Business Loans for Native Americans

Can Native Americans obtain business financing?

Although every American is entitled to equal access to financing opportunities, Native Americans can face some additional hurdles to obtaining business loans and other forms of financing, especially when operating a business on tribal land. For example, Native Americans living on a reservation have an average credit score 30 points lower than people living off the reservation.

Luckily, there are also several programs and grants available to help Native American business owners fund their dreams, whether on a reservation or on non-tribal land. We will cover all of the options on this page.

What are the benefits of Native American business loans?

Business loans are extremely beneficial to business owners of all backgrounds. Having access to financing allows companies to cover short-term funding gaps, finance emergencies, cover new expansion or upgrade costs, pay for marketing or payroll needs, and purchase new inventory.

Taking out a business loan offers the advantage of being able to repay the balance over time in equal monthly installments with low interest rates and fees. When compared to other financing options such as credit cards, business loans are often the better choice for most situations. Before applying for a business loan be sure to explore various options. An investment of your time can increase your ROI. Let’s take a look at types of Native American business loans that are available. 

Types of Native American business loans

There are many different financing options available to Native American business owners, including:

• CDFI loans: Community development financial institutions (also known as CDFIs) are nonprofit organizations that provide loans, mentorship, training, and other resources to underserved communities. They work with borrowers who may be considered too risky by mainstream lenders and help close gaps in funding. In the United States, there are nearly 70 specialized CDFIs certified as "Native CDFIs". Some of the most popular include Lakota Funds, Four Bands Community Fund, and Native American Bank.
• Online business loans: Online lenders typically offer business loans in amounts ranging from $1,000 to upwards of $100,000. Applying for a business loan online can be a more convenient option for many business owners with fewer application requirements. In addition, online lenders can typically fund your loan approval much quicker than other sources of business loans such as traditional banks. Native American business owners that are searching for the perfect business loan are highly encouraged to check offers at PrimeRates. At PrimeRates you can receive personalized offers as well as access an abundance of information about business loans. 
• Microloans: Microloans are loans in smaller amounts (typically $500 to $50,000) that are paid back over a set period of time. Taking out a microloan often results in more flexible loan terms such as a shorter repayment period, lower fees, and lower interest. Because they are offered in smaller amounts than other loan programs, microloans can often be easier to qualify for as well. Sources of business microloans include alternative lenders such as Kiva or Opportunity Fund and government agencies like the USDA or SBA.
• U.S. Department of the Interior Indian Loan Guarantee Program: As a unique option available only to Native business owners, this program helps close the funding gap. The Indian Affairs Loan Guarantee Program assists Native American business owners by guaranteeing loans made through a network of partner lenders. Both Tribal enterprises and individual business owners can take advantage of loans backed by the ILGP.
• U.S. Department of Agriculture Business & Industry Loan Guarantee: The U.S. government also guarantees rural and agricultural loans through a program known as the OneRD Guarantee Loan Initiative. This program guarantees loans made by partner lenders to certain rural businesses. In addition, the Farm Service Agency (FSA) offers programs specifically for Tribal business owners including the Indian Tribal Land Acquisition Loan Program and the Highly Fractionated Indian Land Loan Program.
• U.S. Department of Energy Loan Guarantee: Qualified businesses owned by a federally recognized Indian tribe member or Alaska Native Corporation can take advantage of The Tribal Energy Loan Guarantee Program (TELGP). This program is designed to "help deploy innovative clean energy, advanced transportation, and tribal energy projects in the United States."
• SBA Loans: The Small Business Administration backs loans offered by a network of partner lenders. SBA loan programs include microloans, equipment loans, real estate loans, and general small business loans. Businesses who have struggled to obtain financing through other means often have success applying for an SBA loan. SBA loans are backed by the government.
• Credit Cards: Alternatively, business owners can consider using credit. The option of opening a business credit card or line of credit helps improve access to financing for those who may not otherwise qualify for a business loan. Another advantage of a line of credit is that it can be used again and again, as long as the balance is paid off in full. On the downside, credit cards can come with high interest rates. 

Do Native American business grants exist?

Grants are a form of financial assistance that does not need to be paid back. Since many business grants are designed to help certain segments of the population succeed, it makes sense that there would be many options for Native American business owners. Female business owners have even more grant options available to them such as the Amber Grant.

Review the list below to consider some of your available grant options:

• Montana Indian Equity Fund – This grant opportunity is open to Native American businesses in Montana looking for financial assistance with start-up or expansion costs.

• New Mexico Regional Development Corporation Grant – This local grant is available to businesses in Los Alamos, Mora, Rio Arriba, Sandoval, San Miguel, Santa Fe or Taos County.

• Indian Business Incubators Program (IBIP) - The Native American Business Incubators Program provides grants to "entrepreneurs who will provide products or services in American Indian and Alaska Native communities."

• IDRS Acorn Project – This organization maintains a list of current grant opportunities.

• Grants.gov – As a “one stop shop” to federal funding opportunities, this comprehensive database maintained by the U.S. government is a convenient way to search and apply for a variety of grant programs. For example, the USDA Rural Enterprise Grant Program.

Be sure to check with your tribal administration as well as your local and state government to learn about any available grant opportunities and funding programs.

Other helpful resources for Native American business owners

Additional business resources for Native American entrepreneurs include:

• Office of Native American Affairs – As a division of the Small Business Administration, the Office of Native American Affairs offers free technical assistance, entrepreneurial empowerment workshops, and more.

• National Center for American Indian Enterprise Development - The National Center for American Indian Enterprise Development (NCAIED) exists to provide advocacy, training, business development, and other resources to Native American business owners.

• First Nations Development Institute - Likewise, the First Nations Development Institute offers a variety of programs and resources including investor education, business education, and entrepreneurial programs. Small business loans and grants are also available.

• Acorn Project - The Acorn Project exists to provide support for Native American entrepreneurs through training, technical assistance, and funding opportunities.

• U.S. Department of the Interior Indian Affairs – The agency maintains a website with comprehensive information on “technical assistance, training, and funding to help Tribes and Tribal members start their businesses.” Loan programs are also available.

Tips for applying for a small business loan

The nerves before applying for a small business loan can keep you up all night awaiting the news of an approval. Before you apply you’ll want to do everything you can to increase your chance of approval. 

To prepare for the process, check your credit score! Even though you’re applying for a business loan, your personal credit score will likely be considered. If there are any ways you can improve your credit score whether it be by paying down accounts or correcting any errors, take the opportunity to do so before applying for a business loan. 

Next, prepare for the application. You’ll likely be asked questions such as gross income, years in business, and so forth. You’ll want to ensure that accurate information is submitted and that you have documentation to support your legitimacy and finances. 

Our last tip is to enjoy the process. Keep hunting for just the right business loan offer and don’t jump at just the first loan you qualify for. Loans can be expensive so you’ll want to set your business up for success and keep costs as low as possible without cutting any corners. 

Closing thoughts

Native American business owners have a plethora of resources to take advantage of. As you navigate your options, be patient and stay committed. The internet can offer up valuable information but so can those around you. As a business owner it’s important to network and take advantage of as many resources as possible, especially before making a big decision like a business loan.

Apply & compare rates with PrimeRates

PrimeRates makes comparing business loan offers easy and well worth your time. Within minutes you can receive personalized offers that you actually qualify for. Rather than hopping from website to website and viewing terms you may or may not qualify for, apply at PrimeRates and get real offers. Checking offers at PrimeRates does not impact your credit score. 

Native Americans searching for business loans. . . look no further. Check offers at PrimeRates today!