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Word Document Alderville Small Business Loan Application

Alderville Small/Micro-Business Development Loan Fund

Background
As one aspect of its operations the Alderville First Nation Economic Development Program is committed to the development of ‘on-reserve’ small (micro) business.  This will be accomplished in part by non-interest bearing loans made available to on-reserve Alderville First Nation status membership.  This particular loan fund originated in 1991 and assists in small capital purchases or other business capacity requirements for the on-reserve small business owner.

Policy

Eligibility

1) Only registered ‘status Indians’ belonging to Alderville First Nation, who are 18 years and over living on Alderville First Nation territory, and who are in good financial standing with the Alderville Band, are eligible to apply.

Application and Lending
1) Loan funds will be utilized for small/micro businesses to increase organizational capacity and to expand or start-up a small business.  Applicants may borrow a minimum of $1,000 up to a maximum of $6,000.

2) Loans will be negotiated with and for status Alderville First Nation band members only.  Applicants as principals/owners of the business shall be directly involved in the business, and are not eligible to apply on behalf of another person.  

4) The Economic Development Officer will be responsible for the initial assessment of the application, as well as for conducting a credit check.  The cost for conducting the credit check will be the responsibility of the applicant payable at the time of application.

5) Businesses or enterprises must in the view of Chief and Council, the Band Administrator and the Economic Development Officer, show a reasonable expectation of economic viability.  Businesses need not necessarily be registered but will be expected to prove the legitimacy of their service.

6) At the discretion of Chief and Council, and on the advice of the Band Administrator and Economic Development Officer, an acceptable co-signor will be required.  The co-signor will not be required to be either a status Alderville First Nation member or living on-reserve.

7) No grants or forgivable loans will be awarded.

8) Individuals must have paid off all existing small business loans with Alderville First Nation before applying for another.

9) Upon the approval of a loan an individual will be required to submit post-dated checks covering off a minimum of one year of payments.

10) At the discretion of Chief and Council, loans involving capital purchases may require checks made payable directly to the supplier.

11) Each application will be assessed on an individual basis.

12) Where it is deemed advisable, and where these funds are being utilized to offset costs in larger business enterprizes or projects, a Business Plan may be required from an applicant.    

Borrowing and Repayment

  1. For those borrowing $6,000, the balance will be paid within two years at a rate of $250/month.
  2. For those borrowing $4,000 the balance will be paid within two years at a rate of $166.67/month. 
  3. For those borrowing $2,000 the balance will be paid within one year at a rate of $166.67/month.
  4. In the event that a person borrows $3,000, payments will be divided over 18 months maintaining payments at $166.67.
  5. For those borrowing $1,000 the balance will be paid within one year at a rate of $83.34/month.
13) There will be a charge of $15 for the checks returned Non Sufficient Funds (NSF).  In the event of a NSF check the EDO will write a letter requesting a certified replacement check including the original amount of the loan payment and the $15 NSF fee.

14) Any payment not received within one month shall be deemed to be in arrears and a reminder notice by registered mail will be issued by the Economic Development Officer.

15) No response to a reminder notice within 30 days of issue, if applicable, will result in another notice being issued by the EDO indicating that the co-signor will be notified and accessed.  A copy of this letter will be forwarded to Chief and Council and the Band Administrator.

16) If there is no response to the secondary (co-signor) notice within 10 days of issuance the loan will be deemed to be in default and all actions will be taken to collect on the outstanding loan, including submitting the name of the applicant and co-signor to the Credit Bureau.

17) Where loans are deemed to be in arrears or default, and where the individual is in the employ of Alderville First Nation from time to time, a deduction of 25% of wages will take place until such time as the part-time employment ceases or the arrears are paid in full.

18) In keeping with the Alderville First Nation Personnel Policy an employee who is in arrears with the Band for a debt owing will have their payments automatically deducted, as soon as it becomes a debt.

Collateral

Applicants will be expected to produce as collateral, one acre of land for every $1,000 borrowed.  The land must be accessible by road and be transferred to the Band until the outstanding loan is paid in full.  The land transfer will only be registered with the Department of Indian Affairs in the event of a loan default.  Chief and Council agree by this policy that the issue of collateral is non-negotiable and no appeals are eligible by applicants.

Application Process

  1. Applications are assessed and reviewed prior to Council.  Applicants will be expected to have all documentation in place before review and assessment can take place.
  2. Client will discuss the application with EDO, and the latter will advise the client accordingly.  Full application submitted.
  3. Credit checks conducted.
  4. Presentation to Council.
  5. Decision by Council, or at their discretion decision to be made within a reasonable time-frame.
  6. Preparation of loan agreement.
  7. Signatures, where applicable.
  8. Advancement of funds to client or where otherwise specified advancement of funds to supplier(s).

Procedures/Directives

Application forms are available either through the Economic Development Office or through Yvonne Jenkins at the front office.

Clients wishing to access the Loan Fund must as first fill out an application form providing all required information including Social Insurance Number, which is used needed to conduct a credit check.

Upon receipt of the application form it will then be determined if additional information or a business plan is required.

Credit checks are performed by the Band personnel responsible for the Loan Fund but this information is not shared and remains confidential.  The credit check is conducted through Equifax, with Alderville being a client.  Alderville’s Equifax account number must be provided upon calling 1-877-227-8800 Equifax National Customer Care.

The credit check must be assessed with someone who is experienced and can interpret it.  R1 is an excellent rating, with R9 being negative.  Normally anywhere between an R1 and R3 is within our risk range.

You are then required to assess the land that the applicant will be putting up as collateral.  See above Collateral section. 

A Land Transfer must be conducted, signed off and finalized with the Band prior to any release of any funds.