CDFIs Address Credit Challenges in Indian Country

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A recent subcommittee hearing of the United States Senate Committee on Banking, Housing, and Urban Affairs highlighted the work of Native-serving Community Development Financial Institutions (CDFIs). Senators heard testimony on the continued challenges these unique financial institutions face in extending credit to Indian Country. CDFI representatives made suggestions on remedying the challenges and highlighted their organizations’ impact on the communities they serve. 

The GAO estimates that around 46 million of the 56 million acres of land the federal government holds in trust for Tribes can be used for agricultural purposes. The GAO notes that Tribal Nations and their members continue to suffer from access to credit for agriculture operations. The Bureau of Consumer Financial Protection’s Office of Research defines difficulty accessing credit as being “credit invisible,” while others may define this as “credit deserts.” CDFIs are one tool used to combat these deserts. 

CDFIs were established in 1994 to expand economic opportunities in low-income communities through the U.S. Department of Treasury. CDFIs can take many forms: banks, credit unions, loan funds, microloan funds, or venture capital providers. These entities can extend credit where traditional financial institutions can’t or won’t.   

The Native CDFI Network formed in 2009 to unify CDFIs serving Native trust land communities. Though these entities play an important role in many Indian Country credit deserts, a 2014 study showed that while Native CDFIs are providing agricultural loans in Indian Country, agricultural borrowing needs significantly exceed lending capacity.  

During the fall 2023 congressional hearing on CDFIs, Julia Nelmark, President and Chief Executive Officer of Midwest Minnesota Community Development Corporation noted how challenging Indian Country capital ventures can be for lenders. 

She noted that “in rural areas, there are fewer potential buyers, so a similar property is often worth perhaps 20 percent less than in an urban area. Put that same property on trust land and it drops another 20 to 25 percent. A Tribal business we helped finance before COVID cost roughly $12 million to build but appraised brand new at about $6.5 million. A bank couldn’t finance that fully, and the tribal business couldn’t fill the entire gap.”  

Crystal Cornelius, from Native CDFI intermediary Oweesta in Minnesota, called for increased annual appropriations for CDFIs and to make New Markets Tax Credits permanent, with specific rural and Native allocations. According to Cornelius, Oweesta has around $45 million in agricultural lending extended.  

Senator Tina Smith (D-MN) asked about the challenges facing Tribes and Native CDFIs in getting funds out through the USDA Pilot Project for Home Ownership on Native Lands 

Oweesta’s Cornelius noted that the re-lending program was innovative and much needed after “generations” of challenges in mortgages on trust land. Midwest Minnesota’s Nelmark noted that the pilot project’s requirements for Tribes remained a barrier. She said that some Tribes do not currently have Tribal regulations that allow for federal guarantees and federal direct loans to be used. “If some … leeway in terms of the flexibility that are required to be able to use those (funds) on the reservations, that could be very helpful,” she said. 

The Native Farm Bill Coalition (NFBC) has put forth several policy proposals ahead of the next Farm Bill in its Gaining Ground report that highlight the important role CDFIs have in extending capital to Indian Country to support food, agriculture, and nutrition. 

Gaining Ground calls for the adoption of a pilot program authorizing CDFIs to administer Farm Service Agency and Rural Development direct funding. While these federal funds exist, the challenge of getting them disbursed through traditional financial institutions remains a challenge. Administering these funds through CDFIs would fully exercise the flexibility in existing statutes. 

In the Rural Development title of the Farm Bill, the NFBC outlines two recommendations. The first calls for the U.S. Department of Agriculture to develop a process to foster new CDFIs’ ability to access loan authorities. This process would help Tribal communities overcome many systemic barriers to financial success. The second recommendation proposes extending rural electric loans and granting program authority to CDFIs. This authority would empower these unique financial institutions to make direct loans and loan guarantees as well as grants and other energy project financing to electric utilities that serve customers in rural areas. 

In addition to these initiatives, USDA is expanding its reach into rural housing opportunities through Native CDFIs as well. USDA Rural Development recently announced a collaboration with eight Native CDFIs to increase the number of Native American homeowners residing on Tribal lands. 

Learn more about the Native Farm Bill Coalition at