MBN USA

November 15, 2024

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Native Americans face unique challenges and opportunities

Native Americans have often been overlooked when it comes to supplier diversity. But in recent years, they had started to make progress. Still, challenges like other minority business enterprises abound, but most are unique to Indian Country.

MBN USA recently caught up with Amanda Smith, president of the Native American Business Association (NABA), and Joshua Arce, J.D., president/CEO of Partnership With Native Americans. Both organizations advocate for economic development and opportunities for Native American businesses to grow and thrive.

Here, Smith and Arce discuss the status of Native Americans in the supply chain, opportunities and challenges for Indian Country businesses and more. 

Q: How would you describe the landscape of Native Americans in the supply chain?

A: Smith: Native American-owned businesses play an increasingly significant role in the supply chain across various industries. However, they face unique opportunities and challenges due to historical, social and economic factors.

Q: What are the major challenges ahead for Native American-owned businesses, and what must they do to overcome them?

A: Smith:

Challenge: Access to capital 

Many banks and lending institutions are hesitant to provide loans to businesses on reservations due to the unique legal status of tribal lands, which complicates collateralization.

Solutions: 

1. Tribal lending institutions: Seek out Native Community Development Financial Institutions (Native CDFIs) and other tribal lending organizations specifically designed to support Native businesses with loans, grants and financial training.

2. Federal and private sector funding programs: Participate in programs such as the U.S. Small Business Administration’s 8(a) Business Development program and the U.S. Department of the Interior Bureau of Indian Affairs Indian Loan Guarantee and Insurance Program, along with opportunities through the Bureau of Indian Affairs. Build partnerships with corporations that have supplier-diversity programs, opening avenues for funding.

Challenge: Infrastructure gaps – high-speed internet, transportation systems and utilities Lack of infrastructure can hinder communication, logistics and the ability to compete in broader markets.

Solutions: 

1. Invest in digital infrastructure: Participate in federal programs such as U.S. Department of Agriculture’s ReConnect Loan and Grant Program which aim to provide broadband in rural areas. Partner with federal or state agencies to take advantage of infrastructure grants and loans.

2. Collaborate with private firms to invest in energy, transportation and technological infrastructure to improve overall business operations and community development.

Challenge: Capacity-building and workforce development 

Tribal communities often experience high unemployment rates, which can lead to a shortage of skilled workers for growing businesses.

Solutions: 

1. Invest in education and training: Invest in education and training programs for community members. Partner with local colleges, vocational schools and online education platforms to develop a more skilled workforce.

2. Mentorship and support networks: Participate in mentorship programs — through organizations like National Center for American Indian Enterprise Development or NCAIED and the Native American Contractors Association or NACA — to build leadership skills and foster networking opportunities.

Challenge: Relationship-building with mainstream businesses 

Building relationships with mainstream corporations is partly due to a lack of visibility or misconceptions about the capacity of Native-owned enterprises.

Solution: 

Engage in supplier-diversity programs and networking: Reach out to large companies that have supplier-diversity programs seeking to work with minority-owned businesses. Participate in corporate networking events that foster partnerships.

Challenge: Regulatory complexities

Navigating tribal, state and federal regulations can be complex — particularly for businesses operating on sovereign Native American lands. These regulations can create administrative hurdles for supply chain management.

Challenge: Underrepresentation in key industries

Native American-owned businesses are often underrepresented in high-demand sectors within the supply chain, such as technology, manufacturing and advanced logistics.

Arce: Reservation communities have the same economic disadvantages as rural America — only worse. Access to the internet, outside capital and a skilled workforce all impact the development of Native American businesses.

According to Bankrate LLC’s Small Business Owner Statistics report published in 2023, in a 2022 survey, less than 1% of SBA 7(a) and 504 loans go to Indigenous business owners each year. According to Fed Small Business’ 2023 Report on Startup Firms Owned by People of Color, Federal Reserve Banks found that BIPOC businesses or those owned by Black, Indigenous or people of color are less likely than white-owned startups to be fully approved for funding.

Reporting needs to improve. Native-owned businesses are often omitted from the charts showing approval rates of applicants that applied for loans, lines of credit and/or cash advances.

Q: What are major opportunities ahead for Native American-owned businesses, and what must they do to take advantage of these opportunities?

A: Smith: 

Opportunities

1. U.S. government set-aside programs like the Department of Defense Office of Small Business Indian Incentive Program that provides a 5% rebate to prime contractors who subcontract with Native American-owned businesses and the robust, nine-year Small Business Administration’s 8(a) Business Development program that provides technical and training assistance advantages, resulting in federal contracting preferences.

2. Cultural and resource-based opportunities such as leveraging tribal expertise in construction, energy and government contracting.

To fully leverage these opportunities, Native American businesses must focus on strategic initiatives, capacity-building and partnerships. 

Arce: Partner with corporations that are genuinely interested in DEI [diversity, equity and inclusion]. 

According to Bankrate LLC, several nationwide programs aim to increase access to capital and resources for Native-owned businesses. 

E-commerce is also a growth opportunity but relies on improvements in broadband access, especially in reservation communities.

Q: How is your organization helping entrepreneurs take advantage of an ever-changing, artificial intelligence (AI)-focused marketplace?

A: Smith: The Native American Business Association provides essential resources, training and networking opportunities for Native American businesses, empowering them to integrate AI-driven solutions into their operations. It also advocates for policies that promote economic development.

AI-driven sales and marketing agents help Indigenous businesses by analyzing market data, automating customer relationship management and creating personalized marketing campaigns. 

Arce: In its current state, messaging created through AI technology is often exaggerated or misstates key facts. Our organization is currently focused on transparency and accuracy to help set the record straight. 

Q: What impact have recent court rulings and policies threatening diversity, equity and inclusion’s or DEI’s continued advancement — and, thus, supplier diversity — had on Native American-owned businesses?

A: Smith: The weakening of DEI policies risks reducing opportunities for Native Americans to be included in supply chains, government contracting and corporate partnerships. However, by leveraging advocacy, seeking alternative partnerships and entering new sectors, these businesses can work to mitigate the negative impacts of these changes.

Arce: This country left Native Americans and other minorities behind decades ago, and the current trend of “DEI dropout” foretells a continuation of underserving the underserved.

Q: What is your outlook for Native American-owned businesses in the supply chain over the next three to five years?

A: Smith: 

Growth in supplier diversity 

1. Increased corporate commitments: Corporate supplier-diversity programs are likely to continue growing, especially in industries that prioritize sustainability — such as technology, health care and renewable energy. 

2. Focus on environmental, social and governance (ESG): Many Native American businesses emphasize sustainability and cultural preservation, aligning with the values of ESG-focused companies, creating opportunities for Native businesses to become preferred suppliers in industries like energy, agriculture and eco-friendly consumer products.

Technological integration and e-commerce expansion

1. Adoption of AI and digital platforms: Native American businesses that invest in AI-powered supply-chain management tools, e-commerce platforms and digital marketing will reach wider markets, improve operational efficiency and innovate their offerings. 

2. E-commerce and global markets: Platforms like Amazon, Etsy and Shopify provide opportunities for Native artisans and businesses to sell products globally, allowing for significant growth potential.

Policy uncertainty and potential  challenges

1. Impact of DEI rollbacks: If DEI is deprioritized, the overall level of support may decrease. Native businesses will need to navigate this uncertain landscape by building relationships with committed corporations and advocating for continued support.

2. Government contracts and federal support: Political changes could affect the availability of federal programs such as the Indian Loan Guarantee and Insurance Program and SBA 8(a). To mitigate risks, Native businesses should diversify their customer bases and reduce dependency on government contracts by exploring opportunities in the private sector.

Expansion into key growth sectors

1. Renewable energy and sustainability: The renewable energy sector — particularly solar and wind energy projects on tribal lands — presents a major opportunity for Native-owned businesses. Over the next few years, investment in renewable energy infrastructure on tribal lands could lead to significant economic opportunities. 

2. Health care and telemedicine: Native American-owned businesses that can develop solutions for underserved communities, particularly in rural areas, will benefit from government funding and private partnerships aimed at closing the health care access gap. Telemedicine and AI-based health care solutions are particularly poised for growth in the post-pandemic era.

Arce: Native-owned businesses in the entertainment industry are likely to grow, as Hollywood becomes more informed about Native talent and Indigenous stories waiting to be told.

Green energy is a potential growth area for Native-owned businesses. Native groups have already shown success with wind and solar energy and garden programs.

Native-owned businesses can also help stimulate the Native vote to elect more Native representatives across the country. 

To learn more about the Native American Business Association, visit nativeamericanbusinessassociation.org.

To learn more about Partnership With Native Americans, visit nativepartnership.org.