Indigenous and Northern Affairs committee  Most AFIs use the model to gain access to security. They'll obtain a band council resolution that enables or empowers the business owner to establish the business on reserve, and the second part of the BCR will enable the AFI access to the reserve to recover against assets of the

Indigenous and Northern Affairs committee  Yes, and provisions for loss.

Indigenous and Northern Affairs committee  With regard to the model Kahnawake uses, no, they're the only AFI in Canada that I'm aware of that uses that model. I don't know if it's ever been challenged in court.

Indigenous and Northern Affairs committee  Yes. You call it “overhead” and we call it “administrative expenses”, and loan loss exceeds the revenue obtained from the loan portfolio.

Indigenous and Northern Affairs committee  Aboriginal capital corporations are left on their own. They don't get subsidized for operations, so a couple of years ago, we came up with a concept of a program that was introduced on April 1, 2014, and augments the revenue they receive and offsets the shortfall. For years, the

Indigenous and Northern Affairs committee  A federal government program through AANDC is topping this up.

Indigenous and Northern Affairs committee  It's unique in that it's not an entitlement program. It's an activity/performance-based program, the first of its kind in AFI country. If you don't make any loans, you don't get any ADLA or program dollars.

Indigenous and Northern Affairs committee  It's an average of 8%, really, and some of these AFIs have capital of $2 million or $3 million, while some have capital of $8 million or $10 million, so it's a moving target. They're also improving on their capacity and learning. They've gained a lot of ground in terms of develop

Indigenous and Northern Affairs committee  No. A couple of years ago we appeared at this committee hearing, and at that time we were talking about the cost of capital and the yield that AFIs are able to obtain in the current market. The cost of capital exceeded the yield they could obtain, so—

Indigenous and Northern Affairs committee  For cost of funds, there's zero cost of funds—we don't have to pay a depositor—but there is a cost of capital in terms of putting the loan out, pre- and post-care for the client, and collecting the loan, getting it back in.

Indigenous and Northern Affairs committee  This goes back to a question about the difference between an AFI and a conventional institution in approaching a deal. A conventional institution has a lower level of risk tolerance than an AFI because they have the cost of funds in addition to the cost of capital—or it becomes p

Indigenous and Northern Affairs committee  AFIs, which began delivering the program on behalf of government about a year ago, have an analysis procedure they go through to try to nail down viability. If it is a viable enterprise, that's essentially a go-ahead. The client has to have minimal equity themselves and, with the

Indigenous and Northern Affairs committee  The repayment efficiency rate on the AFI loans is 95%.

Indigenous and Northern Affairs committee  Yes.

Indigenous and Northern Affairs committee  Not really.