Many of us across America have heard about the American Dream. A definition of this set of ideals (Democracy, Rights, Liberty, Opportunity, and Equality) includes the opportunity for prosperity and success, the ability to start businesses, and an upward social mobility for the family and children, achieved through hard work in a society with few barriers.
When talking about economic development in America most feel that this ideal is available for all. If you work hard enough there’s nothing standing in your way of economic success.
I don’t know how many times I’ve used that saying. In the past, I’ve even asked myself why can’t Native Americans “pull themselves up by their bootstraps” to get out of the poverty that many are often mired in.
But I’ve learned a few reasons why it isn’t so simple. Sometimes there are legitimate barriers that restrict an individual’s ability to succeed economically. The playing field is not truly level for Yakama children that might want to start a business as adults.
If I was going to start my own business and needed capital to be able to do that, one of the first places I could go to would be my home. Whether or not it is advisable to use home equity to finance a small business, the reality is that home equity loans are a significant source of capital for start-up businesses. It is estimated that about 25% of small business owners use home equity loans as a source of capital. See here.
But what if the Federal government owned the land your home was built on? Could you still do that?
Any bank that loans money will usually want some form of collateral to secure their loan. They do this so that if the loan is not repaid, the bank can foreclose on the collateral and the bank is able to get their money back. A bank is not able to foreclose on property owned by the Federal government.
This is the #1 reason why Yakama children won’t be able to start a business when they grow up: they do not have access to the funds to start a business.
Since the Allotment Act in 1887 and then modified with the Indian Reorganization Act in 1934, Reservation land is owned in trust by the Federal government. Any Reservation land not deeded and owned outright by a Native American is technically owned by the Federal government (with Native Americans as beneficial owner.)
As you can imagine, if a bank will not loan you money to take out a home equity loan, it is no wonder there are not more small businesses in Native America. In addition, when the Federal government owns the property in which you live, you don’t have the ability to sell that property either.
It’s no wonder that over half of respondents to a survey had received credit from alternative financial services at significantly higher interest rates than what can be obtained with a home equity loan (First Nations Development Institute (2015). Building Assets and Building Lives: Financial Capability in Native Communities. Longmont, CO: First Nations Development Institute.)
There are systemic issues that prevent many Native Americans from “pulling themselves up by their bootstraps.” This is a significant reason why Yakama children won’t have access to the funds to start a business.
Technology has significantly altered the landscape for certain economic activities. Technology has in many cases removed obstacles that Native Americans have faced previously. No longer are the Yakama Indians limited to selling products on their low population Reservation. The online marketplace available to all businesses today is truly providing opportunities not seen before. Sacred Road has the ability to start an online marketplace to help level this playing field and improve the financial situation of this community.
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