New First Nations financing authority grants first loan

A new B.C.-based financing authority for Canadian First Nations has authorized its first loan to a band in Nova Scotia.

The First Nations Finance Authority (FNFA), based in Westbank, has approved a $10 million loan to the Membertou First Nation in Nova Scotia.

The Membertou is one of eight borrowing members of the FNFA. The other seven are from B.C., but the Membertou is the first to have a loan approved.

Historically, First Nations communities have been limited by their inability to get traditional financing for economic development or infrastructure projects.

The FNFA is essentially a municipal financing authority specifically for First Nations communities.

“First Nations don’t have access to the same types of financing that other levels of government have,” FNFA CEO Ernie Daniels told Business in Vancouver. “What it allows them to do is access affordable financing over the long term.”

The interest for the Membertou is 2.5% – 0.5% below the prime lending rate. The loans have a repayment term of up to 30 years.

The Membertou will use some of the money to refinance existing loans, Daniels said. Some of the money will be invested in infrastructure programs.

To qualify for a loan, First Nations must be certified by the FNFA, which looks at the band’s finances and revenue sources to ensure the loans can be repaid. Revenue sources can include lease payments, energy royalties and impact benefit agreements from government.

The FNFA raises money for the loans from capital markets through bond issues.

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