[Code of Federal Regulations]
[Title 45, Volume 4]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR1336.66]

[Page 238-239]
 
                        TITLE 45--PUBLIC WELFARE
 
CHAPTER XIII--OFFICE OF HUMAN DEVELOPMENT SERVICES, DEPARTMENT OF HEALTH 
                           AND HUMAN SERVICES
 
PART 1336_NATIVE AMERICAN PROGRAMS--Table of Contents
 
   Subpart F_Native Hawaiian Revolving Loan Fund Demonstration Project
 
Sec.  1336.66  Procedures and criteria for administration of the Revolving 

Loan Fund: Responsibilities of the Loan Administrator.

    Prior to the approval of any direct loan under the RLF, the Loan 
Administrator must develop and obtain the Commissioner's approval for 
the following procedures:
    (a) Preapplication and loan screening procedures. Some factors to be 
considered in the loan screening process are:
    (1) General eligibility criteria;

[[Page 239]]

    (2) Potential economic development criteria;
    (3) Indication of business viability;
    (4) The need for RLF financing; and
    (5) The ability to properly utilize financing.
    (b) Application process. The application package includes forms, 
instructions, and policies and procedures for the loan application. The 
package must also include instructions for the development of a business 
and marketing plan and a financing proposal from the applicant.
    (c) Loan evaluation criteria and procedures. The loan evaluation 
must include the following topics:
    (1) General and specific business trends;
    (2) Potential market for the product or service;
    (3) Marketing strategy;
    (4) Management skills of the borrower;
    (5) Operational plan of the borrower;
    (6) Financial controls and accounting systems;
    (7) Financial projections; and
    (8) Structure of investment and financing package.
    (d) Loan decision-making process. Decision-making on a loan 
application includes the recommendations of the staff, the review by the 
loan review committee and the decision by the Board.
    (e) Loan closing process. The guidelines for the loan closing 
process include the finalization of loan terms; conditions and 
covenants; the exercise of reasonable and proper care to ensure 
adherence of the proposed loan and borrower's operations to legal 
requirements; and the assurance that any requirement for outside 
financing or other actions on which disbursement is contingent are met 
by the borrower.
    (f) Loan closing documents. Documents used in the loan closing 
process include:
    (1) Term Sheet: an outline of items to be included in the loan 
agreement. It should cover the following elements:
    (i) Loan terms;
    (ii) Security interest;
    (iii) Conditions for closing the loan;
    (iv) Covenants, including reporting requirements;
    (v) Representations and warranties;
    (vi) Defaults and remedies; and
    (vii) Other provisions as necessary.
    (2) Closing Agenda: an outline of the loan documents, the background 
documents, and the legal and other supporting documents required in 
connection with the loan.
    (g) Loan servicing and monitoring. The servicing of a loan will 
include collections, monitoring, and maintenance of an up-to-date 
information system on loan status.
    (1) Collections: To include a repayment schedule, invoice for each 
loan payment, late notices, provisions for late charges.
    (2) Loan Monitoring: To include regular reporting requirements, 
periodic analysis of corporate and industry information, scheduled 
telephone contact and site visits, regular loan review committee 
oversight of loan status, and systematic internal reports and files.