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Indian Economic Development Direct Loan Order (SOR/78-22)

Regulations are current to 2019-08-28

Indian Economic Development Direct Loan Order

SOR/78-22

APPROPRIATION ACTS

APPROPRIATION ACT NO. 1, 1970

Registration 1977-12-29

Terms and Conditions Respecting the Making of Direct Loans for the Purpose of the Economic Development of Indians

P.C. 1977-3609 1977-12-22

His Excellency the Governor General in Council, on the recommendation of the Minister of Indians Affairs and Northern Development and the Treasury Board, pursuant to Vote L53b of Appropriation Act No. 1, 1970, is pleased hereby to approve the annexed Terms and conditions respecting the making of direct loans for the purpose of the economic development of Indians.

Short Title

 These terms and conditions may be cited as the Indian Economic Development Direct Loan Order.

Interpretation

 In this Order,

Account

Account means the Indian Economic Development Account in the Consolidated Revenue Fund of Canada established pursuant to Vote L53b of Appropriation Act No. 1, 1970; (Compte)

applicant

applicant means as applicant under section 3 for a direct loan; (requérant)

borrower

borrower means an applicant who has received a direct loan pursuant to this Order; (emprunteur)

business enterprise

business enterprise means, regardless of a change in ownership or control,

  • (a) any business carried on in Canada for gain or profit,

  • (b) a cooperative association incorporated under a law of the Parliament of Canada or the legislature of a province, or

  • (c) the business of a profession recognized as such under a law of the Parliament of Canada or the legislature of a province,

but does not include

  • (d) a business having as its object the furtherance of a charitable or religious purpose, or

  • (e) a business carried on for the purpose of money lending, insurance or finance; (entreprise commerciale)

direct loan

direct loan means a loan from the Account; (prêt direct)

direct loan agreement

direct loan agreement means an agreement by the Minister to make a direct loan; (convention de prêt direct)

Indian

Indian means an Indian as defined in the Indian Act; (Indien)

interest

interest means simple interest; (intérêt)

Minister

Minister means the Minister of Indian Affairs and Northern Development. (ministre)

Applications

 Any individual, corporation, partnership or Indian band whose activities contribute or may contribute to the economic development of Indians may apply for a direct loan by submitting an application in a form satisfactory to the Minister, signed by the applicant and containing such information as will enable the Minister to satisfy himself in respect of the matters referred to in subsection 4(1) or (2).

  •  (1) The Minister may enter into a direct loan agreement with an applicant where the Minister is satisfied that

    • (a) the direct loan is required to finance a business enterprise that will or may contribute to the economic development of Indians or to provide equity in a business enterprise that will or may contribute to the economic development of Indians;

    • (b) the applicant,

      • (i) in the case of a business enterprise other than the business of a profession, is unable to obtain the required financing on reasonable terms and conditions except under this Order, or

      • (ii) in the case of the business of a profession, is unable to obtain a loan, except under this Order, by reason only that he is prevented by section 89 of the Indian Act from providing satisfactory security;

    • (c) the direct loan is not for the purpose of refinancing an existing indebtedness except where the refinancing

      • (i) is incidental to the main purpose of the direct loan,

      • (ii) in the opinion of the Minister, improves the security to be obtained by the Minister in respect of the direct loan,

      • (iii) in the case of an existing direct loan or a direct loan made under this Order, is, in the opinion of the Minister, desirable, or

      • (iv) is approved by the Minister of Finance;

    • (d) the aggregate of

      • (i) the principal amount of the direct loan, and

      • (ii) the amounts outstanding in respect of all direct loans

      does not exceed the total amount authorized by any Act to be outstanding from the Account at the time the direct loan was made;

    • (e) where the aggregate of

      • (i) the principal amount of the direct loan,

      • (ii) the amount outstanding and the undisbursed amount in respect of all other direct loans made pursuant to Vote L53b of Appropriation Act No. 1, 1970,

      • (iii) the amount outstanding and the undisbursed amount of all guaranteed loans made pursuant to Vote L53b of Appropriation Act No. 1, 1970,

      • (iv) grants, contributions or other payments made or authorized by the Minister for the purposes of Indian economic development,

      • (v) the amount outstanding and the undisbursed amount in respect of all loans, grants, contributions and development incentives made under statutory authority vested in the Minister of Regional Economic Expansion, and

      • (vi) loans made or guaranteed under statutory authority by any federal Department, Crown Corporation or Agency

      to or on behalf of the applicant or in respect of the business enterprise for the purpose of which the direct loan is required exceeds $500,000 or may, in the opinion of the Minister, be reasonably expected to exceed $500,000, the direct loan has been approved by the Treasury Board; and

    • (f) the applicant is able to contribute from his own assets at least 20 per cent of the estimated cost of the entire business enterprise for which the direct loan is to be made.

  • (2) The Minister may enter into a direct loan agreement with an applicant who is unable to make the contribution specified in paragraph (1)(f) if

    • (a) the Minister is satisfied that the conditions set out in paragraphs (1)(a) to (e) have been met;

    • (b) the applicant is an Indian, a group of Indians, an Indian band or a corporation controlled by one or more Indians; and

    • (c) the direct loan is, in the opinion of the Minister, warranted by the circumstances.

Interest

 A borrower shall pay interest on a direct loan, both before and after maturity,

  • (a) where the aggregate of the principal amount of the loan and the amounts outstanding in respect of all direct loans to the borrower does not exceed $75,000, at a rate of interest equal to one per cent greater than the simple average prime commercial lending rate, to the nearest one-quarter of one per cent, of the seven major Canadian chartered banks, established at the close of business on the last banking day of December, March, June or September, whichever such day is the nearest preceding day to the day the loan agreement is signed by or on behalf of the Minister; or

  • (b) where the aggregate of the principle amount of the loan and the amounts outstanding in respect of all direct loans to the borrower exceeds $75,000, at a composite of

    • (i) the rate of interest prescribed by paragraph (a), in respect of the first $75,000, and

    • (ii) a rate of interest two per cent greater than the rate of interest prescribed by paragraph (a), in respect of the amount in excess of $75,000.

  • SOR/78-327, s. 1

 A borrower shall make repayments on the principal amount of a direct loan not less frequently than annually.

 A borrower shall repay a direct loan within 15 years from the payment thereof or within such longer period as is approved by the Treasury Board.

Security

  •  (1) The Minister may require that a borrower give as security for a direct loan

    • (a) a mortgage on real property or a chattel mortgage on personal property;

    • (b) a guarantee specifically listing the interest rate and the repayment terms;

    • (c) a promissory note specifically listing the interest rate and the repayment terms; or

    • (d) any security in place of or in addition to that referred to in paragraphs (a) to (c) that the Minister deems appropriate.

  • (2) The security required by the Minister under subsection (1) may be of whatever rank and may be subject to whatever charges the Minister deems appropriate from time to time.

 
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