Financing and Capital
Access to capital is critical to the successful implementation of any project or program. According to the U.S. Treasury’s “Access to Capital and
Credit in Native Communities” report, the lack of access to capital in Indian Country is a major hurdle for growing Tribal economies. Below are
resources, programs, and organizations to reduce barriers to capital and financing.
Sources Of Capital
- Federal Resources for Tribal Economic Development Grant and Technical Assistance (TA) Programs from DOC, HHS, HUD, and OIED as of 5/25/22: Federal Resources Funding Matrix
- Community Development Financial Institutions (CDFIs) – CDFIs are financial organizations that promote economic development investments in low-income and typically underserved communities. There is a growing community of Native CDFIs (NCDFIs) that serve businesses in Tribal communities by providing access to credit, capital, and financial services. The federal program that supports the development and certification of NCDFIs is The CDFI Fund. A valuable partner for many NCDFIs is the Oweesta Corporation, which acts as an intermediary for NCDFIs and Native communities by offering financial products and development services. There are three NCDFIs initially sponsored by USET member Tribal Nations, including:
- Guaranteed Loans – Guaranteed loan programs provide financial backing, typically by the federal government, for businesses up to a percent of the loan made by a commercial lender. Some programs may have restrictions on how the loan may be used, which is good to know when considering pursuing a guarantee. It is also a key distinction that lending institutions apply to loan guarantee programs, not Tribal governments or Tribal enterprises. Programs might have requirements for lenders to be certified to participate in a program and/or might have a list of lenders that are already certified. Two of the most well-known guaranteed loan programs are:
- U.S. Department of the Interior, Indian Loan Guarantee and Insurance Program
- U.S. Department of Agriculture, Business and Industry Guaranteed Loans
- Revolving Loan Funds – A Revolving Loan Fund (RLF) is a pool of typically public and private sector funds where money is recycled by making successful loans, and any collections and accrued interest are returned to the lending pool. The Economic Development Administration (EDA) and U.S. Department of Agriculture both have programs that can support the creation of Tribal RLFs.
Investments In Indian Country
- Opportunity Zones – Opportunity Zones is a new tax incentive, created through the Tax Cuts and Jobs Act of 2017, to encourage long-term investments in low-income communities across the United States—including Indian Country. Learn more about Opportunity Zones in the USET region.
- New Markets Tax Credit Program – The New Market Tax Credit (NMTC) Program attracts private capital into low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax in exchange for making equity investments in specialized financial intermediaries called Community Development Entities (CDEs). Learn more about New Market Tax Credits in Indian Country by visiting The Native American Finance Officers Association (NAFOA).
- Community Reinvestment Act (CRA) – It is important for Tribal economic development managers to be aware of the Community Reinvestment Act (CRA) when referring to commercial banks. As a result of the market crash in the 2000s, the CRA is intended to address systematic discriminatory lending practices in the banking industry and to stimulate assistance to underserved markets. Banks are graded and obligated to make loans and investments in their local communities, including Indian Country. Current CRA modernization initiatives by banking regulating organizations seek to future hold include underserved communities, and USET SPF comments seek to hold the banking industry accountable to Native businesses and supporting Tribal economies.
- Building Generational Wealth – Wealth is the measure of an individual’s or family’s financial net worth, and wealth is disproportionately low among families in Indian Country. One way to build generational wealth is through financial literacy education programs. Below are resources and tools to build financial literacy for Tribal citizens: