Up to $83 million in federal funds have been approved for small business loans to be made through a consortium of Alaska tribes. The funds announced Tuesday are part of the U.S. Treasury’s broader effort to support tribal economies. Up to $415 million will go toward economic development for 220 tribes, according to a Treasury press release.
Of this group, 125 tribes form the Alaska Consortium.”“These funds will benefit some of the nation’s most rural populations, create jobs and expand access to capital for tribes across Alaska,” said Chief Lynn Malerba, United States Treasurer, the first Native American to hold the position, which oversees gold reserves and other federal assets, as well as money and coin production.
The funds, part of the Biden administration’s American Rescue Plan, are administered by the Alaska Small Business Development Center.
You are part of the center Government credit initiative for small businessesa government-funded program designed to attract investors and lenders to companies that do not normally compete for loans and that have the collateral needed to obtain certain loans.
Rena Greene, deputy director and interim executive director of the Nome Eskimo Community, said her tribe looks forward to the “transformative impact” of the funding.
She mentioned the Port expansion and a new Graphite mine in Nome and said the funding will improve the community’s infrastructure, energy and economic development ahead of upcoming projects. This funding opportunity, she said, is “once in a generation.”
Jon Bittner, executive director of the Alaska Small Business Development Center, said the funds will lower the risk profile of businesses in rural Alaska that have previously failed to receive investment. The center, part of the University of Alaska Anchorage, provides resources, advice and support to help small businesses grow.
“Basically, this will spur private investment in businesses and communities that otherwise wouldn’t have received it,” Bittner said. He also said small businesses in rural areas have a particularly big impact — for example, a store that hires five people could increase employment opportunities in that community by 10 to 15 percent.
Small businesses that meet the program’s criteria can receive up to a 50% loan guarantee, Bittner said, while businesses owned by tribal members can receive up to 80%. “We believe this will incentivize lenders to do a lot more business with tribal members than they otherwise would,” Bittner said.
Bittner said businesses owned by socially and economically disadvantaged individuals may also qualify for the tribal program. This could include businesses located in rural areas or owned by women or LGBTQ individuals.
The new program is similar to the center’s existing state program, which launched in 2023 with $59 million in funding. The main difference between the state and tribal programs, Bittner said, is that the tribal program offers additional incentives for tribal businesses. In addition, borrowers must be socially and economically disadvantaged to qualify for tribal financing. The state program does not have the same requirement, but prioritizes assisting businesses owned by individuals from underserved groups.
According to Bittner, the funds will go to four different programs. The majority of the funds, $39.7 million, will go to a loan guarantee program, while $10.3 million will go to a loan participation program.
In the meantime, $12 million will serve as loan collateral, particularly for businesses that are “hard to secure,” Bittner said. He cited commercial fishing tourism in rural areas as an example, where collateral is “quite frankly a no-go” due to isolation.
Finally, $22.9 million will go toward an equity capital program that provides a one-to-one match for private sector investment capital, which the center hopes will lead to an increase in equity capital investment in rural and remote Alaska.
The program has already drawn interest from seafood processors in rural parts of the state and some individual fishermen, said Nicole Borromeo, vice chair and legal counsel for the Alaska Federation of Natives. “Many of our Native businesses operate the general stores in our villages, and we know there could be interest there,” she said.
Bittner said the center hopes to spur up to $750 million in new investments in the state over the program’s 10-year lifespan.
U.S. Representative Mary Peltola of Alaska, Democrat, said in a press release that the funding would contribute to economic growth “the Alaska way, not the Lower 48 way.”
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