Who's not getting COVID-19 aid? Native American entrepreneurs who may need it most
Sophia Sayles was excited to get her business back on track in January after taking time off to have a baby, now 2. Sayles, a citizen of the Fort McDowell Yavapai Nation, said she had just invested in new technology and equipment as well as explored new services for her visual services business. “I have a photobooth, I do photo shoots, shoot and edit videos, and create slide shows for events,” she said.
“But out of nowhere, it all came to a complete stop!” said Sayles, who also has a 16-year-old son. “No weddings, no photo booths or photo shoots – all eliminated,” she said. And, when she tried to apply for federal small-business assistance, the website froze. “Then the money was just gone,” Sayles said.
Sayles’ experience is echoed by hundreds of indigenous business owners across the state. They're grappling with a sudden stop in revenues after their tribes, and Arizona, went into lockdown in March to slow the spread of the novel coronavirus. While scrambling to pay their bills and feed themselves and their families with little or no income, Native business owners and self-employed microentrepreneurs say it is oftentimes extremely difficult or impossible to obtain business or self-employed SBA loans or other financial assistance. Some lack internet service to navigate websites, while others lack the bank services that might help them pursue aid. Other self-employed people found they don’t qualify for assistance because of their tax status.
The CARES Act provides for loans through the paycheck protection program, known as PPP, or economic injury disaster loan, referred to as EIDL. After small businesses were largely left out of the first round of funding, the Small Business Administration opened a second round of loans when Congress approved an additional $321 billion, including a $60 billion set-aside for small businesses.
However, as Kimber Lanning, founder of Local First Arizona, said, many banks didn’t change their loan processes to accommodate small businesses and microentrepreneurs like barber shops and beauty salons, handymen, artists, photographers, child-care providers and Native art vendors. Nor, she said, did banks notify previous applicants that they were now eligible.
Lanning said she became aware of the numbers of indigenous entrepreneurs who weren’t receiving loans after talking with two members of the Native Women Entrepreneurs of Arizona, an all-volunteer group that provides support, connections to training and networking.
Cherylee Francis, a Navajo Nation citizen who owns a video production firm and is one of the founders of the entrepreneurs group, reached out to several people and organizations, including Democratic Rep. Tom O’Halleran, for help when she learned how many Native businesses need these loans and are not getting them.
Bleu Adams, who’s Navajo, Mandan and Hidatsa, and a citizen of the Three Affiliated Tribes from North Dakota, is one of those business owners. Adams owns Blackbird Brunch, a café in Window Rock, and was in the process of opening up a new eatery, the House of Frybread, in Provo, Utah. The pandemic has largely thwarted those plans. Adams said she could have offered curbside service at the Window Rock eatery but ran into issues with the high cost of compostable takeout containers and interfering with a busy tire shop next door due to traffic flow for curbside. Nevertheless, she said, “We were set to reopen Blackbird Brunch on March 7 but the Navajo Nation shut down due to COVID-19.” So Adams pivoted, and set up the café as a warehouse for Protect Native Elders, a nonprofit for which she’s the co-founder. “We’ve been unable to bring any employees back,” she said.
As for the Provo restaurant, Adams said she isn’t eligible for an SBA loan because she hadn’t opened it yet.
The microentrepreneurs who make their living selling their own and other indigenous artisans’ wares in roadside stands are in similar straits. About 5 miles north of Sedona along S.R. 89A, several concrete tables next to a Dairy Queen restaurant are reserved for the vendors. The Arizona Republic visited the site in May; all the vendors that day were Navajos. Many of the eight artisans at the site that day reported they have raised families and put kids through college by selling to passersby. The pandemic and lockdowns severely impacted their businesses.
Levi Charles’ table is shaded by an Emory oak and other canyon flora. Others have umbrellas to keep the sun off their heads as it crawls west. Charles, who’s from Cameron, is a lifelong vendor and artisan who makes his own pieces and sells other Navajo artists’ works. “I've seen a lot of families that are vendors like myself, who are struggling to make ends meet because of this pandemic,” he said. “Grand Canyon was closed and also our vendors on the reservation until maybe the middle of June.”
Charles said he applied for a CARES Act loan but was denied despite having all the right business tax forms and documents. “The only thing I received was the stimulus,” he said. “I've had family members who applied for unemployment and other grants that that they weren't qualified for just because of the type of microbusiness they have.”
Three tables down, Georgie Reuss had set up her booth for the first time since the lockdown in March. Reuss, a Flagstaff resident, said she was able to obtain unemployment payments for self-employed people for the weeks she was unable to work. Reuss said she also received the $1,200 stimulus payment, and since her grown children worked in essential jobs, the family got by. But, she said, “I'm just happy that we can come back out.”
Some vendors don't qualify because they either don't file federal taxes despite being generally required to do so by federal law, or never set themselves up as a business.
What banks and officials are saying
The Arizona Republic contacted several banks and other financial institutions to learn how they’re doing in loaning to Native-owned businesses. National Bank of Arizona said in a statement that as of May 21, it had processed more than 5,000 PPP loans totaling just over $730 million to businesses all over the state, including the Navajo Nation. The bank also noted that 70% of its loans went to businesses with 10 or fewer employees, and that 72% of the loans totaled less than $100,000.
Wells Fargo also sent a statement. The nationwide bank said they have funded 145,000 loans totalling $9 billion, with more than 50% for $25,000 or less. They didn't provide demographics for their loan customers.
Only one financial institution The Republic contacted reported comprehensive demographics for its loan customers: The Native American Bank.
“I know exactly how many loans we have approved,” said Thomas Ogaard, the bank’s president and CEO. “We track this stuff religiously.” As of May 26, Ogaard said that they have closed $38 million in CARES Act loans to 124 applicants. And, he said, 76% of those businesses are Native-owned and 90% of the loans are to those businesses, although the bank will do business with others. Unlike some banks that are only loaning to existing customers, Native American Bank is making loans to noncustomers, some as small at $1,000, said Ogaard.
Since the bank is mission-oriented to serve Native-owned businesses, he said, “We're going to take the time to ensure that we're doing all we can to support Native-owned businesses and entities," including some owned by tribal elders and others that are just one person, Ogaard said. "We absolutely are going to spend the time and because we know how important it is.” The bank’s 35 shareholders include two Arizona tribes.
Ogaard said that indigenous business owners often lack access to capital; his bank seeks to provide that access. The bank is also a community development financial institution, known as a CDFI. These institutions, which can be a bank, a credit union, or other such financial institution, are organized to serve the banking and funding needs of low-income and disadvantaged communities.
Native American Bank also advises its loan customers about what the funds may be spent on, to ensure that the loans will be forgiven under the specifications of the CARES Act.
One nonprofit organization is also seeking to close the small-business and microentrepreneur loan gap with an online platform. Blue Acorn was established by a group of developers and financial experts to help small- and microbusinesses access CARES Act funds, said spokesperson Stephanie Hockridge. “We found that there’s a lot of misunderstanding for people who are eligible to apply,” she said.
"For example, my uncle is a handyman and owns his own business. He wanted to apply for a PPP loan but he didn’t think he qualifies — but he does.” Hockridge said that these misunderstandings are hurting many small businesses as well as their employees because they don't even realize that they qualify. She also noted that many banks won’t accept applications of less than $100,000.
So, the group, which includes Hockridge’s husband, created an online service to enable a variety of small businesses to apply for these loans. The group also located a community development financial institution which would handle the loan processing and servicing. The service is free to applicants.
Mabel Tsosie, a citizen of the Navajo Nation, said she was stymied in her effort to get a PPP loan for her business and computer information systems support business. “Although I have a relationship with a major bank and signed up to let them know I'm interested in applying for a PPP loan during the first round of COVID-19 funding, the only notification I got was ‘you will be notified when PPP Loan application is ready.’” Tsosie said that the next communication from the bank was that the funds had run out. So, she turned to Blue Acorn. Seven days after applying through Blue Acorn, Tsosie said she was approved for a loan.
“Many small businesses in the Navajo Nation are underbanked, underserved, with intermittent or no internet, and trying to understand very confusing language coming from Congress regarding PPP, all while fighting the COVID-19 pandemic,” Tsosie said. “This gave Navajo small-business owners no chance to apply for the first or second rounds of COVID-19 funding.”
Members of Arizona’s Congressional delegation have taken note of the issue. O’Halleran met with several Native business owners, Local First Arizona and Native Women Entrepreneurs members when he learned that many of his constituents from the 12 tribes he represents weren’t receiving help. "We intentionally tried to make the loan program so that it would go to smaller type of businesses, whether it was a store or a restaurant or a microbusiness," he said. "The first amount of money just got chewed up by bigger, bigger businesses. That was wrong."
O'Halleran said that this lack of support for small businesses led to Congress changing the program. "We also made it so that we drove money down into community banks so that we'll have banking closer to individuals and smaller banks," he said. And, he's been meeting with not only the Native women's group but with artisan associations within the Navajo Nation to learn their challenges and hopefully, to give them the information they need to access the programs.
Sen. Kyrsten Sinema has also taken note of the lack of CARES Act funds channeled to tribal businesses. On May 10, the Arizona Democrat senator wrote that primary employers in tribal communities should have access to the program to protect their paychecks and health insurance.
Sen. Martha McSally took a slightly different stance. At a press conference at the Gila River Indian Community on May 22, Republican McSally said that she had been "hammering on this issue to make sure that these financial institutions know that they were just a conduit of the money, and that they needed to treat everybody equally in their internal processes." McSally noted that money is still available, and advised any small-business owner who hasn't yet obtained funding to try again.
"Putting so much of this relief money in the hands of the big banks allowed them to pick and choose who to help," said McSally's Democrat opponent Mark Kelly in a statement. Kelly said that "Congress has to do a better job in serving Native American small business owners to ensure they get the relief that is intended for them.”
On May 28, the Treasury Department announced that $10 billion of the second round funding for the PPP program would be handled exclusively by CDFIs.
The long view
April Tinhorn is one of the lucky entrepreneurs. Tinhorn, who's also a member of the Native Women Entrepreneurs of Arizona, owns a Phoenix-based marketing and events firm. She obtained a loan to tide her and her family over until she can restart her business. “My PPP loan from the Native American Bank dropped two weeks ago,” said Tinhorn. Also, she said she was offered a mini business grant from the American Indian Science and Engineering Society. So, armed with resources, Tinhorn decided to create a positive space.
“I pivoted to holding events that support the community now,” Tinhorn, a citizen of the Hualapai Tribe, said. She holds a weekly online session to provide advice from experts on mental health, keeping a positive attitude and other practical advice. But one of her biggest pieces of advice is the most profound: “The way things are is dead,” she said. “We need to look forward and shift.” Tinhorn said that quarantine can be a time for refreshing and self-care; “It’s OK to take care of ourselves,” she said.
Like Tinhorn, Sayles says she’s taking a deep breath during this quiet time. “It’s a good time to sit back, have fun with the kids,” she said.
But Sayles said she’s also using some of that time to be ready for when her skills are back in demand. “There’s always something new to learn in the tech biz!”