Cheyenne River loan fund seeded for "economic sovereignty"

EAGLE BUTTE, S.D. - A startup loan fund on the Cheyenne River Sioux reservation here received a seed grant from First Nations Development Institute to help it achieve its goal of "economic sovereignty" for the tribe.

Four Bands Community Fund received $5,000 from the institute's Eagle Staff Fund which has granted millions of dollars to American Indian economic development projects over the past decade.

The non-profit Four Bands, a Community Development Financial Institution, got rolling last April and last fall it held its first business plan development training session for potential entrepreneurs on the reservation. A second 10-week course is set to begin.

Executive Director Stewart Sarkozy-Banoczy said the grant would help Four Bands develop necessary fund-raising and marketing strategies to be able to lend to Lakota entrepreneurs. "We are helping build a reservation economy, we are helping build a nation," he said.

Four Bands will coordinate with Lakota Express, a direct marketing firm owned by Karleen Hunter, and the Lakota Fund, both in Kyle on the Pine Ridge reservation of the Oglala Lakota. The Oweesta Corp., a unit of Virginia-based First Nations, will provide technical assistance. Its director, Elsie Meeks, ran the Lakota Fund for many years. Both women are Lakota.

Four Bands will work with Oweesta on an Individual Development Account program to enable potential entrepreneurs to build up their funds. It will match personal contributions to these accounts which can be used for education, housing or business startups.

Sarkozy said Four Bands is developing a 10-year plan for fund-raising and marketing and picked Lakota Express for its success in direct marketing and because it wants to encourage other reservation-based businesses.

"They've got it down to a pretty good system," he said. The firm will also help the Four Bands develop a Web site.

The director said he hopes to begin lending by June on the reservation, but he acknowledged things can take longer than expected in a new venture. "I've learned to be more patient about this."

Lending will be targeted to business loans and Four Bands plans to do no housing or agricultural credits.

The group has yet to decide on loan amounts and limits, but Sarkozy said the microenterprise model followed by the Lakota Fund and others is a good starting place. He acknowledged he is sanguine that collection problems experienced by the other funds are likely, as well, and is working to instill financial stability and accountability in potential borrowers before Four Bands starts lending.

Money to lend is expected to come from grants and low-interest loans from institutions such as banks or mutual funds. Four Bands received two small donations from commercial banks, and considerable support from the tribe which donated office space, staff assistance and use of equipment. In addition, an Indian-owned business donated a computer.

Four Bands (named after the four bands of Lakota on the reservation - Minniconjou, Itazipco, SiHa SaPa and Oo'henumpa) is applying for some of the $5 million federal set aside approved for assistance to Native CDFIs.

Although it has close connections to the tribe, the fund has been set up as a private, non-profit corporation, and Sarkozy said the tribal council has argued it should remain above the political fray.

It got its start in the spring of 1999, when the tribe's Industrial Business Development Committee made a revolving (money paid back by original borrowers is loaned out again) loan fund one of six priorities. With input from the Small Business Administration, the Federal Deposit Insurance Corp. and the South Dakota Bankers Association on structure, it hired Sarkozy, who taught entrepreneurship at the tribe's Si Tanka College.

Sarkozy said the first 10-week course was attended by business owners intent on honing their business plans and those whose businesses are in "the dream stage."

What are they dreaming about? They include plumbing and heating, legal services, convenience stores, a caf? and pizza delivery, he said.

Sarkozy said that Cheyenne River, like many other reservations, is experiencing "outrageous levels of unemployment and poverty" and he hopes lending to startups will help support the sovereignty of "an emerging nation."

"Our board is pretty diverse and serious about seeing it happen," the director said. The Four Bands board includes tribal members, bankers, American Indian business owners, elders and educators. Banks represented include the local State Bank of Eagle Butte, American State Bank of Pierre and First Financial Bank of Dupree.

Its chairman, Bill Picotte, Lakota, is founder and director of the well-known housing non-profit Oti Kaga.

Sarkozy praised the tribal council and Chairman Gregg Bourland for helping make his organization a reality. "The council instructed the Economic Development Department to help and they have. We could not have done it without their support."