By Susan Woodrow and Casey Winn Lozar
For well more than a decade, the Federal Reserve Bank of Minneapolis (Bank) has strongly advocated for Native entrepreneurship and Native-owned business growth in Indian Country, both to increase jobs and to diversify, and thus strengthen, reservation economies. The Bank’s newly launched Center for Indian Country Development (CICD) will continue to engage in and share best practices that support Native business development and entrepreneurship, one of four areas of focus identified in its five-year strategic plan.1
Partnerships and innovative strategies make these efforts successful over the long term. One promising initiative of the Montana Department of Commerce (MT DoC), the Native American Collateral Support (NACS) program, aims to promote Native business development by supporting funding by lenders, and serves as a model for other states to support Native business growth.2
Montana is home to seven federally recognized tribal nations and one state-recognized tribal nation. Enrolled tribal members make up roughly seven percent of the State of Montana’s population. Approximately 50 percent of Montana’s Native population resides in the state’s most populous cities; the other half or so make their homes on the seven reservations throughout rural Montana. “Within this population, an entrepreneurial spirit ̶ as it has been from time immemorial ̶ is a common characteristic and value that has defined and shaped Montana’s tribal communities, both on the reservation and off.”3 At the root of successful entrepreneurism and business development is access to capital—and often, when talking about capital among tribal business owners and entrepreneurs, the conversation shifts to lack of access to capital. This is an age-old barrier not only in Montana’s Native communities, but across all of Indian Country.4
Montana Governor Steve Bullock has made it a priority to remove key commercial lending obstacles and to keep capital flowing into Indian Country, ensuring that Native entrepreneurs have continued access to meaningful business development assistance.5 To address the ongoing challenge of credit access, MT DoC recently launched the NACS program. Seeded with $500,000, NACS provides a source of collateral funding to lenders for Native American-owned businesses that satisfy all the requisite Cs of lending (character, capacity, capital, collateral, and conditions) except for collateral. Certificates of deposit (CDs) are kept with participating banks to secure a loan to a Native borrower. Annually, portions of the CDs are revolved to the program to support the next collateral support deal.
Just weeks after the formal launch, the NACS program completed a collateral support deal with a regional bank for a business on the Flathead Indian Reservation that is attracting more tourists to the community. Several additional collateral support deals are in the early phases of execution. Governor Bullock and the MT DoC, as well as banks and Native communities, are encouraged to see the program working.
Montana DoC is the first state agency in the country to launch a collateral support program specifically for Native business owners, and is proud to be leading the way in developing creative access-to-capital tools that support Native business growth as well as tribal nations’ development efforts. The NACS program is an important tool to address the longstanding challenge of access to commercial credit in Indian Country, and it looks promising for Montana, its’ tribal nations, and the communities they mutually serve. Importantly, NACS serves as a model for other states to help support the growth of the private Native business sectors within their tribal economies.
Casey Winn Lozar is an enrolled member of the Confederated Salish and Kootenai Tribes from the Flathead Indian Reservation in Montana. Lozar serves as a bureau chief and tribal policy advisor at the Montana Department of Commerce.
Susan Woodrow is Assistant Vice President and Branch Executive of the Federal Reserve Bank of Minneapolis’ Helena, Montana Branch, and co-director of its Center for Indian Country Development.