- Details
- By Chez Oxendine
- Finance
More than $80 million in U.S. Treasury funding could catalyze an additional $830 million in economic opportunities for Alaska Native small businesses, officials said during a press call Tuesday.
The Department of the Treasury announced the approval of up to $83 million in funding through the State Small Business Credit Initiative (SSBCI) for a consortium of 125 Alaska Native tribes that will work in partnership with a small-business development corporation at the University of Alaska Anchorage (UAA).The money will help lenders in these communities support small business owners with more capital, lower interest rates, and longer terms, according to a Treasury statement.
The enhanced support is expected to create a multiplier effect where each dollar of SSBCI funding is anticipated to generate ten dollars of private investment.
Tuesday’s award represents the fifth SSBCI distribution to tribes over the past year, totaling $415 million to more than 220 tribes since distributions began last year.
(L-R): Malerba, Bittner“These funds will serve some of the most rural populations in the United States, creating jobs and expanding capital access for Tribes across Alaska,” U.S. Treasurer Chief Lynn Malerba (Mohegan) said during the press call. “Through the flexibility of the consortium model, these Tribes will benefit from the historic opportunity that these resources for small businesses present to Indian Country.”
Tuesday’s award will provide up to $10.3 million and $37.9 million respectively for loan guarantee and loan participation programs.
Loan participation programs allow the program managers — in this case, the Alaska Small Business Development Center (SBDC) at UAA’s Business Enterprise Institute —to support lenders by either purchasing part of a loan or stepping in as a subordinate lender. Loan guarantees ensure that, should a borrower default, the program manager will assume the debt.
Both of those programs aim to reduce risk for lenders who might take an interest in supporting Alaska Native business owners, per the Treasury statement.
In a similar vein, $12 million of the SSBCI award will be used to cover collateral shortfalls between lenders and small-business borrowers. Finally, $22.9 million will help launch private equity and venture capital funds for some of the member tribes of the consortium. These funds will either pool with private investment or build investment programs of their own to issue equity funding or venture capital in support of small businesses.
Rena Greene, executive director of the Nome Eskimo Community, called the SSBCI award “transformational.”
“Rural Alaska is entrepreneurial,” Greene said. “Our SSBCI consortium will address capital access barriers and unlock private financing for all of our small businesses that are ready to grow.”
John Bittner, state director for the Alaska SBDC, said the funding and its anticipated multiplier effect would mean “hundreds of millions of dollars…flowing into rural and Alaska Native-owned businesses.”
“Alaska’s tribes are the backbone of our rural economies,” Bittner said. “[This will] drastically change the economic landscape of some of the most remote communities in the nation.”
Bittner noted that Alaska SBDC is taking the lead on both tribal and state SSBCI funding. The Center was awarded $59 million on behalf of the state in March 2023, and has distributed over $38 million to state borrowers so far.
Sitting at the helm of both funds, Bittner said he saw a lot of the same lenders who have supported the state SSBCI program show interest in the tribal side of things.
“We’re just trying to get as much interest going as possible,” Bittner said.
Some of the member tribes of Alaska’s SSBCI consortium are part of the wider Alaska Federation of Natives (AFN) consortium. Nicole Borremeo, AFN’s executive vice president and general counsel, said some of the SSBCI consortium’s member tribes are already garnering interest from potential investors as well as Native-owned businesses seeking capital.
“We’re seeing a lot of interest from fish processors and some individual fishermen,” Borromeo said. “We’re also seeing interest from a lot of our Alaska Native Corporations, who run general stores in these communities.”
U.S. Rep. Mary Sattler Peltola, Alaska’s at-large congressional representative, praised the funding as a vital investment in the state’s unique economic landscape.
“Our local and Alaska-Native centric economies thrive and rely on homegrown small businesses—from coffee shops to electricians,” Peltola, a Democrat, said in a statement. “This funding invests in what’s already working here in our state and helps us grow our economies the Alaska way, not the Lower 48 way.”
