Banking Official Defends INAC Loan Program

Banking Official Defends INAC Loan Program

Thursday, January 07, 2010 at 12:17

 

 

A First Nations banking leader is defending Indian Affairs over its handling of an on-reserve loan program.

 

Keith Martell of the First Nations Bank of Canada says he knows a ruckus has been raised over the federal government’s Loan Loss Reserve program.

 

Launched over a year ago, the program is aimed at giving lenders security, in case an on-reserve company can’t pay back the money it owes.

 

Martell says the situation can be a tricky one for on-reserve businesses, because they are unable to use their own inventory for collateral.

 

“So, for example, if you’ve got an on-reserve Aboriginal business that has a large amount of inventory or capital equipment — say, it’s a construction company, they’ve got a large amount of heavy equipment — and for the most part, that equipment resides on-reserve — but typically what happens with a commercial bank is you would look to some of that equipment or assets as some of the security for your loan,” he says,

 

In all, $13.5-million has been set aside to act as security for institutions that are loaning to on-reserve businesses.

 

However, at least one Aboriginal lending agency in Manitoba has filed a legal challenge, saying INAC has only opened up the program to five big players.

 

The agency claims it’s not fair that big groups get access to the money, while smaller groups don’t.

 

Martell says the First Nations Bank isn’t a big player in the grand scheme of things, and it’s important to remember they aren’t receiving any money directly.