Debunking Tribal Lending Myths

The Habematolel Pomo of Upper Lake in California runs a successful Native loan company.


Published April 16, 2018

There are 573 federally recognized American Indian tribes in the United States. Contrary to popular belief, only about half of these sovereign nations operate in the gaming sector. This is due to a number of reasons, the main one being geography. A majority of sovereign tribes are not gaming tribes. They don’t operate lucrative and extensive casino operations, they are small, often geographically isolated and economically distressed groups that are trying to provide for their members through economic development and economic diversification.

In order to better serve their members, tribes continue to branch out into new businesses sectors. They have entered into the fields of pharmaceuticals, health/medical, energy (green/renewable/fossil), e-commerce, online gaming, lottery, fantasy sports, hospitality, retail, aerospace, technology management, staffing, computer/information technology services, banking, and agriculture, to name but a few.

Levi Rickert

One of the areas where tribes have seen economic growth is in the financial technology sector by creating tribal lending enterprises (TLEs). Unfortunately, there are many myths and misinformation regarding Native American lending. As we look at these myths, remember that economically challenged tribes are pursuing economic development opportunities to provide services (housing, health, education, and assistance programs et cetera) and infrastructure to their members.

The first myth is the assertion of a “rent-a-tribe,” whereby non-Indians supposedly “rent” the sovereignty of the tribe. Not only is this myth false, it is inherently discriminatory to imply that  American Indians are rubes to be duped.

The reality is that like any other business, tribal lending companies may choose to outsource, or work with third party service providers when necessary to complement the domain expertise of employees on-reservation. These services may include depository banking services, call center operations, data analysis, IT networking and hosting, and credit risk scorecard development. This is consistent with the larger fintech ecosystem, which is heavily dependent upon third party service providers to maintain a competitive advantage. 

Another myth that must be dispelled, which is related to the rent-a-tribe myth, is that tribes don’t “operate” these businesses, have limited employees on reservations and are not the decision makers.

Tribal lending is becoming a major regional employer in areas surrounding tribal lending operations. Tribal lending jobs offer a career in a fast-paced, high-tech field with growth opportunity that helps tribal councils combat poverty on the reservation. With unemployment on some reservations exceeding 70 percent tribal lending businesses are not only providing large sources of revenue, they are a source of hope. These revenues allow for economically and in some cases, geographically-challenged tribes, to obtain the needed funds to better serve their tribal members.

Two tribal examples come to mind when thinking about tribal economic development and success through diversification into tribal lending.

The Habematolel Pomo of Upper Lake in California and the Lac Vieux Desert in Michigan’s Upper Peninsula are just two of the many tribes who are seeing success and growth of tribal economies by providing Native loans. In California, revenue from the Habaematolel Pomo’s tribal lending goes to support tribal infrastructure, cultural programs and youth outreach. On the Lac Vieux Desert Reservation, approximately 42 percent of the Nation’s General Fund comes from revenue associated with tribal lending operations. That revenue is used for housing, education, social programs, health services, support for medical facilities and propane assistance. During a recent winter, the tribe experienced a propane crisis, with prices spiking to over $9/gallon. Because of the tribe’s diversification, there were funds available to help alleviate the propane problem. And in the short-term, members without heat were temporarily housed at the tribe’s casino hotel. Members shouldn’t have to choose between heat and food in a Michigan winter. Thankfully the funds were there to help.

As federal funding for recognized tribes stagnates, tribes must continue to diversify their business portfolios, exercise their sovereign rights under federal and treaty law, and most importantly, provide for their members. We must continually be on the look out and refute myths and lies propagated by opponents of tribes and tribal businesses.

Levi Rickert (Prairie Band Potawatomi Nation) is the publisher and editor of Native News Online.

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  1. Ian Stark 2 years ago
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