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Native CDFIs getting nearly $3 million

WASHINGTON - Three Native financial institutions received nearly $3 million in financing in the latest round of funding by the federal Community Development Financial Institutions Fund.

Plus, President Clinton has just signed into law a provision that sets aside $5 million from next year's funding to help develop more Native institutions.

Alaska Growth BIDCO, Inc., Anchorage, was awarded a $2 million loan plus a $61,000 technical assistance grant, Hopi Credit Association, Keams Canyon, Ariz., got a loan of $500,000, and the Lakota Fund, Kyle, S.D., received grants totaling $333,000.

The Anchorage firm is a subsidiary of Arctic Slope Regional Corp. and will use the $2 million to increase its loan capital and the grant to buy technology and upgrade its Web site.

Jason Evans, an Inupiat from Nome who is a finance officer at Alaska Growth, said the firm targets Alaska Natives and minorities throughout the state for business loans.

Eighty percent of all its loans have been rejected first by another financial institution, making his for-profit loan fund a lender of last resort.

The firm has loaned about $8 million since starting in 1997, with 50 percent to 60 percent going to minorities, and about half of those going to Alaska Natives, Evans said. He estimated 60 percent to 70 percent of all loans were made in rural areas, to firms like fish-processing companies or lodge providers. It currently makes no housing loans.

Evans said the loan will allow Alaska Growth to hire more employees (currently there are five), make more loans, and make equity investments in firms. It also provides consulting services to village corporations in rural Alaska.

Hopi Credit Association will use its half-million loan to expand housing and small business lending on its Arizona reservation. It is the second time it has tapped the CDFI Fund for $500,000. The tribe is matching the federal funding.

The credit association (it takes no deposits) started in 1952 with a $300,000 BIA loan and existed to lend money to Hopi ranchers for stock. In 1990 the portfolio was still less than $400,000.

But, former president Charley Wagner told a recent CDFI seminar, lending grew to $1.9 million at the end of 1997, as the association began to operate more like a business.

Wagner said an inventory of loans outstanding at the end of 1997 showed two-thirds were housing related with the remainder for business, education, farms and ranches, bill consolidation, lines of credit and other things.

Three hundred loans were outstanding at the end of 1997 with an average loan of $2,800, he said. The smallest loan was for $200 and the largest for $86,000. No more than 10 percent of the total portfolio could be loaned to any one individual.

The credit association topped $2 million in loans in June 1998 and has $3.1 million on its books with total assets of $3.7 million. Stephen Skorupski is now running it.

Delinquencies are usually quite high at revolving loan funds, and for a long time, Hopi was no different. As recently as 1982, more than 30 percent of its loans were overdue. But by 1997, the association reduced that to less than 2 percent.

The Lakota Fund will use its $330,000 to build lending capacity on the Pine Ridge reservation of the Oglala Lakota. The fund, run by Elsie Meeks, Lakota, has made 91 loans for $340,000 over the last three years.

Since its startup in 1986, it has made a total of 400 loans for $1.6 million in microenterprise and small business loans up to $25,000. Meeks told the CDFI seminar she hopes the fund will be able to lift that maximum loan amount to $200,000.

She said she'd like to see the creation of some viable businesses on the reservation, as most of those loans were to entrepreneurs who by and large have not created businesses that employ tribal members.

The $5 million setaside in next year's CDFI total of $112 million is meant for technical assistance and training to encourage development of more Native CDFIs like those funded in the current round. Those additional CDFIs would give Native groups a chance at a larger share of the fund which totaled $123 million to more than 300 financial institutions this year.

Rodger Boyd, Navajo, Native program manager for the CDFI Fund, said a Notice of Funds Availability (NOFA) probably will be posted by the federal government early next year.