New Relationship‑Based Lending Pilot Shifts Credit Rules for

In a pioneering effort to reshape financing for Native‑owned businesses, a pilot loan product has been launched that replaces the conventional “5 Cs” credit assessment with a relationship‑based approach. The program, developed by Nusenda Credit Union together with Roanhorse Consulting, Native Women Lead and other Indigenous partners, offers microloans of $500‑$10,000 at a 5 % interest rate and places underwriting power in the hands of community organizations [1].

Key takeaways

• The pilot uses Nusenda’s Co‑op Capital microfinance product, modified to serve Native entrepreneurs [1].
• Decision‑making shifts from the credit union to community groups that evaluate borrowers on character, goals and determination rather than traditional credit metrics [1].
• Partners provide wraparound services such as financial education, repayment planning and technical assistance [1].
• The model aims to demonstrate that Indigenous borrowers are not “risky” when assessed through a relationship lens [1].

From the 5 Cs to Community‑Centred Underwriting

The traditional five‑C framework—capacity, capital, collateral, conditions and character—has long excluded Indigenous entrepreneurs because it relies on assets and credit histories that many Native people cannot access. Jaime Gloshay, a CDFI staffer, described how banks often refuse to lend on Native lands due to difficulties collecting collateral from sovereign nations, and how predatory lending has fostered distrust of debt among Native communities [1]. In response, the new pilot deliberately omits the 5 Cs, instead empowering organizations that know borrowers personally to assess risk.

Nusenda Credit Union, whose founding mission emphasizes education, already offered a microloan product called Co‑op Capital. For the pilot, the loan size was set between $500 and $10,000 with a flat 5 % interest rate. Crucially, the authority to approve loans moved from the credit union to partner nonprofits—including Native Women Lead, Change Labs and Native Community Capital—who evaluate applications based on relationships, community goals and the applicant’s determination [1]. This shift acknowledges the lived experience and expertise of those closest to the borrowers, allowing for tailored support such as financial literacy training and technical assistance throughout the loan term.

Building an Indigenous‑Led Financial Ecosystem

The pilot’s design reflects a broader movement toward economic justice in Indian Country. By involving Indigenous‑led organizations in underwriting, the model seeks to create a self‑sustaining ecosystem where capital circulates within Native communities. The partnership also received backing from philanthropic groups like Living Cities and the W.K. Kellogg Foundation, which help fund the infrastructure and community‑of‑practice needed for the pilot’s success [1].

During the COVID‑19 pandemic, the program’s partners consulted directly with community members to identify pressing needs, ensuring that loan uses aligned with local priorities. This responsive, bottom‑up approach contrasts sharply with the top‑down, risk‑averse practices of traditional lenders and aims to prove that relationship‑based credit can unlock economic opportunity without relying on conventional collateral [1].