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One of the major advantages of establishing a Section 17 corporation for business activities is that such an entity can arrange for financing without subjecting the tribal governmental assets to the risks and liability associated with borrowing money and can limit financial disclosure of records to those of the corporation and not the tribe. Additionally, in a 1998 Private Letter Ruling, the IRS has held that a Section 17 corporation can be both the borrower and the issuer in a tax-exempt financing if other requirements for tax exempt financing are met.71 When the Section 17 corporation, and not the tribal government, is the issuer/borrower, overly invasive disclosure of tribal financial records may be avoided.
Where the facilities or operations to be financed do not meet the essential governmental function test under section 7871 for tax-exempt bond financing, the Section 17 corporation may seek or arrange other types of financing--such as:
• Government-guaranteed loans
• Tax-credit financing
• Taxable bond issuances
• Private placements
• Commercial bank financing.
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