The nonprofit accelerator and support hub for Navajo and Hopi entrepreneurs has a mandate to deploy $6.7 million from a federal small business credit program to mobilize funding for Navajo businesses over the next two years.
Its first deal through the Navajo Small Business Credit Initiative, or NSBCI, will support Red House Law, a law practice started by Navajo attorney Alvina Earnhart and based on the reservation. Change Labs guaranteed 80% of a $50,000 loan to Red House Law from First Southwest Bank.
“There’s no better investment than Native communities, because that’s where the greatest transformation is [happening],” Change Labs’ Heather Fleming told ImpactAlpha. “The partners that work with us see that future too. They want to be part of that story” (see, “Change Labs’ entrepreneurship hub opens doors for Navajo businesses“).
10x
Change Labs’ $6.7 million is part of a $90 million allocation to the Navajo Nation from the US Treasury Department’s State Small Business Credit Initiative. Funding is being disbursed in tranches.
If Change Labs is able to deploy 80% of its $6.7 million by June 2026, it will unlock another $7 million to the organization and more than $20 million to the tribe. “The goal is to deploy $90 million over 10 years,” Fleming explained.
NSCBI funding can be disbursed in the form of guarantees, participation loans and venture capital. The program stipulates that over the 10-year term, every $1 in NSBCI funding must unlock $10 from other funders.
Lender confidence
Change Labs’ first deal took nearly a year to finalize. Many financial institutions are reluctant to lend to borrowers on tribal lands because of legal complexities, particularly tribes’ sovereign immunity from lawsuits and other legal matters (see, “Overcoming obstacles to Navajo entrepreneurship“).
Navajo business owners based in cities like Albuquerque or Phoenix have an easier time securing a loan, said Fleming. “We’ve lost lenders who were requiring that the tribe waive sovereign immunity, and the tribe is definitely not going to give that up.” Others have asked for guarantees of 200%.
