SCOTTSDALE, Ariz. – Arizona tribal experiences with commercial banks have ranged widely, from being redlined at Gila River to growing too big for bank loan limits at Salt River, officials of the Federal Reserve Board heard at a Scottsdale symposium.

Sally Martinez, economic development planner for the Gila River Indian Community, told the Fed’s “Banking Opportunities in Indian Country” meeting that the tribe has started its own micro-business lending program, since no bank has ever extended a Small Business Administration loan on its reservation just south of Phoenix.

At the other end of the spectrum, Ivan Makil, president of the Salt River Pima-Maricopa Indian Community, said that his economically successful tribe next to Scottsdale may have outgrown local banks. It was forced to go to General Electric Credit Corp. to get its most recent financing, a $118 million loan on a cement plant in northern Arizona.

Martinez said no banks have ever made SBA loans at Gila River, even with the federal guarantee. This list includes, she said, the non-profit Arizona MultiBank Community Development Corp., an initiative of the Arizona Bankers Association.

Therefore, the tribe has started an entrepreneurship program, to bring individual businesses to the reservation. Martinez said there are no storefront businesses on the reservation, only tribally-owned ones.

To date the program, in which the tribe is partnering with the Rural Development arm of the U.S. Department of Agriculture on micro-business lending, has made 27 loans, for $533,000. The delinquency rate is just four percent, she said.

Most reservation businesses owned by individual Indians are home based, Martinez said. The reservation’s rural nature means many people have to travel to Phoenix or Casa Grande for goods and services, providing a great opportunity for local entrepreneurs.

And while many Native people have experience in the kind of “underground” businesses that may generate no tax returns or credit reports, they are stymied when trying to get loans from banks.

The entrepreneurship program also involves courses at the tribal college and financial literacy training. Martinez said the next step for the tribe is to develop its own small business-lending program-or to convince banks that “Native Americans have the ability to be successful in the business world.”

Makil, a keynote speaker at the Fed conference, detailed his 7,000-member tribe’s growth from 350 employees and a budget of $13 million in 1990 to a 2003 job roll of 1,300 and a budget of $80 million.

Makil stressed a spirit of partnership and cooperation as essential to the business success of the tribe. When it started developing businesses in the 1980s, he said, it had no credit history or business experience.

But it partnered with someone who did and was able to get its first bank loan, on a sand and gravel mining company. By the fifth year of operation, Makil said, it was one of the top ten mining operations in the country.

Meantime the tribe developed a land-use plan and a strategic-growth plan and revamped its court system to convince potential partners it had the stability to be successful in industry.

Its diligent courting of business partners paid off, he said, when a trade group, the Arizona Rock Products Association, used its heft to kill legislation that would have banned surrounding cities from doing landfill business with Salt River.

Makil said the tribe thought about developing a bank in the 1990s but instead decided to do business with several local banks, creating competition among them.

“There are any number of banks here,” he said. “It didn’t make sense for us to create a bank or fund.” It is, however, setting up a smaller intermediary, a community development financial institution, for its housing division.

The housing director of another Arizona tribe, the Ak-Chin Indian Community, described how it used a financing vehicle called the Low Income Housing Tax Credit (LIHTC) to develop seven new homes and rehabilitate 30 more.

Marlene Garcia said the 700-member tribe was awarded $265,000 in tax credits this year. Since tribal governments generally don’t pay federal tax and so don’t need the credits, Ak-Chin sold them to investors at 77 cents on the dollar, raising some $200,000. Along with a $350,000 state HOME grant which financed 11 homes, the tribe was able to build many times its average number of units.

Other Arizona tribes besides Ak-Chin that have used the LIHTC to develop housing include Salt River, the White Mountain Apache and the Yavapi.