3. A bank may apply to the Minister, in a form satisfactory to him, for the guarantee by the Minister of a loan to be made by the bank to an applicant whose activities contribute or may contribute to the economic development of Indians.

• 4. (1) Subject to subsections (2) to (4), the Minister may guarantee, in whole or in part, a loan in respect of which an application is made pursuant to section 3 where

  • (a) he is satisfied that the loan is required to finance a business enterprise that will or may contribute to the economic development of Indians;

  • (b) the application for the loan was scrutinized and checked by a responsible officer of the bank, with the care required in the conduct of its ordinary business, prior to the making of the loan;

  • (c) the terms and conditions of the loan were fixed by the bank in consultation with the borrower; and

  • (d) the loan is to be repaid within a period that does not exceed 15 years and repayments are to be made not less frequently than annually.

• (2) The Minister shall not, without the approval of the Minister of Finance, guarantee to a bank a loan in excess of $100,000.

• (3) The Minister shall not guarantee to a bank any loan where the aggregate of

  • (a) the principal amount of the guaranteed loan,

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

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

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

  • (e) 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

  • (f) 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 guaranteed loan is required exceeds $500,000 or may, in the opinion of the Minister be reasonably expected to exceed $500,000, unless he has obtained, in addition to any approval required under subsection (2), the approval of the Treasury Board.

• (4) The Minister shall, on giving any guarantee without the approval of the Treasury Board, certify to the Treasury Board that the aggregate referred to in subsection (3) does not exceed $500,000.

• (5) Where a guaranteed loan is made by a bank other than to an Indian, an Indian band or a corporation controlled by one or more Indians, the Minister shall not guarantee more than 90 per cent of any loss sustained by the bank as a result of the guaranteed loan.

• 5. (1) The Minister shall require that a bank take security for a guaranteed loan in one or more of the following forms:

  • (a) a promissory note;

  • (b) any security instrument pursuant to section 88 of the Bank Act;

  • (c) an assignment of book debts;

  • (d) a chattel mortgage or commercial pledge;

  • (e) a mortgage or hypothecation on real property;

  • (f) an assignment of rights and interest of the borrower under an agreement for sale; or

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

• (2) Every bank shall, throughout the term of a guaranteed loan, keep and maintain in accordance with normal banking practice, the security taken for the guaranteed loan under subsection (1).

• (3) No bank shall release the security taken for a guaranteed loan under subsection (1)

  • (a) without the prior approval of the Minister; or

  • (b) where the Minister of Finance originally approved the loan, without the prior approval of the Minister and the Minister of Finance.