Indian businesses make headway
But success comes not without fighting discrimination, economics of life
By Renee Ruble
MINNEAPOLIS -- When Ken Bellanger sought money to start a business in the berries, syrup and rice of his Leech Lake Reservation, he found he was just a helpless seed in the corporate woods.
Unable to get a bank loan and rejected by some state loan programs, Bellanger risked his savings to start his Indian products business.
"One backer told me, 'We don't loan money for twigs and berries.' No one would invest in me, so we did it by ourselves," said Bellanger, a member of the White Earth Band of Ojibwe.
He took classes, bought a lot of how-to books and sought advice from Indian business leaders around the state. Soon, his Northland Native American Products earned a profit, making Bellanger one of a growing number of American Indians making gains in Minnesota's economy.
Like other Indians who have entered business, Bellanger said he didn't make it without some extra struggle. Discrimination, misconceptions about sovereignty and the economics of reservation life all work against Indians, Bellanger and other entrepreneurs say.
Despite those difficulties, membership in the Minnesota American Indian Chamber of Commerce has doubled in the past four years. A state program makes loans to Indian start-ups, and some bands have their own loan programs. And American Indians who establish themselves often nurture other hopefuls.
Foster Wood Products got off the ground with a loan from the Minnesota Indian Affairs Council, the official liaison between state and tribal governments. The loan program, backed by mineral taxes that counties pay the state, has made more than 100 loans since 1981, worth some $2.35 million.
Such help is critical for Indians, who often have little collateral to offer a bank, said owner Nancy Foster, a member of Mille Lacs Band of Ojibwe.
"It's very difficult for Native American people to accumulate wealth because a lot of Native Americans live on trust land and can't use that for equity," she said.
The loans are spread across the state's 11 reservations, with three-fourths allocated to on-reservation businesses and one-fourth for off-reservation businesses. Recipients must be at least one-fourth Indian, enrolled in a Minnesota tribe, and wholly own a for-profit business in the state.
Most of the Indians who received the loans are still in business, running resorts, saw mills, video stores, coffee shops and auto stores around Minnesota. But the program's restrictions mean that many American Indian entrepreneurs won't qualify.
Last year, the program issued only six loans totaling $142,375.
"It's very difficult with this program because it's so narrow," said Laura Straw, who directs the Indian Affairs Council program.
Some Minnesota bands offer their own loans.
The Mille Lacs Band uses casino revenues to support band members launching businesses. In the last six years, through February, the band had approved 45 loans worth over $1.3 million for businesses ranging from an ostrich farm to a construction company.
Sixty-three percent of the businesses are still operating.
The strongest support for Indian entrepreneurs may come from each other. Whether Ojibwe or Dakota, Indians mentor and employ each other. Bellanger calls it an informal "hand-holding process."
The Fosters decided to move their pallet parts business from Cass Lake to Grand Portage in part to help the economy on the northeastern Minnesota reservation.
When operations begin this summer, Foster Products will create a dozen jobs right away, and later will support other business like trucking and logging.
"It's a win-win situation for both parties, for Foster Wood Products and Grand Portage Reservation," Foster said.
On the Leech Lake reservation, the Chippewa tribe operates a Native American Business Development Center to incubate businesses.
Indians pitch their business idea to the center, which selects the ones with promise and helps develop a business plan, accounting process and loan packaging. The center gets about 300 applications a year and chooses 100.
Jay Goodwin made it on his own.
Goodwin, a White Earth Band member, built one of the state's most successful small businesses -- JGC Equipment Co.
In seven years, his material handling business went from two people (Goodwin and his wife) in rented space with $100,000 in annual sales to 18 workers, $5.2 million in sales and a warehouse in Blaine.
Goodwin became the 2000 Minnesota Minority Small Business Person of the Year and had Fortune 500 clients like Northwest Airlines. He promoted JGC as an Indian-run business, and more than half of the employees were Indian.
Goodwin's business eventually crumbled, and he believes discrimination played a part. His bank refused to extend a line of credit at a critical time, he said. His bank refused to comment.
And Goodwin said even when he was successful, his profits would have been larger if he had kept his Indian ancestry quiet. Some clients pulled business because they thought he was receiving payments from casino revenues, he said; others might not have wanted to do business because of lingering tension over a fishing treaty rights case.
"We'll do business on the phone, but then when they see me, it's a whole different story," Goodwin said.
While Goodwin's business tanked, Bellanger's has prospered. These days he travels the country, mostly the Upper Midwest, to seek out Indian art and items to sell in his Minneapolis gallery alongside his gift baskets.
With plans to branch into Internet sales and perhaps open a second store, Bellanger said he makes sure to practice his cultural lessons.
"We're helping the infrastructures of our tribes," Bellanger said. "The future of our people is going to be dependent on economic development. We need good young Indian men and women going into business. They need to be accountants, financiers and marketers."