The Native CDFI Network maintains three main policy priorities to promote access to fair lending products that meet the unique needs of Native communities. With the support from our members and partners, we work to inform policy that is favorable to positive change in Native American, Alaska Native, and Native Hawaiian communities.
Establish a supportive financial infrastructure that promotes economic stability in Native communities.
Native communities are faced with some of the nation’s most distressed economies and poorest living conditions. The Native American Lending Study, published in 2001 by the US Department of Treasury revealed a lack of investment by mainstream financial institutions in these communities, resulting in lack of access to capital for Native Americans, Native Hawaiians, and Alaska Natives.
- Amend the Native CDFI Fund’s authorizing statute to make the Native Initiatives permanent.
- Continue to provide training and technical assistance to emerging and mature Native CDFIs.
- Increase access to federal capital sources by allowing Native CDFIs to be designated as preferred lenders for loan guarantees offered by all federal agencies, including USDA and SBA.
- Update the Native American Lending Study.
- Implement the CDFI Bond Guarantee Program so that it is accessible to Native CDFIs.
- Deem Native trust lands as qualified investment areas for New Markets Tax Credits.
- Support data gathering initiatives to showcase the meaningful impact Native CDFIs have had on local economies.
Provide innovative financial products and services that adapt to the unique needs of Native economies and support self-sufficiency
Without exposure and access to the mainstream financial industry for generations, many Native people do not understand the importance of financial management or how to begin building assets. The technical lingo and stringent terms of mainstream financial institutions discourage Native people from doing business with them. Developing fundamental financial management skills is essential to building healthy Native economies.
- Reintroduce the CDFI Fund’s Native Individual Development Account (IDA) Initiative.
- Encourage tribes and federal agencies to develop a standard process for financing mortgages on trust land.
- Implement mandatory financial education and entrepreneurship for children in grades K-12.
- Increase access to financial education and entrepreneurial technical assistance for Native Americans, Native Hawaiians, and Alaska Natives.
- Support financial products with flexible terms that address the circumstances of Native communities.
- Share innovative strategies for green workforce, housing, and business development.
Encourage fair and sound lending practices in Native communities
The lack of banks, credit unions, and alternative lending institutions in and around Native communities, has made Native communities prime targets for predatory lending vehicles like high-cost loans against tax refunds, payday loans, pawn shop transactions, car title loans, high-interest credit cards, and mortgage loans with excessive fees or interest rates. Payday loans average 400% interest rates, and thrust borrowers into a downward spiral that diminishes assets and often creates delinquent credit for Native individuals and families.
- Conduct lender outreach and education to attract financial institutions to Native communities.
- Ensure a strong and well-enforced Community Reinvestment Act that effectively serves Native communities.
- Promote the use of the Earned Income Tax Credit (EITC) and Volunteer Income Tax Assistance (VITA) sites.
- Enforce a small-loan interest rate cap of 36% Annual Percentage Rate (APR) or less.
- Restrict Refund Anticipation Loan (RAL) marketing and lending at tax time.
2016 Federal Policy Recommendations
Even in times of restricted federal dollars, CDFIs are good investments to help support low-income, underserved communities. In order to continue to build on the successful impact that Native CDFI’s have had on their local economies over the past decade, the Native CDFI Network has developed a set of recommendations to federal policymakers.
- Provide at least $16 million for the CDFI Fund’s Native American CDFI Assistance (NACA) Program in the FY 2017 Financial Services and General Services Appropriation bill. This is the funding level requested in the President’s FY 2017 budget and is an increase of $1 million over the FY 2016 enacted level. With over 70 certified Native CDFIs and 60 more in the certification pipeline, demand for funding will grow as Native CDFIs work to serve more Native communities.
- Include language in the FY 2017 Financial Services and General Services Appropriation bill to waive the non-federal match requirement (Public Law 113) for Native CDFIs applying for NACA Program funds in FY 2017. Native CDFIs face significant institutional barriers to raise private funds. Native communities are unserved or underserved by the conventional financial institutions which are the most common source of CDFI match and private foundations, also a common source of CDFI match, have a limited presence in Native communities. These barriers to capital are constants in Indian country.
- Make the New Markets Tax Credit (NMTC) program permanent. The NMTC Program was enacted by Congress as part of the Community Renewal Tax Relief Act of 2000 and is administered by the CDFI Fund. It provides tax credits to individuals or corporations, which invest in job creation or material improvements in low-income communities, including Native American communities. Some Native CDFIs have succeeded in deploying NMTC investments. With permanence, NMTC investors and Native CDFIs will have more time to plan and invest in the infrastructure necessary to support the program and have an even greater impact in Indian Country.