PINE RIDGE RESERVATION, S.D. - A lending organization on the Pine Ridge Reservation is touted as the catalyst that brought private enterprise to what was once the poorest county in the country.
The Lakota Fund, a not-for-profit lending organization, started small and grew to become a major player in privatization of economic development here.
Without role models, business plans, motivation and support, very few people can maintain the energy and financial wherewithal to open, let alone sustain a small business. The Lakota Fund is there to help develop plans and also lend the money for start-ups and expansions.
But even more important than location or financing in opening a business on the Pine Ridge Reservation, is education. For many years, potential business owners faced a lack of role models from which to glean information and almost a total void in work experience.
That was until the Lakota Fund began offering a Circle Banking Project and micro-lending to tribal members. Micro-lending later gave way to larger loans ranging from $1,000 to a ceiling of $250,000. The Lakota Fund has loaned more than $3.5 million dollars. In 2001 it helped with 51 small business loans and 27 micro-loans. In 2002 so far, nine small business loans and 17 micro-loans have been contracted.
When the Lakota Fund started there were only 40 businesses on the reservation, mostly owned by non-tribal members. Now the Pine Ridge Chamber of Commerce boasts 93 member businesses, mostly owned by tribal members.
The Lakota Fund was the first micro-lending institution in the nation, said Rebecca Adamson, executive director of the First Nations Development Institute, one of its important supporters. The Fund was also the first on any American Indian Reservation, Adamson said. "People on the Pine Ridge led what is now a huge national movement," she said.
Many small business owners on Pine Ridge call the Lakota Fund the reason for the local renaissance in economic development.
The Lakota Fund moved out on its own as a not-for-profit lending organization and now operates with the help of grants from large organizations, said Monica Drapeaux, the current executive director.
In the past Pine Ridge was a welfare state, Drapeaux said, and people had no concept of what owning a business meant. They looked on arts and crafts as a hobby. Lenders would not look at artisans as business people. Now people are looking at art as a business venture, she said.
"The Lakota Fund created a group of borrowers. Many had never participated before. They have a place to come to for help and technical assistance," Drapeaux said.
The Pine Ridge Reservation has historically had few possibilities for employment, and many people had no work history. They didn't know how businesses worked.
The Lakota Fund provides education and training to people who want to open a business. The potential borrower learns about accounting procedures, business proposal writing, hiring principles and other areas.
The Fund also provides technical assistance after the business opens. The staff at Lakota Fund also helps to engage the BIA in the process to guarantee loans to help reduce risk.
The larger loans create jobs, a few at a time, Drapeaux said. One loan gave rise to 42 jobs; two others were good for 66 more.
The potential borrower must attend a mandatory 10-week course with no guarantee that the person will get a loan.
"If we start a course with 10 people and end with six that is a good thing," Drapeaux said.
"We have tons of visionaries, but you have to have tenacity to be in business. You need drive. Many take the course and never get a loan package, and others take the course and find they are not ready to be in business."
Drapeaux said when she was in business she would have loved to be mentored. "It is scary out there by yourself." The Lakota Fund also provides mentors through the classes.
For many of the people who want to start a business a conventional bank on the reservation is most times out of the question.
"They are regulated. We can do business contracts one on one with people and also provide technical assistance. We know the borrowers. The (Lakota Fund) board members are from the reservation, they know what impact they have on the reservation and there is no politics involved," Drapeaux said.
"You have to have drive and passion. No one makes it easy."
"That's not to say we don't get delinquencies. We work with the people in unconventional ways. We don't make loans to anticipate failure," Drapeaux said.
"The brightest people live here, they just need a break. We give people an extra opportunity to see their dream come true," she said.
Private enterprise is the key to creating jobs and keeping dollars on the reservation, Drapeaux and other business leaders claim.
Drapeaux said the Oglala Tribal Council is supportive of the Lakota Fund and the newly formed Chamber of Commerce, but lobbying of the council members is still needed to bring about a change in attitude.
The Lakota Fund began from within the community and is governed by community leaders, not political aspirants and the tribal government is not involved with the process.
"On Pine Ridge there had been no successes. Not that the Lakota people had failed, it was that the projects failed. Indian people are brilliant and can solve their own problems," Adamson said.
Adamson said a study showed that 83 percent of all the money made on the Pine Ridge Reservation left to help the economies of the border towns and Rapid City.
"People asked us what to do and we said to have their own loan fund; just enough to get a business going. It took one and one-half years of work before the Lakota Fund started in 1986. We were organizing and getting ideas. We wanted to match the culture with capital," she said.
"The (Lakota Fund) has gone beyond my wildest dreams, I feel so good. When Gerald Sherman (the first executive director) and Elsie Meeks (the second executive director) are asked how they achieved success they will say it was because they had the luxury of making mistakes and the time to solve problems.
"It is fascinating to see it is there; people thinking of new ideas and how to solve problems. It's a real entrepreneurial spirit in the institution, it helps borrowers get involved," Adamson said. "There is a personality in the Lakota Fund that comes from the people there."
Drapeaux said it was Elsie Meeks who took the Lakota Fund to the national level. Meeks is now executive director of the Oweesta Corporation, which is a subsidiary of the First Nations Development Institute.
"The question was how can we address the issue of employment and economic development. We had to get loans. It all started as a simple concept," Meeks said. What the Lakota Fund did was to provide the idea that it was okay to be in business. First came the small loans and later the board of directors graduated the amount of loans upward.
"Pine Ridge is doing better in private enterprise. On other reservations businesses are tribally owned," Meeks said.
"When we started making loans we made every mistake in the book. When we separated from First Nations in 1992 we knew success or failure was on our backs. We became better, because we did not want to fail. We corrected our mistakes and started training our potential borrowers. People didn't have a concept of what it meant to be in business," Meeks said.
Meeks was herself a business owner for a few years when she took a break from the Lakota Fund, only to return. The store she previously owned, Longcreek Store in Wanblee, has now doubled in size with the help of the Lakota Fund.
"People became more serious about being in business. When we first started we had lots of capital and weren't lending it, just in small loans. We had to create an entrepreneurial culture. We held fairs and got on the radio and as people got into business it sparked others.
"Businesses became models and that as much as anything helped the climate. When the government doesn't work the private sector has to rise up," Meeks said.
In the beginning she said those involved with the Lakota Fund used to brainstorm about how to build an entrepreneurial culture in opposition to a welfare culture. Years later, she said, it was happening.
"Whether we can lay claim to that, I don't know."