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Native American Collateral Support

The Native American Collateral Support (NACS) Program addresses access to capital issues by providing collateral support security for Lenders making loans with Native American-owned businesses that only lack in sufficient collateral/equity for a business loan according to their loan risk profiles.  (All other aspects of the credit analysis are satisfactory: cash flow, climate, character, and credit-worthiness). 

Native American Collateral Support Program Guidelines 

How it Works*

  1. A Native American-owned business seeks a commercial loan with an eligible Lender.
  2. The Lender requests to participate in the NACS Program.
  3. The Department and the Lender execute a Lender Participation Agreement (LPA).
  4. The Lender submits an Collateral Support Application (CSA) (CSA instructions) on behalf of a Borrower to the Program along with:
    1. Native American Business Owner Certification (completed by Borrower; can also be submitted directly to Program from Borrower);
    2. Collateral Analysis and Review Form
    3. Loan Committee Credit Memo Write-up
    4. Loan Amortization Schedule – Must accompany the Collateral Support Application (CSA). 
  5. If awarded, the Lender and the Department execute a Collateral Deposit Agreement and funds are reserved.
  6. The Lender and the Program establish a 5-year Certificate of Deposit (CD) to establish the required collateral for the Borrower's loan and complete the loan closing.
  7. Yearly, the Lender releases a portion of the CD back to the Program and submits an Annual Status Report on behalf of the borrower.

*See the Requirements tab and  program guidelines for specific details, terms, and requirements.

Collateral Support Amounts

Collateral support amounts vary.  Collateral support deposits are intended to address collateral shortfalls and will be evaluated by the Program on a case-by-case basis. 

Funding Availability

An original pool of $500,000 is available starting July 1, 2015 for collateral support.  Funding is contingent upon availability of NACS funds.  Please inquire with staff the current availability of funds prior to submitting a Collateral Support Application (CSA).

Interest Rate

The interest rate is set by the Lender and reviewed by the Program.

Loan Term

The maximum loan term is five (5) years.

Application Deadlines

Collateral Support Applications (CSA) will be accepted on an open cycle basis.

 

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Eligible Borrowers

An eligible borrower is a Native American-owned business with a structure that is a recognized entity under Montana or tribal law that is registered with the Montana Secretary of State’s Office or under respective tribal ordinances.

Eligible Lenders

Any bank, community development financial institution, tribal revolving loan institution, certified regional development corporation, microbusiness development corporation, credit union, local development corporation authorized to conduct business in the State of Montana is an eligible Lender.

Underwriting

Underwriting will be based on the Lender’s risk profile and collateral underwriting criteria.  The participating Lender must determine that each application meets its normal underwriting criteria “but for” a collateral gap.  The Lender assumes full responsibility for the credit and ongoing servicing of the loan.

Internal Review Process

The NACS Program Manager will first review a CSA for completeness and sufficiency.  During this initial review, the Program may contact the Lender for additional information, documentation, or clarification.  After the CSA is deemed complete and sufficient information is available to evaluate the application, the Program Manager will notify the Lender by email that the CSA will be presented to an internal review committee.  The internal review panel will make preliminary funding recommendations to the Director of the Department who will make the final decision on whether to approve collateral support for an application.  The Program will communicate the determination to the Lender through a formal award or denial letter.


 

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MONTANA OFFICE OF TOURISM AND BUSINESS DEVELOPMENT | MONTANA DEPARTMENT OF COMMERCE
301 S. PARK AVE. | P.O. BOX 200533 | HELENA, MT 59620-0533 |  T: (406) 841-2870 |  F: (406) 841-2871 | TDD: (406) 841-2702