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IEED

Office of Indian Energy and Economic Development

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Expanding Broadband Access

The word “broadband” refers to high-speed internet access technology that is always on, which is different from older, slower dial-up internet access technology that requires users to connect through a conventional telephone line. Digital Subscriber Line (DSL), Broadband over Powerlines (BPL), Cable Modem, Satellite, Wireless, and Fiber are all examples of broadband technologies. 

Federal Communications Commission (FCC) statistics show that American Indian and Alaska Native (AI/AN) communities have less access to broadband than the general U.S. population.

Disparities in Fixed and Wireless Broadband Access

The FCC’s benchmark speed for fixed broadband capability is 25 Mbps/3 Mbps.

FCC data from 2019 shows that over 99% of housing units in U.S. urban areas have access to broadband service, but only 65% of housing units on rural AI/AN lands have the same level of access.

There is also a disparity in terms of wireless broadband access.

In 2019, 99.9% of the U.S. population lived in areas with Mobile Long Term Evolution (LTE) coverage compared to 97.5% of people in AI/AN communities, according to FCC statistics.

Mobile LTE, sometimes called 4G LTE, refers to wireless broadband with a minimum speed of 5 Mbps/1 Mbps.

Barriers to Access

The barriers to broadband deployment in AI/AN communities are varied and can be found across sectors. From a lack of financial investing in tribal communities to the immense geography in question to complex and burdensome regulatory environments, the Office of Indian Energy and Economic Development has identified seven fundamental barriers to deployment:

  • Lack of coordination
  • Insufficient data
  • Missing building blocks
  • Insufficient funding
  • Complex permitting
  • Low adoption
  • Weak connection to economic development

A large proportion of AI/AN lands are located on rough terrain in rural areas. Most rural locations are sparser than urban areas, which increases the cost for businesses to serve those areas, and thus has created an obstacle to broadband deployment in AI/AN communities.

FCC data indicates that 73.3% of rural non-AI/AN areas are covered by at least one terrestrial fixed-broadband provider. However, only 46.6% of rural AI/AN communities have fixed broadband coverage.

Addressing Disparities in Access

The federal government is aware of the disparities in broadband access that exist and working on ways to decrease the gap in broadband access between AI/AN and non-AI/AN areas.

Indian Affairs

  • National Tribal Broadband Grant (NTBG): The purpose of the NTBG program is to bring broadband services to AI/AN communities that need them. Grant recipients can hire qualified consultants to research the potential deployment or expansion of high-speed internet transmitted through DSL, BPL, cable modem, fiber, wireless, and satellite.
  • National Tribal Broadband Summit is a unique annual opportunity for tribal leaders, representatives of tribal organizations, representatives of schools and school districts serving under-connected Native students, federal program managers, and policy-makers at multiple levels of government to come together and share their innovations in expanding broadband access and adoption in tribal communities.

FCC

The FCC established a Native Nations Communications Task Force comprised of 19 AI/AN members and eight FCC members to carry out the FCC’s mission of increasing access to affordable internet services on AI/AN lands.

The FCC’s Universal Service Fund currently provides support through four programs:

  1. Connect America Fund (formally known as High-Cost Support): The program subsidizes the cost of providing service to high-cost areas for qualifying telecommunications companies. This allows users in rural areas to pay reasonable rates comparable to those charged to users in urban areas.
  2. Lifeline Program: The program provides lower-cost phone and internet service to qualifying low-income consumers.
  3. E-Rate: The program offers funding to schools and libraries to access internet and telecommunications services. Schools and libraries may obtain discounts ranging from 20-90% of the costs of eligible services.
  4. Rural Health Care Support: The program provides funding to reduce the cost of internet and telecommunications services for rural healthcare providers.

View a map with fixed broadband data from different areas of the United States.

To learn more about support and programs offered through the FCC, please call (202) 418-2930.

Department of Agriculture

  • ReConnect Broadband Grant and Loan Program: The program offers eligible applicants, including Indian Tribes, funding opportunities for broadband deployment in rural areas. Funds may be used for construction, improvement and acquisition of qualifying facilities, acquisition of an existing system under certain circumstances, and covering some pre-application expenses.
  • Tribal College Initiative Grants: The program provides grants to fund tribal colleges to make capital improvements to their facilities and purchase equipment.
  • Rural Broadband Access Loan and Loan Guarantee Program: The program offers loans and loan guarantees to eligible applicants, including Indian tribes or tribal organizations, to provide funds for the costs of construction, improvement, or acquisition of facilities and equipment needed to provide service at the broadband lending speed in eligible rural areas.
  • Telecommunications Infrastructure Loans & Loan Guarantees: The program provides financing to eligible applicants, including federally recognized tribes, for the construction, maintenance, improvement, and expansion of telephone service and broadband in rural areas.

Department of Commerce

  • 911 Grant Program: The program provides grant funding to support state and local efforts to deliver optimal 911 services.
  • FirstNet Authority: Established by Congress in 2012 as an independent authority within the Department of Commerce, FirstNet develops, operates and maintains the nationwide, public safety broadband network that equips first responders to save lives and protect U.S. communities.

National Telecommunications and Information Administration

  • State and Local Implementation Grant Program: The program offers eligible applicants, including tribal governments, with the resources to work with stakeholders throughout the state or territory to identify needs, gaps, and priorities for public safety wireless broadband.
  • Tribal Broadband Connectivity Program: The Coronavirus Response and Relief Supplemental Appropriations Act, 2021, established $1 billion in funds for Tribal Broadband Connectivity Grants to support access to and adoption of broadband service on tribal lands. Funding can be used for broadband infrastructure deployment, affordable broadband programs, distance learning, telehealth, digital inclusion efforts, and broadband adoption activities. The application for the program has not yet been announced.

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Division of Economic Development
1849 C Street, N.W., Room 4152
Washington, DC 20240
9:00 a.m.–4:00 p.m. EST, Monday–Friday
DEDGrants@bia.gov
(505) 917-3235

Former Partnership with Indigenous Tourism Collaborative of the Americas

The Indigenous Tourism Collaborative of the Americas (ITCA) is an advisory network of Indigenous leaders and non-Indigenous tourism leaders working together to build capacity and resilience in Indigenous tourism and gain respect for Indigenous tourism leadership in government and the tourism industry. The ITCA provides a platform for Indigenous community leaders, policymakers, and business owners to share their experiences, learn from one another, take collective action, and better understand how to promote change through tourism without compromising their cultural values.

ITCA Activites

Indigenous Tourism Forum of the Americas

In October 2020, in cooperation with Indian Affairs, the Organization of American States (OAS) and the George Washington University (GW) International Institute of Tourism Studies hosted the first-ever Indigenous Tourism Forum of the Americas. The event brought together more than 230 community, tourism, and government leaders.

Topics discussed during the forum included the impact of the COVID-19 pandemic on indigenous tourism, the importance of food in tourism, and the ways to protect intellectual and cultural property. One roundtable discussion focused on how governments are supporting indigenous tourism throughout the Americas. Anthony Rodman, the acting director of Office of Indian Energy and Economic Development at Indian Affairs, co-moderated the discussion with the ministers of tourism from Dominica, Ecuador, El Salvador, Panama, and the Secretary of the South Dakota Department of Tribal Relations.

Watch a recording of the roundtable discussion

Watch more recordings from the forum

The forum was part of a new Indigenous Tourism Collaborative established by OAS, GW, and Indian Affairs. The initiative aims to build a resource network to inform and support the development of a sustainable indigenous tourism industry.


ITCA Indigenous Tourism e-Library

The ITCA launched its Indigenous Tourism e-Library in FY 2023, an easily accessible and comprehensive repository that features more than 500 tools and resources to help Indigenous peoples and their stakeholders and partners develop and better manage tourism. The eLibrary supports sustainable Indigenous tourism throughout the Americas (United States, Canada, Mexico, Central America, the Caribbean, and South America). For more information visit: https://Indigenoustourismamericas.org/.

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Division of Economic Development
1849 C Street, N.W., Room 4152
Washington, DC 20240
DEDGrants@bia.gov
(505) 917-3235

Advice for Tribal Economic Development Directors

As a tribal economic development director, you’ll meet regularly with tribal leaders, tribal members, and other stakeholders to determine and evaluate progress made toward your tribe’s goals and develop a realistic strategy to achieve those goals over a 10-to-20-year period.

First Steps

Your initial assessment of your community’s economic strengths and weaknesses will inform your tribal community planning (link TBD).

Employment

You can start by evaluating your community’s economy by obtaining baseline economic information regarding unemployment, underemployment, and labor participation rates.

If tribal members must travel outside their community for jobs or services, determine whether these jobs or services can also be established within the community.

Secured Transactions

You should determine whether your tribe has adopted a secured transactions code. If it has, you should see whether liens attached pursuant to the code are recorded in a state registry. Over time, you should become familiar with secured transactions codes and their role in increasing tribal members’ ability to use credit to purchase the equipment, furniture, and vehicles needed to start or sustain a business.

Encourage tribal leadership to adopt the Model Tribal Secured Transactions Act (MTSTA), if they have not already done so, and encourage them to enter into a joint powers agreement, memorandum of understanding, or compact with the state to register liens arising from the code. For the MTSTA to have an effect there must be a means to enforce it.

Financing

You should find out where tribal entrepreneurs and would-be entrepreneurs can obtain financing for their businesses.

Is there a Community Development Financial Institution or other sources of capital in the community? Are there nearby banks where tribal members can deposit their savings? Do these banks regularly lend to tribal members? If not, why not?

You should learn how tribal and Native-owned businesses can obtain financing.

Businesses should also be made aware of the Indian Loan Guarantee and Insurance Program (ILGP) and other federal sources of capital.

Grants

If possible, your tribe should employ someone who is responsible for tracking federal, state, and private grant opportunities and applying for those that align with the tribe’s long-term economic goals.

However, your tribe’s economic model shouldn’t depend upon obtaining grants. Your tribe’s economic development priorities may not align with the intended purpose of a grant.

Your tribe can reduce its dependence on outside funding by developing profit-making tribal businesses.

This is called an “enterprise strategy.”

Enterprise Strategy

Tribes can and should establish a diverse number of businesses.

You should consult with your tribe’s attorney about how these businesses should be structured to address state and federal tax requirements and regulations.

It’s wise to consider starting tribal businesses that offer services or products that tribal members would otherwise have to travel outside the community to obtain. You might also consider launching tribal businesses that leverage tribal tax and procurement opportunities.

The Role of Tribal Governments

Tribal businesses whose management is separated from tribal electoral politics have the best chance of success.

While the tribal government appoints the tribal business’s board of directors and approves its initial operating plan, it should then allow the business to make hiring and day-to-day operation decisions. Tribal businesses that become politicized create an uncertain environment for investment.

However, the tribal government still can: control, fund, and share in the profits of the business; select its board of directors; enact uniform rules to govern the business; require the business to provide regular financial reports to the tribe; choose an independent accounting firm to audit the business; and retain the option to revoke the business’s charter and fire its board members at will.

Economic Development Projects

It’s important to recognize that economies are built one project at a time. The establish of one project may lead to the development of related businesses, and thus gradually create a network of enterprises that are interconnected.

Oftentimes, tribal leaders lack the expertise to know for certain whether a proposed economic development project, enterprise, business, or technology will succeed or become a costly failure.

To avoid investing in an opportunity with a high risk of failure, you should consider conducting a feasibility study with help of a “qualified” professional or consultant with no financial or personal stake in the outcome of the study. “Qualified” means that the professional or consultant has enough subject matter expertise about the proposed project, has academic or professional licenses or credentials relevant to the proposed project, and/or has experience conducting similar studies.

Outside promoters may often try to persuade you or tribal leaders to invest in economic development projects inside your community that may involve unproven technologies, pose a strong likelihood of failure, or are even intended to defraud tribes.

Some promoters offer credible opportunities, but even these claims should be thoroughly vetted.

One strategy that a tribe can adopt to protect their interests is to request that a promoter fund a feasibility study conducted by consultants chosen by the tribe before committing to a long-term investment in a proposed project.

Encourage Entrepreneurship

Tribes should always encourage entrepreneurship.

As a tribal economic development director, you can start by identifying roadblocks to private business start-ups.

For example, does the tribe lack an independent judicial system that can decide business disputes? Does it impose cumbersome and time-consuming permitting and business site leasing requirements? If so, tribal entrepreneurs might choose to open their businesses in nearby towns rather than in the community.

The tribe’s goal should be to establish an environment conducive to creating and sustaining independent businesses.

When there are many small local businesses in the community, tribal members have more opportunities to buy products and services close to home, and those dollars will circulate longer within the community.

Some tribes with the financial resources can make industrial parks and incubators (i.e., attractive business sites already ready with sanitation, water, electricity, and broadband service) available to entrepreneurs.

Tribal incubators usually consist of a single building with multiple, separate offices each occupied by separate, independent businesses. The theory behind incubators is that their tenants will assist and learn from each other and may even enter into collaborative commercial relationships.

There are also tribes that can provide low-interest financing for entrepreneurs who need seed money for their start-ups or expansions, or that employ staff to assist entrepreneurs in preparing business plans.

However, even a tribe with few resources can still take advantage of federal programs that aim to increase the business knowledge of emerging entrepreneurs. The Federal Deposit Insurance Corporation (FDIC) and the Small Business Administration (SBA)offer free, web-based training on how to start up and manage a small business.

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Division of Economic Development
1849 C Street, N.W., Room 4152
Washington, DC 20240
9:00 a.m. – 4:00 p.m. EST, Monday–Friday
(202) 219-0740

Opportunity Zones, HUBZones, and Foreign Trade Zones

By establishing areas that promote economic development, tribes and tribal governments can encourage and sustain business growth in their communities.

Opportunity Zones

An Opportunity Zone is an economically distressed community where new investments may be eligible for certain tax benefits.

There are 8,764 Opportunity Zones spread throughout the 50 states, the District of Columbia, and five U.S. territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands).

Opportunity Zones in Indian Country

There are many Opportunity Zones that overlap with tribal lands, including state and federally recognized American Indian and Alaska Native (AI/AN) reservations, trust lands, and villages, as well as tribal areas in Oklahoma.

Opportunity Zones offer Indian Country an important new tool to attract investments for a wide range of projects to improve the economic conditions on tribal lands.

Individuals and corporations that sell investments at a profit can invest realized capital gains from such sales in businesses or property in Opportunity Zones and defer paying capital gains tax for up to 10 years

Tribally owned businesses already operating within an Opportunity Zone could seek new investments to further expand or establish new businesses.

To invest in an Opportunity Zone, investors pool their investments in an Opportunity Fund, which is an investment vehicle set up either as a partnership or corporation for investing in eligible property or businesses located in an Opportunity Zone.

Opportunity Funds can also choose to hold their assets in tangible property within an Opportunity Zone, which could lead to the development or redevelopment of properties within Indian Country. This could attract new investments for the construction of new buildings or the redevelopment of existing buildings, such as warehouses, office buildings, hotels, or apartment buildings, thereby leading to an increase in jobs in the Opportunity Zone.

The Office of Indian Energy and Economic Development is helping to foster the success of Opportunity Zones in Indian Country by giving funding priority to tribes who want to conduct feasibility studies focused on businesses and projects located within Opportunity Zones through its Native American Business Development Institute Grant.

HUBZones

The HUBZone program creates incentives (called “preferences”) for federal agencies to purchase goods and services from businesses that operate and employ people in areas designated as HUBZones.

The acronym HUB stands for “Historically Underutilized Business,” and a HUBZone is a historically underdeveloped business zone that meets one or more of five defined criteria.

AI/AN reservations and other Indian Country locations automatically qualify as HUBZones. This includes portions of the state of Oklahoma which are designated as Indian reservations by the Internal Revenue Service (Oklahoma tribal statistical areas) and Alaska Native village statistical areas.

The Small Business Administration (SBA) oversees the program and maintains an interactive map identifying all areas including Indian Country locations.

View SBA HUBZone map.

Federal Contracting Preferences

Every year, the federal government allows for “set-asides,” where it reserves a specified percentage of federal contracting dollars for goods and services from the private sector. The federal government purchases approximately $400 billion in goods and services from the private sector annually.

A set-aside narrows the competition for a federal contract to certain kinds of contractors. For example, the competition for the set-aside contracts may be restricted to SBA-certified HUBZone businesses if there is a reasonable expectation that there will be at least two SBA-certified HUBZone bidders who offer a fair market price.

There are also “sole-source” awards, which are federal contracts awarded without competition. In addition, there are “price-evaluation preference” awards that give an advantage to a HUBZone business in a full and open competition, whose bid is 10% or more lower than an equally qualified, larger firm that isn’t a HUBZone business.

All federal departments and agencies participate in the HUBZone program, and the federal government aims to award at least 3% of all contracts to companies and firms located in HUBZones.

The top categories of HUBZone contracts can change from year to year, but in the past, they have included: commercial and institutional building construction; heavy engineering and civil engineering construction; computer-related services; highway, street, and bridge construction; facilities support services; engineering services; security guards and patrol services; research and development; consulting services; and apparel.

Certification

If your Native-owned business is in a HUBZone, it doesn’t automatically qualify for federal contracting preferences. Your business must be certified by SBA.

To become certified, your business must:

  • be an SBA standard small business

  • be at least 51% owned and operated by U.S. citizens, a Community Development Corporation, an agricultural cooperative, an Alaska Native corporation, a Native Hawaiian organization, or an American Indian tribe

  • have your company’s main office located in a HUBZone

  • have at least 35% of your employees living in a HUBZone

You can find the full qualification criteria in Title 13 Part 126 Subpart B of the Code of Federal Regulations.

Learn how to apply for HUBZone certification.

Foreign Trade Zones

A Foreign Trade Zone (FTZ) is a designated geographical area where foreign and domestic goods are treated, for tax and tariff purposes, as if they had never entered the United States.

Most FTZ activity occurs within the petroleum industry. However, many companies in the automotive, consumer electronics, and pharmaceutical industries also use FTZs.

If a tribe decides to create a tribal corporation, that corporation is eligible to establish a FTZ per FTZ regulations.

Establishing an FTZ offers major cost savings to tribes in several different ways. For example, merchandise may be held and stored in an FTZ on U.S. soil without being subject to U.S. customs duties (also known as tariffs). It’s helpful to think of a duty or tariff as a tax. If the goods shipped into the FTZ are then shipped to another FTZ or another country, a U.S. duty won’t be assessed on the merchandise. If the goods enter the U.S., a duty will be applied.

By utilizing an FTZ, a duty may be significantly reduced. A tribal corporation can avoid paying a higher duty if it manufactures a product within its FTZ and then imports it into the U.S. market, rather than importing the raw materials directly into the U.S. market. This means that the duty applies on a fully assembled product.

For example, the duty on a maple chair is less than the duty applied on the raw materials that would have been used to make the chair. If the duty on the maple wood needed to assemble the chair is $10 when it enters the U.S. market, but the duty on a fully assembled chair made of the same amount of maple wood is only $5 when it enters the U.S. market, the tribal company would save $5 per chair by utilizing an FTZ.

Security and Operational Requirements

The U.S. Customs and Border Protection (CBP) oversees FTZs and requires companies to adhere to detailed security and operational requirements.

Before deciding whether to establish an FTZ, you should calculate whether the potential duty or tariff savings will outweigh the costs you will incur to comply with CBP’s requirements.

In addition, items manufactured in an FTZ must first be approved by the FTZ Board on a case-specific basis. The FTZ Board considers whether there are potential negative effects on other U.S. companies resulting from FTZ manufacturing.

Even though FTZs are treated for customs purposes as if they were outside the customs territory of the United States, they’re still a part of the U.S. For that reason, goods and activities in FTZs are subject to federal, state, and local laws and regulations. Items prohibited by law or that violate copyright, trademark, or patent laws, aren’t allowed to enter FTZs.

Benefits for Tribal Corporations

There are three major ways in which a tribal corporation can profit from establishing an FTZ:

  1. Move goods from a foreign country into the U.S.: To take advantage of an FTZ’s lower duties, tribal corporations should consider importing parts that they can assemble into products. Items like furniture or cars are good examples. Tribal corporations should think about which items they can feasibly manufacture within an FTZ. To determine which items are most advantageous to import, they should use the Harmonized Tariff Schedule to research duties on components used to make those items, and conduct research on whether components are available from domestic sources. The Harmonized Tariff Schedule can be used to look up the import duty on every item imported into the U.S.
  2. Move goods from one foreign country to another foreign country: Tribal corporations should research the cost of importing different materials and the price at which they can re-sell those materials in various other countries to make the most profit. By moving goods from one foreign country to another through an FTZ, it’s like the product never even entered the U.S. because a U.S. duty won’t be imposed on the product.
  3. Leasing/Equity Option tribal corporations can establish an FTZ, and lease or “rent out” different portions of their FTZ to other companies: Companies will pay to rent a portion of the FTZ to take advantage of FTZ benefits. Tribal corporations gain revenue from leasing portions of their FTZ and can also ask for equity in the company that is the lessee (meaning they could own a portion of that company). However, the relatively quick and simple processes available to bring FTZ designation to a company’s own facilities may limit its willingness to pay fees to lease FTZ space elsewhere. Also, if the tribal corporation is the grantee of the FTZ, the FTZ Board’s regulations require that the grantee operate the FTZ as a public utility, which could limit the revenue that the tribe would be allowed to derive from its FTZ facilities.

Under the federal FTZ Board’s laws and regulations, the federal FTZ Board may grant authority to organizations (“grantees”) to sponsor FTZ sites at locations “adjacent” to a CBP port of entry (POE). Adjacent generally means within 60 miles/90 minutes’ driving time of a POE.

Learn how to apply to establish an FTZ.

The FTZ staff is also available to provide guidance.

View FTZ staff contact information.

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Division of Economic Development
1849 C Street, N.W., Room 4152
Washington, DC 20240
9:00 a.m. – 4:00 p.m. EST, Monday–Friday
(202) 219-0740

How Comprehensive Community Planning Helps Tribes

Planning can empower tribal governments to make informed decisions about issues in their tribes based on discussions with stakeholders in their community.

It can ensure that issues are understood and that priorities can be agreed upon, and create an appreciation for how issues are related to each other.

When tribal citizens participate in the government’s planning process, it can help a tribe to unify around a particular goal. A cohesive and unified tribal nation can foster a stronger environment for economic opportunities for all segments of its society.

What is Comprehensive Tribal Community Planning?

Comprehensive community planning is conducted by tribal governments and their citizens concerning where their community has been, where it is now, and what it should be for future generations.

There’s no clearly defined profile of what a comprehensive tribal community plan should look like

Cultural heritage as well as social and economic conditions will vary, and so too will tribes’ plans. The preparation and completion of a plan may take years or only a few months depending on many factors including the size of the tribe and the variety of views of its citizens. The final cost of a plan also won’t be known until it’s already been developed, and it will depend on the complexity of issues addressed and the time required to address them.

The aim of community planning is for a tribal government to collect the full range of views of its citizens. A successful plan is one that enjoys support among the various parts of a tribe’s society including its elected officials, traditional leaders, spiritual leaders, elders, adults, and youth.

It’s best if no one element of society is given the authority to lead the planning process.

Feasibility Studies

Bringing in a “qualified” professional or consultant with no financial or personal stake makes it more likely that those who are facilitating and recording the community dialogue will be trusted by tribal members.

Comprehensive tribal community planning can be used to support feasibility studies conducted by the consultant that speak to the tribe’s work force, community infrastructure, and commitment to economic development.

“Qualified” means that the professional or consultant has enough subject matter expertise about the proposed project, has academic or professional licenses or credentials relevant to the proposed project, and/or has experience conducting similar studies.

A tribe can use findings from a feasibility study to present to investor and lender or as the basis for successful application for a federal, state, or private grant.

If a study recommends that a tribe not pursue a particular project, the tribe can save itself from wasting funds on a project that was destined to fail.

If a study recommends that a tribe move forward on a project proposal, that information can used to persuade lenders and investors to provide financial backing for it.

In either case, a feasibility study’s recommendations are intended to help tribes make informed decisions. As sovereign nations, tribes can always choose to accept or reject the suggestions.

What Topics Might a Tribe Examine in a Community Plan?

A plan can address as many topics as the tribe’s society believes are important and might include:

  • Development of natural resources
  • Air quality, water quality, noise, and traffic
  • Policing and fire protection
  • Options for housing and locations
  • Local commercial services desired
  • Health services and wellness
  • Employment and opportunities
  • Education
  • Spiritual values

Tribes should consider the modern-planning concept of “sustainability,” which means considering how a tribal society’s values and identity can be permanently preserved.

Related to this is the concept of “adaptation,” or how a tribal society’s values and identity can be maintained when changes inevitably occur. Plans will likely need to be adjusted in the future and should be reviewed on a regular basis.

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1849 C Street, N.W., Room 4152
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Why Secured Transactions are Important

Finding affordable credit is difficult in Indian Country.

More than 85% of tribal lands don’t have a bank, and among financial institutions on or near tribal lands, only 33% offer start-up loans and just 29% percent offer small business loans.

To finance a business, an American Indian and Alaska Native business owner may enter into a loan agreement with another party using secured transaction codes.

Lenders are more willing to lend when they can rely on a legal code to ensure that they will be repaid in the event of a default.

Protection for Lenders and Borrowers

A secured transaction is an agreement between two parties in which one of the parties gives property (other than real estate) as collateral, or security, for a loan.

There are two types of secured transactions. One involves a “possessory security interest,” and another involves a “nonpossessory security interest” or “lien.”

A code of law, or legal code, is needed to enforce the liens or security interests of creditors.

These codes are particularly important for a nonpossessory security interest, where no property exchanges hands unless it’s necessary.

For example, imagine that Tom and Mary sign a security agreement that gives Mary a lien on Tom’s saddle and gives Tom a loan to access business capital. Tom still retains possession of the saddle. However, if Tom fails to pay off all of the loan, Mary can take possession of the saddle, sell it, and retain the portion of the sale proceeds that she needs to pay off the balance of the loan.

Liens, like the one described in the example, enable businesses to obtain the credit they need to buy equipment and property for commercial purposes. At the same time, they enable consumers to buy tangible items on credit that businesses produce or sell.

If secured transaction codes didn’t exist or weren’t enforced, credit wouldn’t exist.

Fulfilling Tribal Businesses’ Need for Financing

Without such codes and an accurate, reliable, and publicly accessible system for filing claims, tribal businesses wouldn’t be able to finance the purchase of business-related equipment from sellers located outside of tribal jurisdictions because a dealer couldn’t enforce its lien.

Or, if a tribal business were able to access financing, it might end up being at higher interest rates and for shorter terms. The absence of rules would compel creditors to increase borrowing costs to offset risks or refuse to lend altogether.

Model Tribal Secured Transactions Act (MTSTA)

Tribes and tribal members don’t need to write their own secured transactions codes.

The National Conference of Commissioners on Uniform State Laws and a working group of tribal officials have already drafted MTSTA as a template for legislation to facilitate transactions between lenders and tribal businesses.

The model, which was created in 2004 and revised in 2017, was drafted with the objective of creating a uniform tribal secured transactions law consistent with Article 9 of the Uniform Commercial Code in tribal business, legal, and cultural environments.

The MTSTA provides a set of rules that specify how security interests may be created, perfected, and enforced, and who has first rights when two or more competing creditors have legally enforceable interests in the same collateral.

Under this system, a creditor files a financing statement at a public filing office that constitutes notice to other interested parties about security interests in the personal property of the debtor. This financing statement perfects (or makes good against third parties) a creditor’s security interest in most kinds of personal property.

Repossession Protections

The MTSTA allows a creditor party to repossess collateral after the debtor’s default only by consent of the debtor after the default occurs or through a judicial process, and all repossessions must be done without “breaching the peace.”

Repossession occurs as a last resort by a secured party dealing with loan or other credit agreement payments that are overdue or nonexistent who has obtained from the borrower a financing statement filed in accordance with the code.

A security agreement usually defines what constitutes a debtor’s default. Default occurs when the debtor either fails to make a payment when due or violates his or her security agreement.

After a debtor defaults, the secured party may obtain possession or control of the collateral by written consent of the debtor or by obtaining an order from the tribal court.

A tribe can also insert a provision into its code that prohibits, for example, the pledging of sacred objects as collateral for credit transactions or loans.

DED’s Role in MTSTA Adoption

Tribal adoption of MTSTA is a priority for the Division of Economic Development (DED).

In the past, DED has funded several tribes to explore the adoption of commercial law codes modeled on the MTSTA.

In 2007, with the National Congress of American Indians, DED also organized the National Native American Economic Policy Summit, which was attended by over 500 tribal and federal representatives. One of the approved recommendations by tribal leaders at the event was to develop commercial codes that could be used or customized for each tribe.

In FY 2012 and FY 2013, DED joined with the U.S. Small Business Administration and the Federal Reserve System to sponsor MTSTA training workshops at six key Indian Country locations. These events discussed how MTSTA adoption could increase creditor and investor confidence in tribal economies and ensure the steady growth of business and consumer credit on reservations.

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1849 C Street, N.W., Room 4152
Washington, DC 20240
9:00 a.m. – 4:00 p.m. EST, Monday–Friday
(202) 219-0740

How to Make an Effective Business Presentation

Most commercial products and services aren’t unique, and their benefits aren’t always immediately obvious.

Their value must be communicated in a compelling way to make a sale to customers, convince investors to provide capital, or acquire partners.

A successful business presentation will convey that value.

Preparation

The first step to creating an effective business presentation is to study the target audience you are trying to reach.

An effective business presentation must speak directly to the needs and aspirations of your audience. You’re aiming to inform your listeners about how your product or service will solve their problems or help them achieve their goals.

You should develop an outline of what you want to say or “pitch.” Your presentation should tell a persuasive story, establish your business expertise, address any concerns of customers, clients, investors, or partners, and end with a call for action.

You should also prepare answers for questions that you expect your audience to ask.

The Delivery

Business is a serious subject that demands a serious approach.

While humor may be appropriate in some situations, using it in a pitch is risky. It can distract from your message and leave your audience with the wrong impression of your business.

Start and Finish Strong

The most important parts of a business presentation are the beginning and the end.

At the beginning, you must capture the audience’s attention. You can do this by asking an interesting question, polling the audience, or by making a bold statement. For example, you could say: “I have a product that could increase your sales by 100% or more.”

At the end, you must make a clear and direct call to action. You must tell the listeners how to take the next step such as ordering your company’s product or service or contacting a representative of your company.

Connect with Your Audience

You should remember to involve the audience, which includes making eye contact, smiling where appropriate, and thanking the audience for their attendance and attention.

You can walk around during your presentations if it’s appropriate and comes naturally to you, but you shouldn’t feel compelled to do so.

You should treat questions from the audience as an opportunity to address concerns or skepticism and be willing to invite questions during the presentation instead of waiting until the end.

When you speak, you should avoid using acronyms and technical jargon unfamiliar to your listeners and keep your pitch brief. Audiences in business presentations sometimes complain that pitches are hard to understand and too long.

Multimedia Tools

PowerPoint and other multimedia tools are commonly employed for business presentations. They can either add or detract from your message depending upon how they're used.

When used well, slides can sharpen your message, particularly when they contain graphics that illustrate points in a dramatic or memorable way.

When misused, slides can be boring. A common misuse of slides is when a speaker retreats to the back of the room and simply narrates what’s already on the screen.

Tips for effective slides:

  • Limit the number of slides you use: a good rule of thumb is no more than 20 total slides for a presentation
  • Place titles and the most important information at the top of each slide
  • Use images, charts, or graphs instead of text wherever possible
  • Delete unnecessary words and images from your slides
  • Use as little punctuation as possible and avoid using all uppercase text
  • Choose readable font that people sitting in the back of room can read
  • Avoid white backgrounds and make sure there’s enough contrast between the background and the text on slides
  • Never skip over slides because it suggests to the audience that you’ve miscalculated the time or didn’t carefully organize your slides

PowerPoint slides are now used for more than just presentations. Potential investors often request an electronic version of your slides (sometimes referred to as a “deck”) beforehand.

Technical Issues

You should always be prepared for unexpected issues with technology.

If it’s possible, you should visit the presentation site ahead of time to become familiar with the audio-visual equipment (e.g., computer, projector, and microphone) available and know how to use it.

It’s also wise to bring a back-up thumb-drive for your slides if necessary.

Business Presentation Training

The Division of Economic Development (DED) organizes and co-sponsors conferences throughout the year to connect tribal businesses with potential public and private sector customers and partners.

Some of these conferences offer business presentation training sessions where business experts give feedback to American Indian and Alaska Native business owners about their pitches.

If you’re interested in attending these training sessions, please contact DED.

Additional Information

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Division of Economic Development
1849 C Street, N.W., Room 4152
Washington, DC 20240
9:00 a.m. – 4:00 p.m. EST, Monday–Friday
(202) 219-0740

How Public Law 102-477 Can Create Economic Opportunities

Public Law 102-477 (often referred to as “477”) is the Indian Employment, Training and Related Services Demonstration Act, which was passed in 1992 and amended in 2000.

The goal of the law is to reduce unemployment through workforce development and job training in tribal communities by reducing and streamlining administrative requirements.

This permanent legislation with no expiration date gives tribes the authority to integrate federal employment and training-related services into a single plan for their tribal members.

Participation is voluntary, and the Bureau of Indian Affairs (BIA) is the lead federal agency for the inter-departmental project.

How 477 Plans Work

Each participating tribe decides which eligible employment and training related federal programs to include in its 477 plan.

Public Law 102-477 applies to any federal formula-funded program intended for employment, training, and services that may enhance a person’s ability to become self-reliant.

Examples of eligible programs include BIA’s Job, Placement and Training Program, the Department of Labor’s WIA section 166 Comprehensive Services Program, and the Department of Health and Human Services’ Native Employment Works Program.

A 477 plan is an opportunity for a tribe to develop an employment and training service that is based on their unique tribal goals. In the past, tribes have developed plans that focused on raising educational achievement, addressing the needs of tribal youth, increasing self-sufficiency, and fostering tribal economic development.

Requirements for 477 plans are found in Section 6 of Public Law 102-477.

There is no separate funding associated with Public Law 102-477 itself.

All the funds involved in a tribe’s 477 plan are those which the tribe would have otherwise received from the individual federal programs that are part of their plan.

How to Participate

A tribe wanting to take advantage of Public Law 102-477 should submit an integrated service plan and budget to BIA Indian Services.

A review of their plan is coordinated with BIA’s federal partners who will also decide on its approval. Once approved, the agencies whose programs are included in the plan will transfer funds for the tribe to BIA. After BIA receives the funds, they’ll provide them to the tribe through a Public Law 93-638 grant award designed for 477 or a 477 modification to a Public Law 93-638 self-governance compact.

The tribe is then able to implements its services under the approved plan and budget. Tribal 477 plans are approved for three years at a time.

Benefits of Participating

Tribes have reported several benefits of participation:

  • Improved client services: Increased number of clients served, and improved outcomes for clients
  • Better utilization of program staff: Counseling staff can now serve clients based on client needs, not based on where the money for their salaries originates. Line staff can also focus on providing services to all clients who need them.
  • A single intake system: With only one file for each client, it eliminates the need for multiple files for the same person. The amount of information maintained on each client is also reduced because the federal 477 report form is often simpler than those used for any of the individual programs.
  • Reduction in federal paperwork: Statistics show that the number of reports that must be provided to federal funding agencies is reduced by over 90% from what was required of a tribe before 477 was introduced.
  • Tribal plans can follow tribal, rather than federal priorities: Public Law 102-477 aims to empower each participating tribe to set their own goals for services.
  • A single budget: The public law specifically states that a tribe will submit only one budget for all the funds included in their 477 plan.

Encouraging Economic Development

Title XI of Public Law 106-568 authorizes tribes participating in Public Law 102-477 to devote up to 25% (depending on their local unemployment rate) of their 477 resources to economic development efforts. This overrides any statutory or regulatory prohibitions that part of the individual federal programs in the tribe’s 477 plan.

Title XI also allows tribes to request a statutory waiver of program provisions that could inhibit the successful implementation of their approved 477 plan.

This creates even more flexibility in a participating tribe’s ability to effectively deliver 477 services.

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Division of Economic Development
1849 C Street, N.W., Room 4152
Washington, DC 20240
9:00 a.m. – 4:00 p.m. EST, Monday–Friday
(202) 219-0740

How to Finance a Tribal Business

Tribes and tribal members need to be careful when borrowing money to fund their businesses.

Getting a loan from the wrong source can result in debt repayment terms that can cripple a business or even cause it to collapse.

Prudent financing allows a business to meet the demand for its products or services, hire the employees it needs, secure office or retail space, and purchase necessary equipment.

Where to Find Financing

It’s recommended that you contact your local bank, credit union, or Community Development Financial Institution (CDFI) when seeking financing.

Community Development Financial Institution (CDFI)

A CDFI is a locally controlled private sector financial institution (sometimes funded by the Department of the Treasury) that focuses on personal lending and business development in low-income and urban communities, such as those in Indian Country, where citizens often lack access to traditional lending institutions.

Since the goal of a CDFI is to promote local economic growth, its lending practices are often less strict than other financial institutions.

Some CDFIs are certified by the Department of Treasury as “Native CDFIs,” which means that at least half of their activities are directed toward serving American Indians and Alaska Natives (AI/AN).

Find a list of certified CDFIs.

Preparing for Your Visit

When you arrange for a meeting with a loan officer at a lending institution, you should be prepared to show how a loan will benefit your business.

You should document your company’s profits during its time in business. If your business isn’t profitable yet, you’ll need to describe the steps you’re taking to achieve profitability.

If your business is a start-up, you should provide the officer with a business plan showing how your business will succeed.

You should also bring records documenting your personal and business credit history, tax returns from previous years, cash flow projections for the upcoming year, and relevant financial and bank statements.

Defining Common Finance Words

Principal is the amount of money you want to borrow that you will repay over an agreed upon period of time.

Interest is the amount of money you will pay the lender for borrowing its money over this period.

The interest rate is the amount charged, expressed as a percentage of the principal, by a lender to a borrower for the use of its funds. Interest rates are normally determined on an annual basis, and thus are listed with an annual percentage rate (APR).

Collateral are assets such as real estate, savings, equipment, or other items of value that the lender can use as a secondary source of repayment if the borrower is unable to repay the loan. Collateral reduces the lender’s risk of being unable to recover the money it lent to the borrower.

A secured loan involves collateral that the lender can recover in the event that your business doesn’t pay back its loan. Secured loans usually involve higher credit amounts (the amount of money the lender is willing to lend) and lower interest rates because they pose less risk to the lender.

Receivables financing describes a loan obtained based upon expected payments owed to you by a third party for your goods or services. This is a kind of short-term, secured loan.

A line of credit (also called “revolving credit” or “working capital”) is an account a lender makes available from which you can draw funds when needed, which provides flexibility. You can borrow money up to a pre-determined limit and must pay interest on the money you withdraw.

An equipment loan is used to fund the purchase of a particular vehicle, machine, or other device used for your business. These loans have fixed interest rates and terms.

Equity financing (also called “venture capital”) describes the sale of an ownership stake in shares of your business in return for an immediate cash. Keep in mind that it’s possible to sell so much of your company that you lose benefits that come with being a business that’s majority-owned by American Indians and Alaska Natives. For example, you could lose your eligibility to obtain an Indian Affairs Loan Guarantee (anchor link).

Loan Approval Process

Your lender will try to determine whether you have enough cash flow to pay back the loan in time and whether you’re a person that can be trusted to pay it back.

They’ll also attempt to figure out the collateral or security that they can receive if you don’t pay back the loan.

A private, Native-owned business may pledge land that it owns as collateral for a loan, but tribally owned businesses can’t pledge trust lands as collateral. However, some lenders have accepted leasehold mortgage interests as collateral, and others have taken equipment that a tribe has purchased through the loan.

In addition, the lender will want to know your credit score. A low score may disqualify you from a loan unless you can identify a source of collateral to secure the loan.

Another part of your business that the lender will review is your current debt and the diversification of your income streams. A lender may be less likely to offer a loan to you if your business is too dependent on one specific income source.

To further gauge your ability to pay, the lender may ask whether you’re contributing any of your personal funds to your business. They may express concerns if you’re depending only on financing to start or sustain your business.

From a legal standpoint, the lender will also check to make sure that there aren’t any liens against your business’s assets or lawsuits or tax liabilities that could threaten your company’s existence.

As a general rule, you’ll need to show that your business has been profitable over the past three years to obtain a bank loan.

Sovereign Immunity

When a lender deals with a private, AI/AN-owned business, it can seek to resolve contract disputes with the borrower through litigation, arbitration, or other means.

However, tribally owned businesses enjoy sovereign immunity.

These businesses must first grant their permission before any such dispute can be resolved in court, arbitration, or another venue. Indian Reorganization Act (IRA) Section 17 corporations and businesses created by tribal resolution have sovereign immunity.

To learn more about tribal business structures that preserve a tribe’s sovereign immunity, please see our “Choosing a Tribal Business Structure” page (link TBD).

On the other hand, if the tribal resolution establishing a business states that the business can sue and be sued, the business is likely a separate legal entity from the actual tribe and can’t claim sovereign immunity.

A tribal business may also waive its sovereign immunity.

This is called “a limited waiver of sovereign immunity,” and it’s a common feature of lending transactions involving tribally owned businesses.

Indian Loan Guarantee and Insurance Program (ILGP)

A federal loan guarantee isn’t a direct loan, but it’s still a promise by the federal government to pay back a certain percentage of a loan’s principal in the event the borrower defaults. This kind of guarantee reduces the risk to the lender and enables them to approve a loan that otherwise wouldn’t have been approved, or to offer a loan on better terms to the borrower (e.g., at a reduced interest rate or with a longer repayment term).

Through loan guarantees provided by ILGP, our Division of Capital Investment (DCI) helps tribes and tribal members overcome barriers to conventional financing and secure reasonable interest rates, while also reducing the risk to lenders by providing financial backing from the federal government.

In doing so, DCI is working to fulfill the mission of the Indian Financing Act of 1974 by reducing the disparity between the business capital available to tribal businesses and non-tribal businesses.

Learn more about ILGP.

Additional Information

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Indian Economic Development
1849 C Street, N.W., Room 4152
Washington, DC 20240
9:00 a.m. – 4:00 p.m. EST, Monday–Friday
(202) 219-0740

Choosing a Tribal Business Structure

A tribally owned business is different than a business owned by a member of a tribe.

There are specific forms of tribal business structures that tribes can take advantage of when establishing their business under tribal, federal, or state law.

When a tribe incorporates, it will need to determine the structure that their tribally owned business adopts and under whose laws it will be organized.

A tribally owned business can be formed as an Indian Reorganization Act (IRA) Section 17 corporation, a tribally chartered corporation, or a state-chartered tribal corporation.

Each structure has different consequences in terms of tax liability, preservation of tribal assets, and corporate transparency requirements for potential creditors, investors, partners, regulators, and customers.

We advise that tribes consult an attorney for specific legal guidance on which corporate structure will best suits their needs and circumstances.

IRA Section 17 Corporation

Congress created this tribal business structure when it passed the Indian Reorganization Act of 1934 (IRA).

In authorizing this structure, Congress sought to "permit Indian tribes to equip themselves with the devices of modern business organization, through forming themselves into business corporations.”

Advantages

  • Preserves tribal assets: A Section 17 corporation is wholly owned by the tribe, but is separate and distinct from the tribal government. If the corporation defaults on the payment of funds it has borrowed, only the corporation’s property and assets are at risk. Sovereign immunity removes any tribal government property and assets from risk during a default.
  • No federal income taxes: Guided by federal court decisions, the IRS has ruled that Section 17 corporations aren’t required to pay federal income taxes whether they are operated on or off the reservation.
  • Can issue tax-exempt bonds: Section 17 corporations can issue these debt instruments if the proceeds are used to finance essential governmental services.

Disadvantages

  • Inflexibility: An IRA Section 17 corporate charter cannot be dissolved or suspended except by an act of Congress. It also cannot be amended without approval from the Secretary of the Interior.
  • Minimal statutory definition: States promulgate laws governing all aspects of the formation, management, operations, and dissolution of state-charted corporations. By contrast, Section 17 corporations are established under the authority of 25 U.S.C. § 5124, which is a single paragraph of text. The absence of comprehensive corporate statutes may increase the risk of litigation and make prospective business partners hesitant to enter into contracts with Section 17 corporations.

Setup Process

In order to establish a Section 17 corporation, a tribe must submit a resolution adopted by its tribal council petitioning for the issuance of a Federal Charter of Incorporation to the appropriate Bureau of Indian Affairs (BIA) regional office.

The resolution should be accompanied by a proposed charter, which is typically prepared by the tribe’s attorney.

The proposed charter, which is similar to articles of incorporation, should detail the business’s purpose, how the business will be managed, when and how meetings will be conducted, what its powers and limitations will be, and other pertinent operational and structural information.

The regional director of the receiving regional office will review these submissions to ensure that the resolution was duly adopted in accordance with tribal law and that the charter contains no provisions contrary to federal law. Then, the regional director will sign and submit a Certificate of Approval to the tribe.

The tribal council must then pass another resolution to ratify the charter. When that resolution is enacted, the corporation will officially come into being.

Tribally Chartered Corporation

A tribally chartered corporation is an entity organized by a tribal government that’s pursuant to a tribal code or resolution.

Advantages

  • Avoid state regulation and taxation: A tribally chartered corporation doing business on tribal land whose stock is owned by American Indians and Alaska Natives (AI/AN) isn’t subject to state control or taxation. However, if a tribally chartered corporation conducts business outside of the reservation, some states may require “foreign corporation” registration to operate within the state.
  • Easy to form: No approval is needed from the federal government or state authorities to establish this kind of corporation because it’s formed entirely by a tribal government, which enacted the ordinance, business corporation code or resolution that authorized the corporation's formation.

Disadvantages

  • Transparency concerns for lenders and partners: Lenders and potential business partners can easily obtain information about a corporation within a state because state-chartered corporations are required to regularly disclose and update operational information on a state’s official website. Tribally chartered corporations may not have this requirement and may find it harder to access capital and attract joint venture partners as a result. One possible solution for a tribe is to set up its own corporate website and impose its own stringent disclosure requirements.
  • Potential federal tax liability: The IRS doesn’t provide precise guidance on the limits of federal tax immunity for tribally chartered corporations. However, because tribes are exempt from federal taxation, tribally chartered corporations that operate as an “integral part” of the tribe are exempt from taxation. The IRS will consider many factors in determining how “integral” a tribally chartered corporation is to a tribe.

Setup Process

If the chartering tribe has enacted a business corporation code, this will often spell out precisely what must be included in the business’s articles of incorporation and by-laws. On the other hand, if the tribal council has simply adopted a resolution authorizing the tribally chartered corporation without providing more details, organizers of the corporation must create their own articles of incorporation and by-laws.

State-Chartered Tribal Corporation

A “state-chartered” tribal corporation is a corporation wholly or partially owned by a tribe organized under state law.

Advantages

  • Easy to form: Organizers of the corporation need only follow formation procedures detailed by the state in which they wish to incorporate. This usually involves filing articles of incorporation, though requirements may differ from state to state. There is no separate setup process.
  • Transparent: Creditors and potential partners can easily conduct research on a state-chartered corporation because filing information and updates can be obtained online from a state’s official website or from other sources.

Disadvantages

  • No presumption of sovereign immunity: Tribes themselves will still have sovereign immunity (i.e., they cannot be sued in federal court without their permission). However, tribal corporations chartered by states are subject to litigation in most cases.
  • Must pay federal taxes: Tribes are not liable for federal taxes, but state-chartered tribal corporations must pay taxes regardless of where they do business.
  • May not issue tax-exempt bonds: This kind of corporation isn’t an “integral part” of a tribe, and therefore cannot issue or use these debt instruments.
  • Unclear rules about state taxes: Some courts have ruled that state tax law is less likely to apply to on-reservation activities involving only AI/AN individuals and where the state’s regulatory interest is minimal. Yet other courts have ruled that, even on tribal lands, state tax laws may apply unless doing so would interfere with tribal self-governance or a right conferred or reserved by federal law.

Additional Information

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Division of Economic Development
1849 C Street, N.W., Room 4152
Washington, DC 20240
9:00 a.m. – 4:00 p.m. EST, Monday–Friday
(202) 219-0740

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