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Aboriginal Loan Guarantee Program
Outline of Loan Guarantee Agreement
The following is an outline of the terms that may be included in an agreement for a loan guarantee
provided by the Province under the ALGP. These terms are general in nature and subject to
modification by the Province depending upon the structure and details of the specific project. The
Province must be satisfied by the final terms and conditions and the guarantee agreement must be in
a form satisfactory to the Province. The Ontario Financing Authority (OFA) administers the ALGP on
behalf of the Province.
(i) Guaranteed Amounts: During the term of the guarantee, the Province will guarantee to the
lender the applicant’s repayment of a maximum specified principal amount of an eligible loan
and any accrued but unpaid interest as calculated under the loan agreement. The Province
will not guarantee the payment of any fees, penalties, make whole amounts or other such
amounts that may become due under the loan agreement.
Note that the loan agreement must also be in a form satisfactory to the Province. The Province
may have comments on any specific loan agreement and may require changes to the structure
or terms of a loan agreement guaranteed under the ALGP.
(ii) Guarantee Fee: The applicant will be required to pay an annual guarantee fee to the
Province. The Province will determine the amount of the guarantee fee for each transaction.
For some transactions, the Province has set the guarantee fee in the amount of 15 basis
points (0.15%) to be paid on the amount of the loan at the time the guarantee is entered into,
and thereafter annually based on the outstanding balance of the loan, including accrued but
unpaid interest. Any upfront guarantee fee must be paid prior to the guarantee being
effective.
(iii) Applicant’s Obligations: The applicant will be required to fulfil certain conditions related to
the loan and transaction prior to the guarantee becoming effective, and meet certain
requirements throughout the life of the guarantee. The Province will determine the appropriate
conditions for each transaction, including the following (note that the Province may add or
delete any conditions at its discretion depending on the specific transaction):
a. The applicant must be a corporation wholly-owned by one or more First Nation, Métis, or
other Aboriginal communities.
b. The applicant will be required to provide satisfactory evidence of its authority to enter into
the loan and loan guarantee agreement and other project agreements as applicable and
must provide evidence of Band Council resolutions as appropriate.
c. The applicant will be required to provide confirmation that the material agreements that
are required to carry out the project are in place and provide copies of the agreements.
d. The applicant will be required to provide satisfactory security to the lender for the loan in
accordance with the terms of the loan agreement. The form of security must be
satisfactory to the Province. The security will usually consist of the applicant’s interest in
the project, and may need to be negotiated in cooperation with any other secured lenders.
e. The applicant will be required to open bank accounts that are subject to withdrawal and
use restrictions. For example, the applicant will be required to establish and maintain a
proceeds account into which all its Project revenues are paid and which will be used to
fund its loan repayments and guarantee fee payments. The applicant will also be required