SBA rules · SOP 50 10 8.1
Can an SBA loan finance a business owned by a Native American tribe?
Yes, an SBA loan can finance a business owned in whole or in part by a Native American tribe, provided the business is a separate legal entity and specific sovereign immunity conditions are met.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- Separate legal entity required: The tribe itself is a governmental entity and is not eligible, but a small business owned in whole or in part by a state- or federally-recognized tribe may be eligible if it establishes that it is a separate legal entity from the tribe, submits authorizing documents, and meets all other SBA Loan Program Requirements.
- Federally-recognized tribes: For federally-recognized tribes, the tribe must waive sovereign immunity with respect to collateral pledged for the loan and collection of the loan from the applicant, and must agree to a "sue and be sued" clause specifically naming U.S. Federal courts as "courts of competent jurisdiction".
- State-recognized tribes: Tribes that are recognized only by a state do not have sovereign immunity, meaning the sovereign immunity waiver and "sue and be sued" requirements do not apply to them.
- Indian lands held in trust: Lenders may seek advice and assistance from Bureau of Indian Affairs (BIA) personnel for loans collateralized by Indian lands held in trust, and if approval for a lien cannot be obtained, lenders may consider an Assignment of Lease approved by the Secretary of the Interior or an authorized representative.
The source
What the SOP says
“A Native American tribe is a Governmental entity and is not eligible.
“A small business that is owned in whole or in part by a state or federally-recognized Native American Tribe may be eligible, provided the small business meets all other criteria set forth in SBA Loan Program Requirements and:
“Establishes that it is a separate legal entity from the tribe and submits the documents authorizing its existence; and
“For federally-recognized tribes, the tribe waives sovereign immunity with respect to the collateral pledged for the loan, and collection of the loan from the Applicant, AND agrees to a “sue and be sued” clause specifically naming U.S. Federal courts as “courts of competent jurisdiction.” (Note: Tribes that are recognized only by a state do not have sovereign immunity. Therefore, this requirement is not necessary if the tribe is only recognized by a state.)
“SBA Lenders may seek the advice and assistance of the Bureau of Indian Affairs (BIA) personnel when dealing with loans collateralized by Indian lands held in trust.
“For loans collateralized by Indian lands held in trust, if the owner of the land cannot get approval for a lien on the property, the SBA Lender may consider requiring an Assignment of Lease. The Assignment of Lease also has to be approved by the Secretary of the Interior or his/her authorized representative.
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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.