Access to Finance: Native-Owned Businesses
This report examines financial challenges faced by Native-owned businesses, based on surveys by UM's REAL Co-Lab and partners. The findings highlight barriers to capital and underutilization of financial products among Native entrepreneurs while offering solutions to address these issues.
Overview:
Funding Disparity
68%
of Native business owners reported access to capital as a significant challenge, compared to 49% of all business owners.
55%
express willingness to use person collateral, though many report not being offered these opportunities by lenders.
Use of Financial Products:
- Native business owners access financial tools like business checking accounts, credit cards, and loans at lower rates than their white counterparts, often relying more on grants, which are harder to scale for business growth.
Trust Land Lending:
- Inflexible policies for using trust lands as collateral have historically limited access to loans. However, initiatives like the Native American Collateral Support (NACS) Program and efforts by Native CDFIs, such as Four Bands CDFI, are breaking down these barriers by working with the Bureau of Indian Affairs to create new loan models.
Recommendations:
- Expand training and resources for lenders to better serve Native entrepreneurs.
- Increase awareness of financing opportunities and technical assistance for Native businesses.
- Strengthen community-focused funders like Native CDFIs.
- Scale successful programs like NACS and explore shared services to address risks in small business finance.
Programs such as the Indian Equity Fund Grant and Native American Business Advisor Grant are already providing much-needed support, but further investment and innovation are critical to leveling and playing field for Native-owned businesses.
This report emphasizes the importance of collaboration between state programs, lenders, and Native organizations to create a more equitable financial landscape.