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Indian Nations Law Update - September 2011

September 13, 2011

Treasury Department Announces NACA CDFI Awards

On August 24th, the Treasury Department announced awards of approximately $12 million to financial institutions whose primary mission is to increase lending and other financial services in low-income Indian communities under its Native American CDFI Assistance (NACA) Program. The NACA program can help tribes develop private sector economies on their reservations. The CDFI Fund does not make loans directly to individuals nor does it finance specific projects. Instead, the CDFI Fund provides financing to CDFIs who, in turn, loan to individuals needing assistance to purchase their first home or entrepreneurs seeking financing for a new business. In addition, many CDFIs provide technical assistance (credit counseling, budgeting, business plans, etc.) to their clients.

A newly formed entity first applies for a technical assistance (TA) award, typically in the $75,000-$100,000 range. Grants may be used for training, hiring specialists, consulting, market studies, technology and other purposes. A TA awardee has three years to become certified as a CDFI. In order to achieve certification, the entity must serve a target market (usually a low income or impoverished area) and have as its "predominant business activity ... the provision, in arms length transactions, of financial products (such as loans or equity investments), development services (such as credit counseling) and/or other similar financing." Once certified, the entity is eligible to participate in the financial assistance (FA) component of the CDFI program. In the most recent round, FA awards ranged form $279,000 to $750,000, with most awards at the $725,000 level.

Assuming that Congress does not terminate the program, the Treasury Department will likely announce the availability of CDFI technical assistance and financial assistance grants for FY 2012 some time before the end of 2011. Godfrey & Kahn has experience helping tribes and other organizations form CDFIs both to provide down payment assistance to first-time home buyers and to provide funding for start-up businesses.

For more information, contact Brian Pierson, 414.287.9456 or

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