
Application Process Borrower Prepare a Business Plan Management Marketing Money Shop your Loan Banks Non- traditional lenders (CDFIs)
ApplicationProcess Lender Loan Guaranty Agreement BIA Form 5-4753 Submit to DCI, Southwest Zone, Albuquerque BIA Form 5-4755 Loan Guaranty Request Lender s Credit Analysis to include terms conditions Justify why guaranty is needed Applicant s Business Plan with supporting documentation
Application Process DCI - Indian Affairs Conduct independent analysis Work directly with lender to address concerns Approval/disapproval
NORTHWEST ZONE SERVICING RESPONSIBILITIES: WISCONSIN MINNESOTA MICHIGAN IOWA KANSAS NEBRASKA SOUTH DAKOTA NORTH DAKOTA MONTANA WYOMING COLORADO IDAHO OREGON WASHINGTON
Southwest Zone Servicing Responsibilities: Utah Nevada California Arizona New Mexico Texas
EASTERN ZONE SERVICING RESPONSIBILITES: Maine New York Massachusetts Connecticut North Carolina Florida Mississippi Louisiana Oklahoma Texas Alabama
ALASKA ZONE SERVICING RESPONSIBILITIES: ENTIRE STATE OF ALASKA
Contact Information Alsace LaFramboise, Zone Manager Telephone: 505-563-5466 Cell: 505-554-9526 alsace.laframboise@bia.gov Jerry Ryburn, Contractor Telephone: 505-563-5470 Cell: 505-681-1223 jerry.ryburn@bia.gov
Mailing Address Capital Investment Southwest Zone Indian Energy & Economic Development Assistant Secretary - Indian Affairs 1011 Indian School Road, Suite 131 Albuquerque, NM 87104 http://www.indianaffairs.gov/WhoWeAre/AS-IA/IEED/DCI/index.htm
