The best part is helping other entrepreneurs to start needing help herself. So she turned to the Northwest Native Development Fund, a community development financial institution based in Coulee Dam, in north-central Washington state. Known as CDFI, the fund is a private financial institution that provides affordable loans to help low-income, low-wealth individuals and communities, and other disadvantaged individuals and communities. CDFIs focus primarily on specific communities or regions and provide finance and other services to encourage economic development and economic security.

The funds are not new – the Northwest Native Development Fund has been around for over a decade. But the funds have been a lifeline for entrepreneurs who lack access to connections to traditional lines of credit during the economic downturn caused by the pandemic. The Indian country and arts, entertainment and recreation businesses have been hit hard during the pandemic, according to a report from the Center for Indian Country Development at the Federal Reserve Bank of Minneapolis.

Many residents of the Pacific Northwest reserves “don’t have an ATM on their land, let alone a full-service bank,” said Amber Shulz-Oliver, a descendant of Yakama-Wasco who is the executive director. by Affiliated Tribes of Northwest Indians. – Economic development company. “Many have no collateral like a house or a rich uncle to borrow $ 10,000. CDFIs can be a trusted institution for obtaining this type of capital in order to set up businesses. “

The battle to end predatory lending

Ted Piccolo, executive director and creator of the Northwest Native Development Fund based on the Colville Indian Reservation, is considered the CDFI guru of the region.

NNDF, which Piccolo founded 13 years ago, has loan capital of around $ 5 million. He would like to double this war chest by the end of the year.

“If we had to do it, if people came to the door, we could deploy almost $ 8 million tomorrow with the money available,” he said, noting that the total would include loans that are already depleted.

The fund opened in 2009 with classes, workshops and small business planning.

“I was looking for ways to get funding for some of our aboriginal businesses that couldn’t get traditional funding,” said Piccolo, a member of the Colville Tribe. “They were stuck in the water, on the margins.”

NNDF has become a Quasi-Business Consultant, educating business owners about the financing process and the need for good credit. To achieve this credit goal, the NNDF has launched an “anti-payday loan” program.

“One of the reasons for bad credit was that people were getting into all this high risk stuff, really expensive predator sinkholes that they couldn’t get out of,” Piccolo said.

People were trapped in a system that worked to keep borrowers in debt. Piccolo said predatory lending practices that include principle, interest, and fees can reach 200 or 300 percent and create exponential, endless debt.

Instead, NNDF offers a loan product that allows an individual to pay off a hypothetical $ 1,500 loan over 12 months with an interest rate of 15%, creating new credit as they go. he repays the loan.

Borrowers are encouraged to repay their advances with the promise of better interest – as low as 10 percent – on the resulting loans.

As expected, borrowers will repay their NNDF loans and build up enough seed credit to get additional credit through more traditional banks or credit unions. In addition to providing loans, the fund offers advice to help clients develop business and marketing plans. Staff are running family budget workshops, and in 2019 the fund financed the construction of a house to deal with a housing shortage in the area.

“One of the great tools of economic development is a strong private sector, but small businesses need capital,” she said.

Piccolo said the biggest challenge for CDFIs in the Indian country is the “human capacity” to operate financial institutions.

“Here on the reserve there are just not a lot of loan officers, accountants or controllers,” Piccolo said. “We have to train them and pay them, while continuing to operate at the same time. We all learn on the fly, learn to train while raising funds to train and lend. “

And while CDFIs are not new – there are at least 1,000, of which 70 serve indigenous communities, across the country – they are growing. A 15-member Northwest Native Lending Network, made up of developing or operating CDFIs, was organized in 2019 at the Economic Summit for Northwest Indian Affiliate Tribes – Economic Development Corporation. The newest CDFI in the Northwest is the Nixyaawii Community Financial Services which serves Confederate tribes on the Umatilla Indian Reservation in northeastern Oregon.

In the Northwest region, many indigenous CDFI business portfolios consist primarily of natural resource based businesses, with loans for forestry equipment and fishing boats. However, CDFIs work with all kinds of clients, including a software company that is trying to get started with the help of ATNI’s Economic Development Corporation. The aim of these institutions is to help clients achieve financial stability so that they no longer need the services of CDFIs.

“We’re trying to go bankrupt, to make individuals creditworthy enough” to access more traditional sources of funding, said Shulz-Oliver.

Loan provided needed boost

Best provides training and teaches her yoga classes, but her bread and butter is portrait photography, especially photos for high school kids.

More than a year after the pandemic hit the United States, Best is still in business, watching senior portraits and paddleboard yoga season. Best said the NNDF loan provided her with cash flow that got her through the initial shock of the economic crisis.

“That $ 5,000 is all it takes to get out of the stressed state of mind,” she said. “Now the bills are paid. You have a good month or two to figure out how to make things work. This small loan transformed the direction in which I was able to grow with my businesses.