The Community Development Financial Institution (CDFI) Bond Guarantee Program was enacted through the Small Business Jobs Act of 2010 (Public Law 111-240). The legislation directs the Department of Treasury to guarantee bonds up to $1 billion per year to Community Development Financial Institutions (CDFIs) to provide low interest, long-term capital for qualifying projects. In FY 2015 it will guarantee up to $750 million in bonds.
Although this program has been praised as a valuable source of credit and capital to tribes, it has failed to consider many of the nuances of Indian Country, leaving tribal applicants at a significant disadvantage. Through conversations with individual CDFIs, NAFOA has identified a widespread misconception that Treasury has a strong emphasis on land-based collateral. This issue was raised at a Senate Committee on Indian Affairs Oversight Hearing in June of 2014 where Dennis Nolan, Acting Director of the CDFI Fund spoke to the CDFI Fund’s attempt to promote access to tribal projects through the use of a case study, which was introduced into its outreach sessions to educate applicants and eligible CDFIs on alternative forms of collateral. The CDFI Fund is also exploring how leasehold mortgages might be used to mitigate the collateral impediments discussed.
NAFOA has been working with the Treasury and the CDFI Fund to devise solutions to the barriers currently precluding tribal applicants from participating in the Bond Guarantee Program. NAFOA has engaged with the four eligible CDFIs for the FY 2013 round of funding to gain insight on their distinctive methods of issuing Bond Guarantee Program loans to best assess how to include Native projects in their deal portfolios. NAFOA has also encouraged the CDFI Fund to amend the capital guidelines in an effort to increase lending to Native CDFIs and tribal governments.