Joshua Iron Shell spent 18 years working for construction companies before he reached a breaking point. He was on a roof in Lincoln, Nebraska, installing gutters, and it was about 100 degrees out. 

“I’m like, I’m making all this money for these other companies,” he said. “I need to be making this money for myself, you know? And my family.” 

Iron Shell had been toying with the idea of starting his own roofing company for a while. He had the skills and the management experience but needed to get his hands on some expensive equipment. 

“My whole extended family, they had to listen to me for years about getting a gutter machine. Like, all I need’s a gutter machine,” he said — plus a trailer and some ladders. All of that would total around $25,000. And Iron Shell couldn’t just walk into any bank and ask for a loan. 

“Coming from where I came from, I didn’t even value having a bank account, let alone a credit score.” 

Iron Shell is a citizen of the Rosebud Sioux Tribe. When he was growing up on his tribe’s rural reservation in South Dakota, he said there just wasn’t a lot of commerce. The handful of businesses in his community — a grocery store, a couple of gas stations — were owned by white people from out of town. 

“There was really no one to model or to look up to,” he said when it came to this entrepreneurship stuff. But when he started asking around for help launching his own company, he heard about a Native guy named Pete who ran a loan fund. 

So on that 100-degree day, Iron Shell took a short video of all the work he’d done and sent it to Pete. 

“He said, ‘I want to open my own business. Tell me what I need to do,’” said Pete Upton, executive director of the Native360 Loan Fund. 

Upton, a citizen of the Ponca Tribe of Nebraska, said Iron Shell was like a lot of his clients: He had plenty of talent and drive, but a less than stellar financial history. 

“He had to clean some things up on his credit, and he did it,” Upton said. Native360 helped Iron Shell develop a business plan, and within a year, it got him that $25,000 loan. 

“Four years later, he’s one of the most successful roofers in the region,” Upton said. 

Ongoing colonialism and generations of anti-Indigenous federal policy have stripped tribal nations of wealth and created unique barriers to financial well-being for Native people, including high rates of subprime credit, physical distance from financial services and a lack of generational financial literacy and wealth.

“We don’t have those parents that are going to co-sign loans for us, we don’t have that inheritance,” Upton said. 

He works with the Native CDFI Network, which represents banks, credit unions and loan funds working to “fill gaps in tribal economies.” But he said upcoming changes to a Treasury Department program have the potential to undermine that work. 

More than 60 financial institutions operating in Indian Country are certified as community development financial institutions, or CDFIs, by the U.S. Treasury Department — a label that gives them access to special grants, technical help and other federal assistance. Last fall, Treasury published a proposed overhaul of the CDFI certification process. 

“When we first heard about it, naturally a lot of fear generated throughout the community of what could happen if all these [new rules] went through,” Upton said. 

“We don’t have those parents that are going to co-sign loans for us, we don’t have that inheritance.”

— Pete Upton, executive director of the Native360 Loan Fund

The Native CDFI Network is mostly concerned about a proposed ban on CDFIs offering certain financial products, including mortgages with terms of longer than 30 years or hefty balloon payments. A survey of its member institutions found that over 70% of Native-serving CDFIs are “gravely concerned” or believe those proposed bans will prevent them from being recertified. 

The number of CDFIs has grown from just a few hundred when the program was launched in the ’90s to more than 1,400, according to Noel Andrés Poyo, deputy assistant secretary of community economic development at the Treasury Department. And Treasury is looking to ensure that banks benefiting from the label are actually filling gaps in underserved communities. 

“Being more clear about what that value is and how you meet that standard is what we are trying to do,” Poyo said. 

He said the lending practices that Treasury is seeking to weed out of the CDFI system are sometimes used predatorily. But through the public comment process, Poyo explained that Treasury has learned that a ban on these practices could have unintended consequences for CDFIs working in Indian Country. 

“The question is, how do you balance between [discouraging] practices that we know have not been good for the marketplace,” Poyo said, while also honoring the needs of banks working in hard-to-serve markets? “And I challenge anyone to find me a harder-to-serve market than many reservations in this country.” 

Joshua Pape, chief operating officer of Chickasaw Community Bank in Oklahoma City, said extended-term and balloon mortgages can be important tools for boosting Native homeownership. He said his bank uses them to balance risk and as a last resort for borrowers with especially poor credit who aren’t eligible for more traditional loans. 

“There are cases where those products may need to be a flexible option,” Pape said. “’I’m not saying it’s the best option, but it is an option. And homeownership is always a good option.” 

If Treasury’s proposed rule changes go into effect without changes, Pape said Chickasaw Community Bank is at risk of losing its CDFI status. 

“We would not stop serving Native Americans; that would not change at all. What would stop though is our ability to receive certain types of grants,” Pape said, including grants that help fund Chickasaw Community Bank’s operations and programs like its down payment assistance program for Chickasaw tribal citizens. 

“We’re totally supportive of refreshing the certification process,” Pape said. “What we’re really wanting the Treasury to do is review some of these unintended consequences and see if there’s some tweaks that can be made.” 

Treasury has held a series of listening sessions with Native CDFI leaders, and Pete Upton of the Native360 Loan Fund is confident that their concerns will be addressed when the new process is rolled out this fall. Native-serving financial institutions face a unique set of challenges, he said, and shouldn’t be subject to a one-size-fits-all certification process. 

“We need to operate in our own little world. Don’t throw us in the bucket with everyone else,” Upton said. “What we’re hoping is that [Treasury] comes to a compromise with us.” 

In a lot of rural tribal communities, Upton said Native CDFIs are the only viable source of capital and the only bridge to traditional financing for clients like Joshua Iron Shell.  

“[Native 360] gave me a shot when I had no credit,” Iron Shell said. But after making years of payments on his business loan, his credit has “gone up tremendously.” He’s looking to expand his business, called The Gutter Connection, to offer other construction services. This time, he said a business loan doesn’t feel so far out of reach.