Accessing the Resources and Capital to Support Economic Development - Part 2 (Virtual Training Session)
Cultivating Investor-Lender-Borrower Relationships
As tribes and Native communities seek to develop a strong foundation for economic development activities and strategies, they must also identify the array of available sources of funding, financing and/or customers/clients that will support the enterprises and projects that will ultimately implement portions of these strategies.
This session is the second installment in this 3-part training series and will describe approaches that tribal business entities, small business owners, and entrepreneurs can use as borrowers to cultivate relationships with lenders and investors to support economic development.
Training Summary
Session Slides:
Subject Matter Experts:
Foundations of Cultivating Relationships
In the clip to the right, Kevin Klingbeil discusses the steps necessary to move beyond a grants-only approach to funding projects in your economic development plan. In summary, after identifying the projects you are seeking to fund, part of your evaluation of funding sources might reveal that your project would be best funded through loans, tax credits or incentives, or other non-grant sources of funding. If this is the case, you will need to cultivate relationships with the lenders and investors you are engaging with if you have not already done so to solidify both your knowledge of these potentially complicated funding sources as well as your lender’s or investor’s understanding of your community’s unique circumstances, cultures, and values.
Initial Considerations (Slides 6-7)
Who you are – whether a lone entrepreneur, tribal enterprise, or tribal entity - and the size of the project you are seeking to fund will dictate how you approach forming relationships with financial professionals. Ask yourself:
The answer to this question may determine:
Eligibility for different funding types (grants, loan products, tax credits, etc.)
Reference to a business plan vs tribal/community level economic development plan
Types of financial and legal documentation required
Examination of individual vs organizational business and credit history
Need for prior approval from Tribe or other governing body
Types of acceptable collateral and equity required for loans
Identifying Project and Potential Funding (Slides 8-9)
As discussed in part 1, the first step in implementing economic development plans is choosing and sequencing the various projects you are considering undertaking. During this process, it is critical to perform an initial funding landscape analysis and evaluate the available funding sources for your selected project(s).
One approach for evaluating funding sources is using a funding matrix to compare the characteristics of different sources across a range of criteria.
Your initial evaluation may uncover that you want to seek funding from lenders (in the form of loans) or from investors (tax credits or incentives).
If so, you will need to cultivate relationships with these investors and lenders before launching your project.
Keep in mind that financial professionals can provide valuable guidance to help you determine which funding sources are a right fit for your project, saving you time, energy, and money. Accordingly, it’s critical to reach out to financial professionals early and often.
Assessment of Existing and Potential Relationships (10-12)
The relationships you cultivate might come from a variety of places. Assessing your existing relationships and the opportunities for potential relationships can help you decide who you ultimately choose to engage with.
Assess whether the financial institutions you already work with can help you identify and secure the right fit and combination of funding sources.
Determine if your partners (e.g., govts., architects, professional service providers) can leverage their relationships with lenders and financial institutions.
Connect with other trusted sources, including other tribes and regional associations, and examine similar projects in other places to see how they were funded.
Consider seeking out sources of funding at conferences or events for larger, unique, complex, or layered projects (e.g., NMTCs at Novogradac or CohnReznick)
Look through the CoP Subject Matter Experts (SMEs) page to see if connections there will fit your project goals, connect with SMEs from this session, and meet other participants and experts at CoP events.
When deciding between financial professionals and partners, it’s important to ensure a clear alignment of values, products, and qualifications since different financial institutions offer different services and serve varying demographics.
Lead Time, Organizational Structure, and Required Documentation (Slides 13-15)
The amount of lead time – the time required to prepare for funding implementation – is often longer than you might think. Precursor steps like collecting and compiling documentation needed for New Markets Tax Credits, for example, the time needed to achieve tribal leadership approval when applicable, and the time needed for your staff to understand your project situation increase the importance to reach out to financial professionals months or even years in advance of when you intend to use the funding you are pursuing.
The structure of the entity seeking funding will partially dictate the types and amount and complexity of documentation necessary to support the application process. A Native entrepreneur, for example, will likely need to provide personal financial statements whereas tribal enterprises, departments, or chartered entities might use historical and projected operating financials in addition to personal statements.
If you are applying for tax credit financing, the application may require that you demonstrate your community’s need for the project in question, the opportunities unlocked in doing so, and the financial viability of your proposal.
Citizen Potawatomi Community Development Corporation (CPCDC)
Bobby "Trae" Trousdale highlights Citizen Potawatomi Community Development Corporation (CPCDC)‘s mission and services.
Bobby Trae is a citizen of the Citizen Potawatomi Nation and is the Grants and Finance Coordinator for CPCDC. CPCDC is a Native CDFI whose mission is primarily to finance, promote, educate and inspire the entrepreneurial growth, economic opportunity and financial well-being of the Citizen Potawatomi Nation tribal community and other underserved Native populations.
During this session, Bobby highlights the role that CDFIs play in helping Native entrepreneurs and in Indian Country. Find your local CDFI on through the Native CDFI Network.
CPCDC provides both commercial and consumer financial services, including business loans, financial education, and various loan programs such as auto loans and home loans.
CPCDC offers extensive technical assistance to both individuals and businesses. This includes hands-on support for credit building, business plan development, and navigating financial transactions.
Their loan officers provide guidance, constructive feedback, and personalized support to help clients at different stages of their entrepreneurial journey, from those with only ideas to those with fully developed business plans.
In 2024, CPCDC surpassed $100 million in assets and has provided over $116 million to Native American-owned firms, creating or retaining about 921 jobs. They are the largest Native CDFI non-bank in the U.S.
CPCDC collaborates with external agencies, such as the Oklahoma Native Assets Coalition and Sovereign Bank, to efficiently address local financial issues and foster economic prosperity for Citizen Potawatomi Nation citizens.
Bobby emphasizes the importance of starting a conversation early with CPCDC. He suggests bringing whatever documentation or ideas you have, even if incomplete, as it is easier to build from something than from nothing. CPCDC aims to be transparent and supportive throughout the process, helping entrepreneurs gather the necessary financial documents and providing guidance along the way.
Craft3
Phoebe Thums shares her perspective on the role of Craft3 and how it differs from other lenders, particularly native CDFIs and traditional banks. She is Craft3’s Indian Country Strategist and is an enrolled Hopi citizen. Some key points she highlighted include:
Craft3 has a mission to address three main regional challenges in the Pacific Northwest.
Phoebe highlights that Craft3 serves all types of clients, even those who may not be "bank-ready" and offers flexible loan terms to support success, including fixed closing costs, interest-only periods, and payment deferrals for loans under $250,000.
Phoebe states that Craft3 prioritizes building strong relationships with borrowers, even if it means recommending smaller or delayed loans to ensure long-term sustainability.
It specializes in bridge financing, assisting businesses and nonprofits that need to front capital for grants or federal allocations, and offers New Markets Tax Credits programs.
Phoebe shares Craft3 targets at least 20% of its New Markets Tax Credit allocations for Native projects. Each entity targets different amounts for their allocations
Craft3 understands the unique challenges of working with tribal enterprises and native-owned businesses, particularly in areas like land trust issues, and adjusts its lending practices to support these communities.
Craft3 focuses on providing proactive support and technical assistance to borrowers, helping them navigate the complexities of loan compliance, financial history, and documentation, especially as loans increase in size.
Phoebe emphasized the importance of engaging with funders early in the project planning process, even during the conceptual phase, to understand costs, roadblocks, and funding opportunities, including grants and tax credits.
Phoebe concluded by offering Craft3's Getting Loan Ready guide, a comprehensive booklet that answers common questions and provides a glossary of business terms, helping entrepreneurs navigate the complexities of the loan process.
Native American Bank
Peyton Batliner speaks about the Native American Bank’s operations and its unique role as a CDFI and bank serving Native tribes and communities. He is Native American Bank’s Chief Lending Officer and is a citizen of the Cherokee Nation of Oklahoma.
Payton provides insights into the documentation and processes required when working with Native American Bank, particularly highlighting larger scale projects.
Native American Bank offers a wide range of financial products, including commercial loans, secured term loans, revolving lines of credit, construction loans, and bridge financing. The loan sizes range from $<100,000 to $40 million.
The bank will work directly with borrowers who have no credit or messy credit history. If they are unable to assist, they refer borrowers to entities that can help improve their credit.
Payton highlights that the bank will work with unique situations in Indian Country such as tribes not having tax returns.
The bank utilizes non-conventional collateral sources and unique revenue streams like tax credit financing (e.g., New Market Tax Credits, Low-Income Housing Tax Credits), government loan guarantees, and grant programs (e.g., BIA, SBA, USDA) to finance deals in Indian Country.
Payton also highlights the 105(l) lease program. This program is an agreement between Indian Affairs and a Tribe or Tribal Organization to reimburse facility costs and possibly to build a new facility.
The bank requests detailed financial and legal documentation from potential borrowers, including business plans, historical financials, tribal government audits, legal counsel representation, and personal financial statements for key personnel involved.
U.S. Bancorp Impact Finance
Drew Hammond and Phillip Sangokoya speak about U.S. Bancorp Impact Finance operations, mission, and role in Indian Country. Drew specifically highlights how Impact Finance works with New Markets Tax Credit (NMTC) in Indian Country.
Impact Finance is a division of U.S. Bank and it specializes in tax credits (e.g., New Markets Tax Credits, Low-Income Housing Tax Credits, Renewable Energy Tax Credits) and community impact investing. They also provide CDFI loans, lines of credit, and patient capital investments to support the growth of CDFIs and MDIs.
U.S. Bank has a strong focus on supporting projects in Indian Country. They’ve closed projects totaling $840 million, with many on reservation or trust land, including community centers, Head Start facilities, broadband expansion, and housing rehab.
Drew highlights that NMTC is a key tool for gap financing in larger projects, often filling 25-30% of the capital stack. It’s used for projects over $7 million, with an ideal range of $10 million to $25 million. The program is can be applied to various types of community-focused projects.
For successful NMTC deals, early communication is critical. Understanding the project structure, legal constraints (e.g., tribal lease terms), and other funding sources (like USDA debt financing or grants) can prevent delays and help avoid complications during the financing process.
It’s crucial to begin the process early, especially since NMTC allocations are competitive and awarded annually. To use New Markets Tax Credits (NMTC), projects must attract third-party organizations (like Native American Bank, Craft3, CPCDC, and Impact Finance) that have received NMTC allocation awards. These organizations deploy the credits into qualifying projects, but there’s limited allocation and timing constraints.
NMTC deals involve significant documentation, and specialized tax credit attorneys are often needed. The program requires a 7-year commitment, meaning the project must be operated as initially outlined during this period. It's important to plan for potential complexity and have experts involved.
Phillip Sangokoya highlights how Impact Finance builds capacity for nonprofits through their unique partnerships.
Phillip discussed partnerships with platforms like Resilia and Catchafire. Resilia offers free coaching and advising for nonprofit sustainability, while Catchafire connects nonprofits with volunteers for project execution.
Catchafire supports a wide range of projects, from social media strategies to language translations and market research, providing nonprofits with resources to complete tasks they might otherwise struggle with.
Resilia is the all-in-one platform where nonprofits and funders gain visibility into their impact, grow their philanthropic footprint, and strengthen their relationships. Business Intelligence for Impact tracking.
An example of a successful project through these partnerships is how a San Fernando Valley nonprofit increased its impact through Impact Finance and Catchafire.
Phillip encourages CoP participants to reach out if there is interest from a nonprofit looking to access Resilia and Catchafire through their sponsored partnership.
A participant asked about the percentage of NMTC allocations that eventually make their way to tribal nations. Kevin shared that NMTC investments on American Indian, Alaska Native, and Native Hawaiian (AIANNH) lands made up 2.6% of all NMTC investments from 2003-2020. Since 2017 to 2021, there have been an average of 12 projects each year and $144 million in NMTC investment each year in AIANNH lands from New Markets Tax Credit Investments in Native Areas: Selected Case Studies and Best Practices.
Phoebe highlights that Craft3 targets at least 20% of its New Markets Tax Credit allocations for Native projects. Each entity targets different amounts for their allocations.
Model Activity
The subject matter experts walked the audience through a model activity in sequencing and combining different funding sources for project implementation.
Drew suggested using NMTC for the project, first ensuring location eligibility in a qualified census tract, then coordinating timing, site control, and funding with partners like U.S. Bank, Craft 3, and Native American Bank, timing those deals based on type of funding. He also recommended potentially dividing the project into separate components (e.g., healthcare, business incubator, workforce housing) for staggered financing based on different CDE partners' focus areas.
Phoebe suggested that CDFIs could play a role in supporting business owners in the project, especially for retail spaces, food trucks, and nonprofit-led community gathering spaces. She also recommended holding technical assistance sessions for entrepreneurs involved in the project, much like the discussion they were having, to help them navigate tenant improvements and other costs.
Payton emphasized the importance of front-end work such as analyzing programs within the facility, conducting market analysis, and securing funding through IHS, BIA, or tribal contributions. He also stressed ensuring that infrastructure and site control elements (e.g., surface leases, rights of way) are in place and compliant with the requirements of funding programs, suggesting collaboration with consultants and making sure all stakeholders are aware.
Bobby echoed Phoebe's points about the value of partnerships, emphasizing the importance of early-stage client work, such as credit repair, to ensure the long-term success of the project. He highlighted the opportunity to use the project timeline to prepare the community and integrate identity and culture into the development, setting it up for sustainable success.
Closing Thoughts
Questions, with answers from the Resource Group and fellow participants, will continue to be posted in the Knowledge Bank on the CoP website. If you have questions that you want answered, please ask in the LinkedIn group or share it with the administrators.
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