---
kind: "section"
citation: "25 U.S.C. § 4196"
title: "25"
title_heading: "Indians"
number: "4196"
heading: "Demonstration program for guaranteed loans to finance tribal community and economic development activities"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/25/4196"
units:
  - "Chapter 43 — Native American Housing Assistance and Self-Determination"
  - "Subchapter VI — Federal Guarantees for Financing for Tribal Housing Activities"
---

# §4196. Demonstration program for guaranteed loans to finance tribal community and economic development activities

- (a) **Authority—**
  - (1) **In general—** Subject to [paragraph (2)](#a-2), to the extent and in such amounts as are provided in appropriation Acts, subject to the requirements of this section, and in accordance with such terms and conditions as the [Secretary](/usc/25/4103.md?p=20) may prescribe, the [Secretary](/usc/25/4103.md?p=20) may guarantee and make commitments to guarantee the notes and obligations issued by [Indian tribes](/usc/25/4103.md?p=13-A) or [tribally designated housing entities](/usc/25/4103.md?p=22) with tribal approval, for the purposes of financing activities carried out on [Indian](/usc/25/4103.md?p=10) reservations and in other [Indian areas](/usc/25/4103.md?p=11) that, under the first sentence of [section 5308(a) of title 42](/usc/42/5308.md?p=a), are eligible for financing with notes and other obligations guaranteed pursuant to that section.
  - (2) **Limitation—** The [Secretary](/usc/25/4103.md?p=20) may guarantee, or make commitments to guarantee, under [paragraph (1)](#a-1) the notes or obligations of not more than 4 [Indian tribes](/usc/25/4103.md?p=13-A) or [tribally designated housing entities](/usc/25/4103.md?p=22) located in each Department of Housing and Urban Development Office of Native American Programs region.
- (b) **Low-income benefit requirement—** Not less than 70 percent of the aggregate amount received by an [Indian tribe](/usc/25/4103.md?p=13-A) or [tribally designated housing entity](/usc/25/4103.md?p=22) as a result of a guarantee under this section shall be used for the support of activities that benefit [low-income families](/usc/25/4103.md?p=14) on [Indian](/usc/25/4103.md?p=10) reservations and other [Indian areas](/usc/25/4103.md?p=11).
- (c) **Financial soundness—**
  - (1) **In general—** The [Secretary](/usc/25/4103.md?p=20) shall establish underwriting criteria for guarantees under this section, including fees for the guarantees, as the [Secretary](/usc/25/4103.md?p=20) determines to be necessary to ensure that the program under this section is financially sound.
  - (2) **Amounts of fees—** Fees for guarantees established under [paragraph (1)](#c-1) shall be established in amounts that are sufficient, but do not exceed the minimum amounts necessary, to maintain a negative credit subsidy for the program under this section, as determined based on the risk to the Federal Government under the underwriting requirements established under [paragraph (1)](#c-1).
- (d) **Terms of obligations—**
  - (1) **In general—** Each note or other obligation guaranteed pursuant to this section shall be in such form and denomination, have such maturity, and be subject to such conditions as the [Secretary](/usc/25/4103.md?p=20) may prescribe, by regulation.
  - (2) **Limitation—** The [Secretary](/usc/25/4103.md?p=20) may not deny a guarantee under this section on the basis of the proposed repayment period for the note or other obligation, unless—
    - (A) the period is more than 20 years; or
    - (B) the [Secretary](/usc/25/4103.md?p=20) determines that the period would cause the guarantee to constitute an unacceptable financial risk.
- (e) **Limitation on percentage—** A guarantee made under this section shall guarantee repayment of 95 percent of the unpaid principal and interest due on the note or other obligation guaranteed.
- (f) **Security and repayment—**
  - (1) **Requirements on issuer—** To ensure the repayment of notes and other obligations and charges incurred under this section and as a condition for receiving the guarantees, the [Secretary](/usc/25/4103.md?p=20) shall require the [Indian tribe](/usc/25/4103.md?p=13-A) or [housing entity](/usc/25/4103.md?p=22) issuing the notes or obligations—
    - (A) to enter into a contract, in a form acceptable to the [Secretary](/usc/25/4103.md?p=20), for repayment of notes or other obligations guaranteed under this section;
    - (B) to demonstrate that the extent of each issuance and guarantee under this section is within the financial capacity of the [Indian tribe](/usc/25/4103.md?p=13-A); and
    - (C) to furnish, at the discretion of the [Secretary](/usc/25/4103.md?p=20), such security as the [Secretary](/usc/25/4103.md?p=20) determines to be appropriate in making the guarantees, including increments in local tax receipts generated by the activities assisted by a guarantee under this section or disposition proceeds from the sale of land or rehabilitated property, except that the security may not include any grant amounts received or for which the issuer may be eligible under subchapter I.
  - (2) **Full faith and credit—**
    - (A) **In general—** The full faith and credit of the United States is pledged to the payment of all guarantees made under this section.
    - (B) **Treatment of guarantees—**
      - (i) **In general—** Any guarantee made by the [Secretary](/usc/25/4103.md?p=20) under this section shall be conclusive evidence of the eligibility of the obligations for the guarantee with respect to principal and interest.
      - (ii) **Incontestable nature—** The validity of any such a guarantee shall be incontestable in the hands of a holder of the guaranteed obligations.
- (g) **Training and information—** The [Secretary](/usc/25/4103.md?p=20), in cooperation with [Indian tribes](/usc/25/4103.md?p=13-A) and [tribally designated housing entities](/usc/25/4103.md?p=22), may carry out training and information activities with respect to the guarantee program under this section.
- (h) **Limitations on amount of guarantees—**
  - (1) **Aggregate fiscal year limitation—** Notwithstanding any other provision of law, subject only to the absence of qualified applicants or proposed activities and to the authority provided in this section, and to the extent approved or provided for in appropriations Acts, the [Secretary](/usc/25/4103.md?p=20) may enter into commitments to guarantee notes and obligations under this section with an aggregate principal amount not to exceed $200,000,000 for each of fiscal years 2009 through 2013.
  - (2) **Authorization of appropriations for credit subsidy—** There are authorized to be appropriated to cover the costs (as defined in [section 661a of title 2](/usc/2/661a.md)) of guarantees under this section $1,000,000 for each of fiscal years 2009 through 2013.
  - (3) **Aggregate outstanding limitation—** The total amount of outstanding obligations guaranteed on a cumulative basis by the [Secretary](/usc/25/4103.md?p=20) pursuant to this section shall not at any time exceed $1,000,000,000 or such higher amount as may be authorized to be appropriated for this section for any fiscal year.
  - (4) **Fiscal year limitations on Indian tribes—**
    - (A) **In general—** The [Secretary](/usc/25/4103.md?p=20) shall monitor the use of guarantees under this section by [Indian tribes](/usc/25/4103.md?p=13-A).
    - (B) **Modifications—** If the [Secretary](/usc/25/4103.md?p=20) determines that 50 percent of the aggregate guarantee authority under [paragraph (3)](#h-3) has been committed, the [Secretary](/usc/25/4103.md?p=20) may—
      - (i) impose limitations on the amount of guarantees pursuant to this section that any single [Indian tribe](/usc/25/4103.md?p=13-A) may receive in any fiscal year of $25,000,000; or
      - (ii) request the enactment of legislation increasing the aggregate outstanding limitation on guarantees under this section.
- (i) **Report—** Not later than 4 years after October 14, 2008, the [Secretary](/usc/25/4103.md?p=20) shall submit to Congress a report describing the use of the authority under this section by [Indian tribes](/usc/25/4103.md?p=13-A) and [tribally designated housing entities](/usc/25/4103.md?p=22), including—
  - (1) an identification of the extent of the use and the types of projects and activities financed using that authority; and
  - (2) an analysis of the effectiveness of the use in carrying out the purposes of this section.
- (j) **Termination—** The authority of the [Secretary](/usc/25/4103.md?p=20) under this section to make new guarantees for notes and obligations shall terminate on October 1, 2013.

## Source credit

(Pub. L. 104–330, title VI, § 606, as added Pub. L. 110–411, title VI, § 601(a), Oct. 14, 2008, 122 Stat. 4331.)

## Notes

### Editorial Notes

### Codification

Another section 606 of Pub. L. 104–330 is set out as an Effective Date note under section 4191 of this title.