---
kind: "section"
citation: "42 U.S.C. § 2991b–1"
title: "42"
title_heading: "The Public Health and Welfare"
number: "2991b–1"
heading: "Loan fund; demonstration project"
release: "119-102"
url: "https://uscodex.org/usc/42/2991b-1"
units:
  - "Chapter 34 — Economic Opportunity Program"
  - "Subchapter VIII — Native American Programs"
---

# §2991b–1. Loan fund; demonstration project

- (a) **Grant to Office of Hawaiian Affairs to establish revolving loan fund; purposes of fund; administrative costs; matching funds—**
  - (1) In order to provide funding that is not available from private sources, the [Commissioner](/usc/42/12302.md?p=1) shall award a grant to the [Office](/usc/42/3058f.md?p=1) of Hawaiian Affairs of the [State](/usc/42/201.md?p=f) of Hawaii (referred to in this section as the “[Office](/usc/42/3058f.md?p=1)”), which shall use that grant to carry out, in the [State](/usc/42/201.md?p=f) of Hawaii, a [demonstration project](/usc/42/16281.md?p=d-2) involving the establishment of a revolving loan [fund](/usc/42/12854.md?p=3)—
    - (A) from which the [Office](/usc/42/3058f.md?p=1) shall make loans or loan guarantees to [Native Hawaiian organizations](/usc/42/280g–4c.md?p=a-6) and to individual [Native Hawaiians](/usc/42/2992c.md?p=4) for the purpose of promoting economic development in the [State](/usc/42/201.md?p=f) of Hawaii; and
    - (B) into which all payments, interest, charges, and other amounts collected from loans made under [subparagraph (A)](#a-1-A) shall be deposited notwithstanding any other provision of law.
  - (2) The [agreement](/usc/42/1320b–8.md?p=a-3-A) under which a grant is awarded under [paragraph (1)](#a-1) shall contain provisions which set forth the administrative costs of the grantee that are to be paid out of the [funds](/usc/42/12854.md?p=3) provided under the grant and a requirement that the grantee contribute to the revolving loan [fund](/usc/42/12854.md?p=3) an amount of non-Federal [funds](/usc/42/12854.md?p=3) equal to the amount of such grant.
- (b) **Loans or loan guarantees to borrowers; determinations; term; interest rate; default and collection procedures; prohibition on self-lending—**
  - (1) The [Office](/usc/42/3058f.md?p=1) may make a loan or loan guarantee to a borrower under [subsection (a)(1)(A)](#a-1-A) only if the [Office](/usc/42/3058f.md?p=1) 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)](#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](/usc/42/201.md?p=f) of Hawaii before the date on which the loan is made); and
      - (II) 3 percentage points.
  - (3) The [Office](/usc/42/3058f.md?p=1) may require any borrower of a loan made under [subsection (a)(1)(A)](#a-1-A) to provide such collateral as the [Office](/usc/42/3058f.md?p=1) determines to be necessary to secure the loan.
  - (4) Prior to making loans under [subsection (a)(1)(A)](#a-1-A), the [Office](/usc/42/3058f.md?p=1) 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](/usc/42/12302.md?p=1). Such [Office](/usc/42/3058f.md?p=1) shall provide to each applicant for a loan under [subsection (a)(1)(A)](#a-1-A), at the time application for the loan is made, a written copy of such procedures and definitions.
  - (5) The [Office](/usc/42/3058f.md?p=1) may not lend to itself any of the [funds](/usc/42/12854.md?p=3) awarded under the grant.
- (c) **Notice to Commissioner of loans in default and uncollectability of such loans; instructions by Commissioner—**
  - (1) The [Office](/usc/42/3058f.md?p=1) shall provide the [Commissioner](/usc/42/12302.md?p=1) at regular intervals written notice of each loan made under [subsection (a)(1)(A)](#a-1-A) that is in default and the status of such loan.
  - (2)
    - (A) After making reasonable efforts to collect all amounts payable under a loan made under [subsection (a)(1)(A)](#a-1-A) that is in default, the [Office](/usc/42/3058f.md?p=1) shall notify the [Commissioner](/usc/42/12302.md?p=1) 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](/usc/42/3058f.md?p=1).
    - (B) Upon receiving such notice, the [Commissioner](/usc/42/12302.md?p=1) shall instruct the [Office](/usc/42/3058f.md?p=1)—
      - (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](/usc/42/3058f.md?p=1) shall carry out all instructions received under [subparagraph (B)](#c-2-B) from the [Commissioner](/usc/42/12302.md?p=1).
- (d) **Payment of administrative costs; management and technical assistance—**
  - (1) The [Office](/usc/42/3058f.md?p=1) shall, out of [funds](/usc/42/12854.md?p=3) available in the revolving loan [fund](/usc/42/12854.md?p=3) established under such subsection—
    - (A) pay expenses incurred by the [Office](/usc/42/3058f.md?p=1) in administering the revolving loan [fund](/usc/42/12854.md?p=3); and
    - (B) provide competent management and technical assistance to borrowers of loans made under [subsection (a)(1)(A)](#a-1-A) to assist the borrowers to achieve the purposes of such loans.
  - (2) The [Commissioner](/usc/42/12302.md?p=1) shall provide to the [Office](/usc/42/3058f.md?p=1) such management and technical assistance as the [Office](/usc/42/3058f.md?p=1) may request in order to carry out the provisions of this section.
- (e) **Regulations—** Not later than 120 days after November 29, 1987, the [Commissioner](/usc/42/12302.md?p=1), in consultation with appropriate agencies of the [State](/usc/42/201.md?p=f) of Hawaii and community-based [Native Hawaiian organizations](/usc/42/280g–4c.md?p=a-6), shall prescribe regulations which set forth the procedures and criteria to be used—
  - (1) in making loans under [subsection (a)(1)(A)](#a-1-A); and
  - (2) in canceling, adjusting, compromising, and reducing under [subsection (c)](#c) the outstanding amounts of such loans.

  The [Commissioner](/usc/42/12302.md?p=1) may prescribe such other regulations as may be necessary to carry out the purposes of this section, including regulations involving reporting and auditing.

- (f) **Authorization of appropriations; investment in obligations of United States—**
  - (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](/usc/42/12854.md?p=3) that is required to be established under [subsection (a)(1)](#a-1) shall be maintained as a separate account. Any portion of the revolving loan [fund](/usc/42/12854.md?p=3) that is not required for expenditure shall be invested in obligations of the [United States](/usc/42/403.md?p=k) or in obligations guaranteed or insured by the [United States](/usc/42/403.md?p=k).
- (g) **Reports to Congress; contents—**
  - (1) The [Commissioner](/usc/42/12302.md?p=1), in consultation with the [Office](/usc/42/3058f.md?p=1), shall submit a report to the President pro tempore of the Senate and the Speaker of the House of [Representatives](/usc/42/3058f.md?p=5) 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](/usc/42/12302.md?p=1) with respect to the revolving loan [fund](/usc/42/12854.md?p=3) established under [subsection (a)(1)](#a-1) and with respect to loans made from such [fund](/usc/42/12854.md?p=3), and shall—
    - (A) describe the effectiveness of the operation of such [fund](/usc/42/12854.md?p=3) in improving the economic and social self-sufficiency of [Native Hawaiians](/usc/42/2992c.md?p=4);
    - (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](/usc/42/1320b–8.md?p=a-3-A) under which such loans are required to be repaid.

## Source credit

(Pub. L. 88–452, title VIII, § 803A, as added Pub. L. 100–175, title V, § 506(a), Nov. 29, 1987, 101 Stat. 976; amended Pub. L. 102–375, title VIII, § 822(2), Sept. 30, 1992, 106 Stat. 1296; Pub. L. 103–171, § 5(3), Dec. 2, 1993, 107 Stat. 1991; Pub. L. 105–361, § 3, Nov. 10, 1998, 112 Stat. 3278.)

## Notes

### Editorial Notes

### Amendments

1998—Subsec. (a)(1). Pub. L. 105–361, § 3(a)(1)(A), in introductory provisions, substituted “award a grant” for “award grants” and “use that grant to carry out” for “use such grants to establish and carry out”.

Subsec. (a)(1)(A). Pub. L. 105–361, § 3(a)(1)(B), inserted “or loan guarantees” after “make loans”.

Subsec. (b)(1). Pub. L. 105–361, § 3(a)(2)(A), substituted “a loan or loan guarantee to a borrower” for “loans to a borrower” in introductory provisions.

Subsec. (b)(2). Pub. L. 105–361, § 3(a)(2)(B)(i), substituted “Each loan or loan guarantee made” for “Loans made” in introductory provisions.

Subsec. (b)(2)(A). Pub. L. 105–361, § 3(a)(2)(B)(ii), substituted “7 years” for “5 years”.

Subsec. (b)(2)(B). Pub. L. 105–361, § 3(a)(2)(B)(iii), substituted “that does not exceed a rate equal to the sum of—” for “that is 2 percentage points below the average market yield on the most recent public offering of United States Treasury bills occurring before the date on which the loan is made.” and added cls. (I) and (II).

Subsec. (f)(1). Pub. L. 105–361, § 3(a)(3), substituted “2000 and 2001,” for “1992, 1993, and 1994,”.

1993—Subsecs. (b) to (d)(1). Pub. L. 103–171, § 5(3)(A), struck out “to which a grant is awarded under subsection (a)(1) of this section” before “may make loans” in subsec. (b)(1), before “may require any borrower” in subsec. (b)(3), before “shall establish written” in subsec. (b)(4), before “may not lend” in subsec. (b)(5), before “shall provide the Commissioner” in subsec. (c)(1), before “shall notify the Commissioner” in subsec. (c)(2)(A), and before “shall, out of funds” in subsec. (d)(1).

Subsec. (d)(2). Pub. L. 103–171, § 5(3)(B), struck out “to which a grant is made under subsection (a)(1) of this section” after “Commissioner shall provide to the Office”.

Subsec. (f)(1). Pub. L. 103–171, § 5(3)(C), substituted “each of the fiscal years 1992, 1993, and 1994, $1,000,000” for “fiscal years 1988, 1989, and 1990 the aggregate amount $3,000,000 for all such fiscal years”.

1992—Pub. L. 102–375, § 822(2)(C), (D), substituted “Commissioner” for “Secretary” wherever appearing in subsecs. (a)(1), (b)(4), (c), (d)(2), and (e) and “Office” for “agency or organization” wherever appearing in subsecs. (b)(1), (3) to (5), (c), and (d).

Pub. L. 102–375, § 822(2)(B), which directed the amendment of this section by substituting “Office” for “agency or organization to which a grant is awarded under subsection (a)(1) of this section” wherever appearing, could not be executed because the words “agency or organization to which a grant is awarded under subsection (a)(1) of this section” did not appear in the original.

Subsec. (a)(1). Pub. L. 102–375, § 822(2)(A), substituted “the Office of Hawaiian Affairs of the State of Hawaii (referred to in this section as the ‘Office’)” for “one agency of the State of Hawaii, or to one community-based Native Hawaiian organization whose purpose is the economic and social self-sufficiency of Native Hawaiians”, struck out “5-year” before “demonstration”, and in subpar. (A) substituted “the Office” for “such agency or Native Hawaiian organization”.

Subsec. (a)(2). Pub. L. 102–375, § 822(2)(E), inserted before period at end “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”.

Subsec. (b)(6). Pub. L. 102–375, § 822(2)(F) struck out par. (6) which prohibited making of loan from revolving fund after close of 5-year period beginning on Nov. 29, 1987.

Subsec. (f)(1). Pub. L. 102–375, § 822(2)(G), which directed substitution of “each of the fiscal years 1992, 1993, and 1994, $1,000,000” for “fiscal years 1988, 1989, and 1990 the aggregate amount of $3,000,000 for all such fiscal years”, could not be executed because the words “fiscal years 1988, 1989, and 1990 the aggregate amount of $3,000,000 for all such fiscal years” did not appear.

Subsec. (f)(3). Pub. L. 102–375, § 822(2)(H), struck out par. (3) which read as follows:

“(A) All monies that are in the revolving loan fund at the close of the 5-year period beginning on November 29, 1987, and that are not otherwise needed (as determined by the Secretary) to carry out the provisions of this section shall be deposited in the Treasury of the United States as miscellaneous receipts.

“(B) All monies deposited in the revolving loan fund after the close of such period pursuant to subsection (a)(1)(B) of this section shall be deposited into the Treasury of the United States as miscellaneous receipts.”

Subsec. (g). Pub. L. 102–375, § 822(2)(I), amended subsec. (g) generally. Prior to amendment, subsec. (g) read as follows:

“(1) The Secretary, in consultation with the agency or organization to which a grant is awarded under subsection (a)(1) of this section, shall submit to the Congress—

“(A) an interim report not later than 2 years after November 29, 1987; and

“(B) a final report not later than 4 years after November 29, 1987;

regarding the administration of this section.

“(2) Each such report shall include the views and recommendations of the Secretary regarding—

“(A) the effectiveness of the demonstration project;

“(B) whether the demonstration project should be expanded to other groups eligible for assistance under this subchapter; and

“(C) whether the duration of the demonstration project should be extended.”

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective upon expiration of 90-day period beginning Nov. 29, 1987, see section 701(c) of Pub. L. 100–175, set out as an Effective Date of 1987 Amendment note under section 3001 of this title.