No land? No loan. Why Borrowing Money From A Bank Can Be Difficult If You Live On A Reservation

LouAnn Solway’s love for breeding runs deep. She grew up on the Siksika First Nation, about 100 kilometers east of Calgary, and learned to care for cattle from her father and grandfather.

“I was always supposed to be around the cattle, feeding them and watering them and fixing the fences and, you know, making sure all the babies were born,” she said in an interview with CBC Radio. Cost of life.

Solway learned not only about cows, but also about horses – used in livestock breeding and management – ​​and how to be frugal when it comes to animal care. “It was a lot to be creative and self-reliant.”

Solway started with about 10 head of cattle, inherited from his father. When she wanted to expand her business, she contacted several banks, looking for a loan between $150,000 and $200,000 – and they all turned her down.

“They all came up with the same thing…you know, ‘Sorry,'” Solway said.

The problem she, like many others in similar situations, faced was this: First Nations people living on reserve do not legally own the land they live on, as stated in the Indians.

Solway Ranch is on the Siksika Nation Reserve. The land belongs to the Crown, and under federal regulations the bank cannot seize it – or the livestock – in the event of default.

For the banks, “it was not a good guarantee”, she said, of her land and livestock. “And a lot of times it was that they didn’t have a special program in their banks that served native projects like mine.”

Solway said she found this particularly discouraging because growing up she often heard non-Indigenous classmates talk about their families going to the bank and getting loans easily.

“And I couldn’t see how I was different. Hell, I always pay like they pay,” she said. “But I had to go to a separate entity which is not even a bank.”

Cost of life9:35Getting a loan from a bank is much harder if you live on a reservation

Solway eventually secured a loan through the Calgary-based Indian Business Corporation, an Indigenous-run, community-based Aboriginal Financial Institution (AFI).

Shannin Metatawabin knows this struggle for funding well.

Metatawabin, who is CEO of the National Aboriginal Capital Corporations Association (NACCA), which represents AFIs across Canada, says the problem has deep roots.

“[Colonial powers] basically took us out, gave us an Indian Act that required us to be wards of the state. So we don’t even retain ownership of any land,” he said.

“So there’s no way for a bank to take collateral on that. So there’s no generational wealth that you can create. Because to create generational wealth, you have to have access to the land, in order to be able to constitute a capital.”

Shannin Metatawabin is from Fort Albany First Nation. He is the CEO of the National Aboriginal Capital Corporations Association, a group representing Aboriginal financial institutions across Canada. (Cody Burton)

Why the “perfect” loan is impossible

Michael LeBourdais is the former Chief of the Whispering Pines-Clinton Indian Band in Kamloops, British Columbia, and President of the Tulo Center of Indigenous Economics.

He too is a breeder and knows first hand the problem of trying to get a loan.

“It’s very, very derogatory to First Nations people just trying to get a credit card, just trying to start a small business, just trying to maintain a cow-calf-cattle operation,” did he declare.

“We’ve never owned new equipment. All of our equipment is used…because we have to pay cash for it.”

LeBourdais explains that for people who do not have a guarantee, such as a First Nations rancher on reserve, the bank may require the loan to be 100% guaranteed — a so-called “perfect” loan.

“You literally need to have bonds, have stocks, have gold or something in a safe that the bank feels comfortable grabbing and grabbing if the loan turns wrong,” LeBourdais said.

Michael LeBourdais, a rancher and former Chief of the Whispering Pines-Clinton Indian Band of the Shuswap Nation near Kamloops, B.C., is here talking with former B.C. Premier Christy Clark. (Darryl Dick/The Canadian Press)

At least one bank specifically cited this challenge.

In a statement to Cost of lifeBMO stated that “in the case of someone [whose] collateral is located on a First Nation, the lender must understand the limitations and restrictions of the Indian Act, particularly the challenges centered around Section 89.”

The Indian Act, established in 1876 and amended several times, is the law the federal government uses to govern First Nations peoples in Canada. He is widely criticized for his regressive policies; former Prime Minister Paul Martin called him “racist”.

Article 89 of the law prohibits the seizure of property held by a First Nations person or a band on a reserve by any person other than an Aboriginal person, a member of the First Nations or a band. This means, in effect, that a bank cannot use property there as collateral.

Meanwhile, Canada’s Big Five banks are touting Indigenous banking services on their websites.

Tom Wallis, senior director of public affairs at CIBC, told CBC in a statement that “because every business is different, loan and credit options will vary.”

“While obtaining a business loan is complex, we invite Indigenous entrepreneurs to discuss their banking needs with our business and commercial banking advisors. We are committed to finding solutions to the best of our abilities,” he wrote.

In a statement to Cost of lifeTD wrote: “TD’s Indigenous Banking Group, with regional managers located across Canada, works collaboratively with Indigenous peoples, and their governments, businesses and residents to help them find the best banking solutions to meet their unique needs while cultivating a strong alliance with their communities. »

When Being Known Helps Get a Loan

Aboriginal financial institutions have filled a gap in lending to Aboriginal people across Canada, including First Nations people living on reserve.

There are 58 IFAs across Canada, including the Louis Riel Capital Corporation (LRCC) in Winnipeg, the Tewatohnhi’saktha Business Loan Fund in Kahnawake, Quebec, and Ulnooweg Development Group in the Maritimes.

According to Metatawabin, AFIs have provided 50,000 loans to First Nations, Métis and Inuit, representing $3 billion in funding since AFIs began lending about three decades ago.

NACCA recorded a repayment rate of 97.7% for these loans.

AFIs charge between 8 and 12% interest, which is higher than a traditional bank loan. Metatawabin said AFI operates like a cooperative and has historically offered small loans, in the range of $250,000 to $500,000.

Because AFIs are locally administered and part of their communities, First Nations people from the region will often sit on an institution’s board of directors, Metatawabin said.

“So these officials are able to make business loans based on, of course, due diligence and the business case, but they’re also based on the social understanding of who is who and who is who. who is the family.”

LouAnn Solway now manages approximately 125 head of cattle on her Siksika Nation farm. (Trevor Solway)

This was Solway’s experience with an AFI. She remembers sitting down with the loan officer and starting to tell her story. “He said, ‘No, I know your family. Your family is known for [ranching] and you are a good candidate,” she said.

Instead, he then asked her about her dreams and Solway told her that she wanted to live a life as a rancher, like her father and grandfather.

This more compassionate approach is what sets working with an AFI apart, Metatawabin says.

“They are able to work with families if they have difficulty. There are ups and downs in any business, but [AFIs are] able to use that and understand that they have to be nice, be flexible and work with the contractor,” he said.

Last year, NACCA launched the Indigenous Growth Fund, a partnership with the federal government, Crown corporations and private partners to provide $150 million in capital to AFIs so they can make loans more important to customers.

The first loan – $10 million – was made to the Nuu-Chah-Nulth Economic Development Corporation on Vancouver Island in April, enabling the company to offer a client a $2 million loan. dollars for the purchase of a complex.

Release “blocked capital”

LeBourdais would like to see Canada act to allow First Nations people living on reserves to hold land privately, under a title system. “It will free up locked capital which is Indian reservation land,” he said.

He knows that this decision is controversial and that some fear that such private property could be sold to non-Indigenous people.

“I need people to understand that if we get to own it once, that’s more than… what’s happened in the last 152 years. We don’t own our reserves.”

Either way, indigenous people are looking for change and a way to secure a good life for the future, Metatawabin said.

“If Canada is to prosper, it must include Indigenous Peoples [people] go forward. Because now you have people like me, who know our place and our role – and we’re not going to take no for an answer,” Metatawabin said.

“We’re going to want to make sure our kids aren’t in the same situation in the future.”

With the help of AFI, LouAnn Solway was able to raise her herd to around 150 head of cattle.

She now sees herself passing on the teachings of her father and grandfather to her nieces and nephews. As she recalls telling her loan officer, “My heart is to be there [on the land] and continue what I know and what I love to do.”

Interviews produced by Jennifer Keene, with files by Danielle Nerman.

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