[Code of Federal Regulations]
[Title 25, Volume 1]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 25CFR103.34]

[Page 314-315]
 
                            TITLE 25--INDIANS
 
     CHAPTER I--BUREAU OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR
 
PART 103--LOAN GUARANTY, INSURANCE, AND INTEREST SUBSIDY--Table of Contents
 
                 Subpart F--Loan Servicing Requirements
 
Sec. 103.34  What if the lender and borrower decide to change the terms of the loan?

    (a) The lender must obtain written BIA approval before modifying a 
loan guaranteed or insured under the Program, if the change will:
    (1) Increase the borrower's outstanding principal amount (if a term 
loan), or maximum available credit (if a revolving loan).
    (i) BIA will approve or disapprove a loan increase based upon the 
lender's explanation of the borrower's need for additional funding, and 
updated information of the sort required under Secs. 103.12, 103.13, and 
103.26, as applicable.
    (ii) Upon approval by BIA and payment of an additional guaranty or 
insurance premium in accordance with Secs. 103.8 and 103.19 and this 
section, the entire outstanding loan amount, as modified, will be 
guaranteed or insured (as the case may be) to the extent BIA specifies. 
The lender must pay the additional premium only on the increase in the 
outstanding principal amount of the loan (if a term loan) or the 
increase in the credit limit available to the borrower (if a revolving 
loan).
    (iii) Lenders may not increase the outstanding principal amount of a 
loan guaranteed or insured under the Program if a significant purpose of 
doing so would be to allow the borrower to pay accrued loan interest it 
otherwise would have difficulty paying.
    (2) Permanently adjust the loan repayment schedule.
    (3) Increase a fixed interest rate, convert a fixed interest rate to 
an adjustable interest rate, or convert an adjustable interest rate to a 
fixed interest rate.
    (4) Allow any changes in the identity or organizational structure of 
the borrower.
    (5) Allow any material change in the use of loan proceeds or the 
nature of the borrower's business.
    (6) Release any collateral taken as security for the loan, except 
items sold

[[Page 315]]

in the ordinary course of business and promptly replaced by similar 
items of collateral, such as inventory.
    (7) Allow the borrower to move any significant portion of its 
business operations to a location that is not on or near an Indian 
reservation or tribal service area recognized by BIA.
    (8) Be likely to materially increase the risk of a claim on BIA's 
guaranty or insurance coverage, or materially reduce the aggregate value 
of the collateral securing the loan.
    (9) Cure a default for which BIA is to receive notice under 
Sec. 103.35(b).
    (b) In the case of an insured loan, the amount of which will not 
exceed $100,000 when combined with all other insured loans from the 
lender to the borrower, the lender need not obtain BIA's prior approval 
to make any of the loan modifications indicated in Sec. 103.34(a), 
except as provided in Sec. 103.21(b). However, all loan modifications 
must remain consistent with the lender's loan insurance agreement with 
BIA, and in the event of an increase in the borrower's outstanding 
principal amount (if a term loan), or maximum available credit (if a 
revolving loan), the lender must send BIA an additional premium payment 
in accordance with Secs. 103.8, 103.19 and this section. The lender must 
pay the additional premium only on the increase in the outstanding 
principal amount of the loan (if a term loan) or the increase in the 
credit limit available to the borrower (if a revolving loan). To the 
extent a loan modification changes any of the information supplied to 
BIA under Sec. 103.18(b)(3), the lender also must promptly notify BIA of 
the new information.
    (c) Subject to any applicable BIA loan guaranty or insurance 
coverage conditions, a lender may extend additional loans to a borrower 
without BIA approval, if the additional loans are not to be guaranteed 
or insured under the Program.