Loans and Grants for Native American Small Business Owners in 2023
Detailed list of various resources and government programs available for minority-owned businesses, specifically Native American entrepreneurs.
According to the 2020 Annual Business Survey, the number of Native American-owned businesses has been steadily growing — but their revenues and employee shares have not. These stats may come as no surprise to Native American business owners, but they illustrate the striking difference between the opportunities offered to Native entrepreneurs and those offered to others.
In fact, Native Americans still face a 27% poverty rate — much higher than the national average. For centuries, Native people have tried to reverse the lasting effects of broken treaties and discriminatory federal policies, but many of those policies continue to affect Native businesses in a very real way. Fortunately, a number of organizations now offer Native American business loans and grant programs that cater specifically to this community of entrepreneurs. Here are a few that could help you launch your business into its next stage of growth.
Business loans for Native Americans
Loans are one of the most commonly utilized sources of business financing. Unlike grants, loans have to be paid back (usually with interest or fees). However, they can be easier to get than grants. They can therefore be a critical resource for small businesses, especially Native American-owned businesses that may have struggled to secure traditional forms of financing, like loans or lines of credit from big banks. These are the best Native American business loans for the coming year.
1. U.S. Department of the Interior Indian Loan Guarantee Program
The Bureau of Indian Affairs (BIA) is a federal agency within the U.S. Department of the Interior (DOI). Among other things, it helps provide business capital to American Indian and Alaska Native Tribes.
One of the ways it does this is through its Indian Loan Guarantee Program. This program isn’t a direct loan, but it does help Indian-owned businesses obtain financing by providing a repayment guarantee to outside lenders.
Basically, if you’re a Native American entrepreneur and take out an eligible loan from a bank or other lender, the BIA will guarantee up to 90% of that loan. This means that if your business defaults on its debt, the lender can ask the government to reimburse up to 90% of the unpaid principal.
This provides an extra level of security for loan servicers — making them much more likely to lend to Native American and Native Alaskan businesses that might not otherwise qualify. To apply for this program:
- The borrower must be either a federally recognized tribe, an individual member of a federally recognized tribe, or an entity that’s at least 51% owned by members of federally recognized tribes.
- The owner must have at least 20% tangible equity in the project being financed.
- The project must benefit the economy of tribal lands, such as a tribal service area or reservation.
2. NDN Fund
The NDN Collective is an Indigenous-led organization that dedicates itself to building Indigenous power. It does this through community organizing, activism, and philanthropy, as well as business lending through its NDN Fund.
One of NDN Fund’s best offerings for small business owners is its Relief and Resilience program. This loan program exists to help business owners move past the financial impacts of the pandemic. It provides small business loans of up to $500,000 to Indigenous businesses and entrepreneurs.
3. The Minnesota Indian Business Loan Program
The Minnesota Indian Business Loan Program is an initiative of the Minnesota state government. It offers loans that support the development of Indian-owned and operated businesses throughout Minnesota.
To apply, you must be an enrolled member of a federally recognized, Minnesota-based band or tribe, and your business must be wholly owned by an enrolled tribal member. It can be located anywhere in the state, though most loan recipients are usually based in Indian country, i.e. on or near reservations.
The program accepts loan applications on an ongoing basis, subject to the availability of funds. You can use the funding to cover startup business needs, purchase or upgrade machinery and equipment, make renovations, or purchase real estate. The loan can also be used as working capital, but you can’t use it to finance existing debt.
Keep in mind that there’s a wide range in interest rates for these loans: typically between 2% and 10%. Real-estate loans are limited to 20 years, and non-real estate loans must be repaid within ten years.
4. SBA Loans
The U.S. Small Business Administration offers a number of loans to small business owners. While SBA’s loans are open to all entrepreneurs, the agency strives to help minorities and underserved communities get the funding they need to make their businesses successful. Historically, nearly one-third of SBA loans have gone to minority business owners. The following funding programs may be a particularly good fit for Native entrepreneurs:
- The 7(a) Loan Program: SBA’s most common loan program provides financial aid of up to $5 million to small businesses with specific purchasing needs, such as paying for real estate.
- 504 Loans: Certified Development Companies (CDCs) are SBA-regulated non-profit organizations. They provide 504 Loans to help businesses purchase major fixed assets that promote business growth and job creation.
- Microloans: The SBA’s microloan program provides loans of up to $50,000 to help small businesses start up and expand.
Getting a new business off the ground can be challenging. But if you’re an entrepreneur, you probably already have a vision and some determination. What you may not have is capital. Microlending, a popular alternative to traditional loans, could help you obtain funding for your small business, especially if you don’t have a long business credit history or stellar credit score. Microloans, sometimes called “small-dollar loans,” are around $10,000 on average. Because eligibility requirements are flexible, microloans are often much easier to secure than more mainstream loans.
If you’re a Native American or Alaskan Native business owner in need of funding, Accion Opportunity Fund (AOF) offers microloans for both start-up and ongoing costs. AOF’s small-dollar loans can be used to cover equipment purchases, inventory, leases, supplies, staff, marketing expenses, and more.
Native American business grants
Both state governments and tribal administrations offer grant funding for Native American-owned businesses. Grants are free money; unlike loans, you never have to pay back a grant. However, many grants have specific eligibility requirements, and you may have to have a certain type of business, business plan, or business goals to apply. Here are some grants to consider as you begin your search.
1. First Nations Development Institute
The First Nations Development Institute is a Colorado-based nonprofit that works to improve the lives of Native Americans. Its business programs put heavy emphasis on business owner education and support, and webinars on everything from the basics of budget management to the inner workings of financial markets.
The Institute also offers several programs designed to support new Native American businesses. Since starting its national grantmaking program in 1993, the institute has given out more than 2,700 grants — a total of $54.7 million — to Native American projects and organizations. Keep an eye on the revolving door of grant opportunities announced through the Institute’s website and social media.
2. Regional Development Corporation (RDC) funding
The Regional Development Corporation (RDC) is a nonprofit that helps drive economic development in Northern New Mexico. RDC’s mission is to increase revenue and create jobs, so if you can prove that your business has potential, you could qualify for funding. To apply, you must have a for-profit business that is headquartered in Los Alamos, Mora, Rio Arriba, Sandoval, San Miguel, Santa Fe, or Taos Counties. Some past funds include:
- Tribal Economic Diversity Fund: This fund caters to businesses owned by federally recognized Indian tribes or enrolled members of such tribes. Grants can be as much as $8,000 and can be used for any critical technical services or equipment.
- Micro-Grant Fund: This fund offers small grants of $500 to $3,000 to help businesses diversify, boost profits, sustain revenue, and leverage other investments. The next application cycle opens in the spring of 2023.
- Technology & Manufacturing (TEAM) Fund: These are no-interest loans of up to $20,000. They’re designed to help manufacturing- and technology-based companies purchase business equipment, consulting services, or specialized software.
3. Indian Equity Fund (IEF) Small Business Grants
The Indian Equity Fund Small Business Grant, offered by the Montana Department of Commerce, was created to assist both start-up and expanding Native American businesses in Montana. In 2022, a total of $260,000 was made available, and applicants were able to request up to $14,000 for big expenses, including the purchase of new equipment.
4. The SBA 8(a) Business Development Program
The U.S. Small Business Administration caters to small businesses of all kinds — including those owned by Native Americans. (In fact, the Office of Native American Affairs is located within the SBA’s headquarters in Washington, D.C.). Aside from the loan programs listed above, the SBA’s 8(a) Business Development Program is one of its most helpful offerings for Native entrepreneurs.
The 8(a) Business Development Program was created to help firms that are owned and controlled by socially or economically disadvantaged individuals. To qualify, businesses must have been operating for at least two years and must be interested in expanding into the federal marketplace. As a technical assistance program, 8(a) provides free training and mentorship to successful applicants, and can give businesses a serious leg-up on securing lucrative federal government contracts.
Native American business development resources
Funding is important, but it isn’t everything. A number of other resources exist to provide Native American business owners with education and guidance. These resources include:
1. SBA minority-owned business programs
2. The National Center for American Indian Enterprise Development
3. Free online education through Accion Opportunity Fund
If your business qualifies as minority-owned, you likely qualify for the SBA’s guidance and mentorship programs. These can help you gain access to everything from business counseling and training, to help in securing coveted government contracts.
Under SBA guidelines, a minority-owned business is one in which a member of an ethnic minority holds 51% or more of the company in either stocks, assets, or equity. Minorities include African Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans. You can learn more and apply for programs at SBA.gov.
The National Center for American Indian Enterprise Development (NCAIED) is a non-profit organization committed to helping Native Americans realize their entrepreneurial dreams. NCAIED provides training, advocacy, business development, and other business resources for Native American entrepreneurs.
If you’re starting your first business, you probably have a lot of questions — but you may not feel like you’re ready to apply to a formal counseling or lending program. If that’s the case, there are plenty of resources online where you can learn more about what it takes to start and run your business.
Accion Opportunity Fund offers a variety of educational resources that cover everything from permitting to hiring to tax planning. You can seek out information from reliable sources like government agencies and nonprofit entities.
Explore funding options with Accion Opportunity Fund
Indigenous Americans have been historically cut off from funding access — a huge hurdle that can keep many talented entrepreneurs from sustaining or growing their businesses. While a significant funding gap remains, there’s now a growing number of loans and grants specifically designed to uplift Native business owners.
Accion Opportunity Fund is one of the many organizations working to advance Indigenous businesses. About 90% of our clients are ethnically and socio-economically diverse, and our loans are structured to address each business’s individual needs. If you’re searching for a reliable source of funding to help grow your latest venture, look through our available business loans to see which one may be right for you.