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American Indians helping American Indians

ROCKY BOY, Mont. - A new credit outreach program will make it easier for Indians to secure and pay back agricultural loans. The American Indian Credit Outreach Initiative, launched last January, brings Indian borrowers and credit counselors together to make federal farm and ranch lending work for Indian country.

A cooperative agreement between the Farm Service Agency, a division of the U.S. Department of Agriculture, and the National Tribal Development Association, a non-profit 39-tribe coalition, Credit Outreach's self-described mission is "to advance the governance and economies of its member tribes and Indian country as a whole."

Neal Rosette, NTDA's program director, said the effort grew from an economic needs-assessment of reservations in Montana and Wyoming, which clearly revealed a dearth in credit opportunities for potential borrowers. An experienced grant-writer, Rosette, Chippewa-Cree, sent FSA an unsolicited proposal to provide loan application services to potential borrowers. A key feature of this proposal was its outreach component, which took the program's services to farmers and ranchers on their own time.

"Most programs are for the convenience of the program itself," Rosette said. "Farmers and ranchers have much different hours - between nine and five, they're outside. Not only that, the program came from Indians. It was conceptualized by Indians, designed by Indians and administered by Indians. Based on that, we convinced FSA to let us try this."

A very successful three-and-a-half-year pilot program, which operated out of the Chippewa-Cree Tribe's Stone Child College, proved Indian borrowers an acceptable credit risk for lenders participating in FSA loan programs. Credit Outreach, headquartered on the Rocky Boy reservation, was in business. The initiative officially kicked off last January in a ten-state region, and received up-front funding for year.

"When we first started [in 1997] the delinquency rate for Socially-Disadvantaged Borrowers [in which Indians are classified] was over 28 percent,' Rosette said. "In Montana, after one year, the rate for our program recipients was 14 percent." The state's total volume of FSA loans jumped to $10 million from $2 million to Indians in its first year. Montana now averages some $8 million to $9 million in FSA loans annually.

Credit Outreach strives to provide pre-loan education and borrower responsibilities and to educate Indian country as to what FSA can do for Indian ranchers and farmers in need of capital.

"It's not just getting the loan, it's learning how to manage and pay back your loan," Rosette said. "We're not saying the saviors of Indian agriculture. But we can provide services that borrowers have never had before."

Another innovative feature of Credit Outreach is that its staff is largely comprised of Indians. Rosette said this was because potential Indian borrowers are generally intimidated by the grueling and highly regulated application process as well as a lack of native staff members at FSA.

Rosette described the application itself as like opening a large book, which was quite intimidating to Indian borrowers inexperienced in the bureaucratic regulations governing federal lending programs. But the pilot program proved that with proper pre-loan education and counseling, delinquency rates for Indian borrowers could be drastically reduced.

Previously, borrowers who could not meet a loan payment, even for reasons beyond their control, would "hide under rocks because they didn't know what to do," Rosette said. Flexibility and servicing options are available to borrowers, "that they didn't understand before. Now they know that FSA will work with them ? "We do have to hold peoples' hands sometimes, but that's alright. Some people need that."

"These programs can work in Indian country," Rosette continued. "But you have to have Indians there, helping to make the rules at the state level. All [of FSA's] programs are written so that everybody in the country can access them no matter who you are. Each state has its own committee that sets policy for that individual state. In order for Indians to have access, you'd better have an Indian person sitting on that state committee to make sure we're not left out again."