§ 2991b–1 — Loan Fund; Demonstration Project

(1) In order to provide funding that is not available from private sources, the Commissioner shall award a grant to the Office of Hawaiian Affairs of the State of Hawaii (referred to in this section as the “Office”), which shall use that grant to carry out, in the State of Hawaii, a demonstration project involving the establishment of a revolving loan fund— (A) from which the Office shall make loans or loan guarantees to Native Hawaiian organizations and to individual Native Hawaiians for the purpose of promoting economic development in the State of Hawaii; and (B) into which all payments, interest, charges, and other amounts collected from loans made under subparagraph (A) shall be deposited notwithstanding any other provision of law. (2) The agreement under which a grant is awarded under paragraph (1) shall contain provisions which set forth the administrative costs of the grantee that are to be paid out of the funds provided under the grant and a requirement that the grantee contribute to the revolving loan fund an amount of non-Federal funds equal to the amount of such grant. (1) The Office may make a loan or loan guarantee to a borrower under subsection (a)(1)(A) only if the Office determines that— (A) the borrower is unable to obtain financing from other sources on reasonable terms and conditions; and (B) there is a reasonable prospect that the borrower will repay the loan. (2) Each loan or loan guarantee made under subsection (a)(1)(A) shall be— (A) for a term that does not exceed 7 years; and (B) at a rate of interest that does not exceed a rate equal to the sum of— (I) the most recently published prime rate (as published in the newspapers of general circulation in the State of Hawaii before the date on which the loan is made); and (II) 3 percentage points. (3) The Office may require any borrower of a loan made under subsection (a)(1)(A) to provide such collateral as the Office determines to be necessary to secure the loan. (4) Prior to making loans under subsection (a)(1)(A), the Office shall establish written procedures and definitions pertaining to defaults and collections of payments under the loans which shall be subject to the review and approval of the Commissioner. Such Office shall provide to each applicant for a loan under subsection (a)(1)(A), at the time application for the loan is made, a written copy of such procedures and definitions. (5) The Office may not lend to itself any of the funds awarded under the grant. (1) The Office shall provide the Commissioner at regular intervals written notice of each loan made under subsection (a)(1)(A) that is in default and the status of such loan. (A) After making reasonable efforts to collect all amounts payable under a loan made under subsection (a)(1)(A) that is in default, the Office shall notify the Commissioner that such loan is uncollectable or collectable only at an unreasonable cost. Such notice shall include recommendations for future action to be taken by the Office. (B) Upon receiving such notice, the Commissioner shall instruct the Office— (i) to continue with its collection activities; (ii) to cancel, adjust, compromise, or reduce the amount of such loan; or (iii) to modify any term or condition of such loan, including any term or condition relating to the rate of interest or the time of payment of any installment of principal or interest, or portion thereof, that is payable under such loan. (C) The Office shall carry out all instructions received under subparagraph (B) from the Commissioner. (1) The Office shall, out of funds available in the revolving loan fund established under such subsection— (A) pay expenses incurred by the Office in administering the revolving loan fund; and (B) provide competent management and technical assistance to borrowers of loans made under subsection (a)(1)(A) to assist the borrowers to achieve the purposes of such loans. (2) The Commissioner shall provide to the Office such management and technical assistance as the Office may request in order to carry out the provisions of this section. (e) Not later than 120 days after November 29, 1987, the Commissioner, in consultation with appropriate agencies of the State of Hawaii and community-based Native Hawaiian organizations, shall prescribe regulations which set forth the procedures and criteria to be used— (1) in making loans under subsection (a)(1)(A); and (2) in canceling, adjusting, compromising, and reducing under subsection (c) the outstanding amounts of such loans. (1) There is authorized to be appropriated for each of the fiscal years 2000 and 2001, $1,000,000 for the purpose of carrying out the provisions of this section. Any amount appropriated under this paragraph shall remain available for expenditure without fiscal year limitation. (2) The revolving loan fund that is required to be established under subsection (a)(1) shall be maintained as a separate account. Any portion of the revolving loan fund that is not required for expenditure shall be invested in obligations of the United States or in obligations guaranteed or insured by the United States. (1) The Commissioner, in consultation with the Office, shall submit a report to the President pro tempore of the Senate and the Speaker of the House of Representatives not later than January 1 following each fiscal year, regarding the administration of this section in such fiscal year. (2) Such report shall include the views and recommendations of the Commissioner with respect to the revolving loan fund established under subsection (a)(1) and with respect to loans made from such fund, and shall— (A) describe the effectiveness of the operation of such fund in improving the economic and social self-sufficiency of Native Hawaiians; (B) specify the number of loans made in such fiscal year; (C) specify the number of loans outstanding as of the end of such fiscal year; and (D) specify the number of borrowers who fail in such fiscal year to repay loans in accordance with the agreements under which such loans are required to be repaid.