The Osage Nation’s newly established Community Development Financial Institution is receiving its initial $1 million capital infusion to launch its lending services after the Eighth ON Congress unanimously approved the appropriation during the August special session.
In a 12-0 vote, Congress passed bill ONCA 23-75 (sponsored by Congresswoman Jodie Revard) on Aug. 2, which authorized the $1 million appropriation to the Nation’s CDFI for capital. The Nation’s CDFI Board, which includes former Assistant Principal Chief Raymond Red Corn as its chairman, is forming operations for the CDFI, which will be called “The Place to Borrow Money” and located on the first floor of the former First National Bank in Pawhuska.
Red Corn met with the Congressional Commerce, Gaming and Land Committee on Aug. 1 to discuss the CDFI capital request, which was initially $750,000. According to ONCA 23-75, the funding will come from the Nation’s retained revenue fund and its co-sponsor is Congressman Scott BigHorse.
The board’s initial hire was Christopher Coburn as the institution’s CEO. Before his hiring for the Osage Nation’s CDFI top post, Coburn spent more than five years as CEO at the Mvskoke Fund, which is the Muscogee Nation’s CDFI.
The infusion request will be used “specifically for lending capital,” Red Corn said. “We have no lending capital presently, we do have about everything else we need … (one day prior to the meeting), Mr. Coburn and I spoke personally with our IRS representative, from whom we are requesting a 501c3 designation … We should have our 501c3 designation within 30 days.”
Red Corn said the requested capital infusion won’t entirely be used for lending, but also “we are going to leverage that money because there are many opportunities to do so in the federal government.”
In 2021, the Seventh ON Congress approved legislation (ONCA 21-27) establishing a Nonprofit corporate code in Osage law, as well as a resolution (ONCR 21-09) to “authorize and adopt the articles of incorporation for the nonprofit corporation” as initial steps for planning a CDFI.
Congressman Joe Tillman said he spoke with a Muscogee Creek National Councilman about the Nation’s respective CDFI operations and said Coburn was “highly recommended … That has really added to my willingness to go ahead with this venture of the Nation, I feel like we’re in good hands. I feel you have the knowledge and experience to understand applications as they come across your desk and we will be monitoring the situation closely,” Tillman said during the committee meeting.
Tillman said he also spoke with others in the banking business and expressed interest in seeing the $750,000 initial request increased to $1 million and Red Corn replied “We’ll certainly accept more.”
“I don’t know how you’re going to pick and choose when the (loan) applications come in, I fully expect you all to be able to come back to Congress for more appropriations, if necessary as needed, but I want to see this thing work and I think there’s a lot of optimism among our constituents that may see a light now that they can use this as a resource for their own, whether it’s personal help or whether it’s their business start-ups, so looking forward to see what you get accomplished.”
Coburn, who attended the committee meeting, said the Muscogee’s CDFI was nearly failing when he started, but he and his team turned it around to become profitable and “doubled and tripled year after year … Hopefully with our performance here and the proven metrics in the things that I have done as far as programming, we’ll do the same thing here, but what we don’t know yet, since it’s brand new and never been done here, is how quickly our pipeline of clients will grow and our community. But we’re optimistic on how that will grow.”
For the capital infusion request, Coburn said he also supported a bigger appropriation and added “I anticipate the first year to be smaller lending based on the size of the demographic area, based on what we’re doing and the scale of what we have there with metro Tulsa being part of our jurisdiction. The demand could be higher, but we’re not going to know the demand level until we get out there and we start going. Hopefully we will not have to come back to Congress often (for appropriations) … We’re applying for a USDA IRP (Intermediary Relending Program), which is a very specific cheap long-term loan for lending capital, but it’s awarded like a competitive grant, so it’s a 1% 30-year loan and we can take increments of $500,000 and that has a leverage requirement.”
Revard applauded the CDFI board and staff’s work to develop the working structure “to roll out a program that will benefit our folks” and asked about a target date to start lending.
Coburn said the two latest hires for a finance officer and loan officer started working Aug. 14 and they will begin training, and lending could start on Sept. 15 pending other items also in the works. “We’ve got logo design going on for signage, we’ve got materials, we’ve got a software system for accounting ordered and a lending database system ordered, the staff will need to be trained on that. When those pieces are together, we’ll roll out our printed literature, what our initial mix of products are going to be, we’ll also work with areas in the Osage Nation to where we can do trainings … education materials are about to be ordered. I may use the same vendor we used at Creek Nation to do our technical assistance outreach classes or I may find another vendor,” Coburn said.
“Most of our loan clients that are loan-ready will come out of our outreach, that’s how we refresh the pipeline because typically we’re dealing with higher-risk people and we’ve got to show them how we work and learn what their needs are and hopefully we can elevate their skills by interacting with us and from those educational outreaches with skin in the game and people willing to grow their skills, they’re more likely to succeed and we’re more likely to be paid back,” Coburn said.
For lending purposes, Coburn said the CDFI will initially focus on small businesses, agricultural business, consumer or housing-related loans. As an example, for small business loans, Coburn said it would be one under $50,000 where a seasoned employee is interested in starting their own small business and that person can take available financial trainings that come with the loan opportunity.
“What’s typical and what I’ve learned in a lot of environments is tribal nations have tried that, but most of those programs didn’t go well, so when they had a CDFI established, the CDFI took on that role as we are bankers, we know how to structure it, we know how to structure the payments and it’s much more for citizens of any tribal nation if they know it’s from a financial institution versus from the Nation (government), they realize it’s a loan and not an entitlement and they do have to pay it back,” Coburn said.
After committee discussion, the appropriation request received an increase to $1 million that was supported by both the committee and the entire Congress, which passed ONCA 23-75. Principal Chief Geoffrey Standing Bear also signed the bill to take effect after the special session ended.