Securing financing for small business venture does not always turn out easy, according to the Small Business Administration (SBA). Native Americans face the same predicament that small business owners and minority entrepreneurs. Business News Daily writer detailed how startups find it difficult to obtain small business loans because of the following reasons:
- Negative Credit History – Lenders rely mainly on credit history to determine the borrower’s paying capacity.
- Restricted Cash Flow – Lending facilities also look at the business owner’s cash flow to pay back loans.
- Business Plan – Banks and lending firms look for a systematic, comprehensive, and quantitative business strategy as a prerequisite for loan processing.
- Organization – The business must demonstrate organized operations and documentation.
Entrepreneurs who fail to meet the criteria as mentioned above will find it hard to obtain loan approval.
Small Business Grants
BIzfluent states that Native Americans can look forward to small business funding from federal and state governments. Some public and private entities also offer grants only for Indigenous Americans. Eligibility requires the applicant to become a member of any recognized tribe in the country.
The First Nations Development Institute authorizes endowments for economic development given directly to the tribes concerned or Native American non-profit groups. It created a Native Asset Building Partnership Coalition offering investment subsidies to promote businesses of home-grown citizens.
On the other hand, the United States SBA offers loans instead of grants although the agency allocates capital for the so-called Native American Micro-Enterprise Business Services. The SBA does not provide funds for expansion but conducts executive and specialized training courses to qualified applicants.
The Department of Agriculture conceived the Rural Business Enterprise Grants to finance business ventures of legitimate Native American tribes as well as make available employment opportunities. Only officials of certified ethnic groups can apply for RBEG funding which ranges between $10, 000 and $500, 000 without any cost-sharing precondition. Local and state RBEG offices receive applications every year although submission dates vary according to state.
The United States Commerce Department provides an assortment of grants solely for job creation with indigenous Americans as beneficiaries. Tribal governments and their constituents, as well as companies that conduct business with these natives regardless of the location of these enterprises, can apply for the subsidy. The category of grants includes tourism promotions, economic development, and infrastructure programs.
One of the US Department of Health and Human Services (Office of Children and Families) known as the Administration for Native Americans offers opportunities in the areas of socio-economic development, sustainable employment, and asset-building for Native Americans. The ANA funding ranges from one up to five years and includes technical training.
Free Assistance from Office of Native American Affairs
The Office of Native American Affairs conducts technical assistance programs for free to help companies with a variety of business disciplines in marketing, financial analysis, compliance, contract management, strategic planning, and others.
Interested parties can contact the following organizations:
- Cherokee Nation (Tahlequah, Oklahoma) – Combine training with executive counseling for entrepreneurs in sales, marketing, financial management, and product management.
- Oregon Native American Business and Entrepreneurial Network (Portland, Oregon, and Tulsa, Oklahoma) – Provide Peer Monitoring and Entrepreneurial Exchange Program concentrating on Indigenous American small enterprise in Texas, Oklahoma, and New Mexico states.
- Native American Development Corporation or NADC (North Billings, Montana) – It offers pre/post technical aid for native-owned and managed small-scale enterprises as preparation for government contracting which adopts the SBA procurement program and other state/federal platforms.
- Indian Dispute Resolution Services or IDRS (Plymouth, California) – The IDRS carry out entrepreneurial training courses and imparts technical support for tribal members all over California, Oregon, and Nevada. Workshops include accounting specifically Quickbooks, financial planning, business plan formulation, computer literacy, and negotiations.
Dilemmas of Native American Entrepreneurship
Entrepreneurship represents one of the remedies to financial hardships that majority of American Indians face. Unfortunately for them, specific factors hinder their progress primarily because of issues such as poverty, work experience, and inadequate formal education. Majority of Native Americans many of whom do not have jobs live in destitution. This condition affects their capacity to become eligible for loans and capability to make use of assets in self-finance. Lack of academic and employment experience prevent them from becoming entrepreneurs.
Most of these tribes still live in remote reservations which remain far from market hubs making it harder and expensive for a few skilled natives to serve trading markets. The absence of Internet access, as well as telephone services, further aggravates their condition. Inadequate communications systems make it more difficult for Indigenous American entrepreneurs to coordinate with mentors, network with stakeholders, and explore their customer base.
Discrimination and Repression
Historically, American Indians have always borne the stigma of racial bias and oppression by their countrymen. This situation and years of inequality have somehow affected their positive mentality and ability to develop their skills and engage in worthwhile undertakings. In fact, favoritism against minority business owners still proliferates in lending practices. Only a genuine change can drive Native Americans to seek better opportunities.
At the same time, Kaufmann research studies pointed out that the low rate of entrepreneurship in Indian reservations and among native tribes lead to less exposure to entrepreneurial prospects. Native Americans have fewer mentors to learn from which represent among the primary factors in the entrepreneurial boom.
Rules, Risks, and Structure
Research also revealed small business proprietors would less likely launch or start expansion with the belief that standards or regulations may not change for the better sooner or later. Tribal governments demonstrate inconsistencies and do not maintain standardized regulatory processes and benchmarks for startups.
The factors of an insufficient history of the enterprise together with tribal government unpredictability contribute to the downfall of the prospective entrepreneur or small investors. These potential business operators find it confusing to figure out results expected from them. Speculators who fail to foresee the regulatory atmosphere for possible investments find isolated federal reservation risky places for investment activities.
In spite of everything, the United States federal government, state governments, and non-profit institutions continuously implement programs and give out financial support for minority enterprises. The writing of grants, submission of applications, documentation, and approval process takes time. The benefits of free funding make the waiting time and efforts worth working for in the long run.
According to the Small Business Administration, minorities come in the following demographic groups:
- African American
- American Indian
- Native Hawaiian
- Pacific Islander
Given this position of the government, Native Americans can still look forward to prospects in entrepreneurship and a slight chance to enhance their lives despite the challenges as well as the unfortunate position of today’s minorities.
Author: Jane Meggit has been writing for a reputable newspaper chain during the last two decades. She earned a Bachelor of Arts degree in English from the New York University and Associate of Arts degree from the American Academy of Dramatic Arts also in NYC.
Author: Paula Fernandez, a writer based in New Jersey finished her Bachelor’s in English and Master’s Degree in Education. She worked as director for an academic service learning and community outreach facility for almost ten years. Her experience includes corporate communications, public relations (non-profits), and publishing.