Trump’s budget cuts are hitting Native American businesses and the rural communities they support

Oklahoma has some 130 casinos owned by Native American nations, but the economic impact of tribal governments spreads far beyond gaming. While WinStar and related entertainment ventures remain the largest single source of revenue for the Chickasaw Nation, the tribe owns more than 100 businesses ranging from banks to manufacturers. 

In 2023, Oklahoma’s 38 federally recognized tribes owned businesses that generated more than $23 billion in economic activity for the state, supporting 140,000 jobs and nearly $8 billion in wages and benefits, according to an impact report published last year by researchers at Oklahoma City University and commissioned by tribal groups. 

Oklahoma is far from an outlier. Tribally owned businesses operate across the U.S., active in everything from construction to healthcare and financial services. Particularly in rural areas, where opportunities for jobs and businesses can be scarce, tribal enterprises can act as a primary engine of economic growth. And because businesses are owned by tribal governments, large shares of revenue are often funnelled directly into public services, making tribal businesses a critical funding source for local infrastructure and healthcare programs.

“Some of these tribes, they’re in very remote areas, and the only economic driver for that community may be a business owned by the actual tribe,” Chris James, president of the National Center for American Indian Enterprise Development, told Fortune. “That’s their only bread and butter.”

But over the past year, tribal business models have become precarious. While tribes have diversified significantly in recent years, a large share of their income still comes from contracting with the federal government, a revenue source that has all but dried up due to the Trump administration’s hostility towards programs facilitating contracting opportunities.

Tribal businesses now face a vastly more competitive landscape, and virtually no opportunities for those new to the contracting game, James said. And for everyone, federal changes have threatened to pull the economic floor out from under the regions and communities that rely on tribally owned firms succeeding.

When tribes do well, neighboring communities tend to do the same. Tribal businesses often lead to significant spillover effects benefiting even non-tribal citizens, and while national-level data of their economic impact is scarce, state-level examples are illuminating. 

In Oklahoma, 64% of those employed by the state’s tribal gaming industry in 2023 were not citizens of any tribe, according to last year’s impact report. Tribally owned hospitals provided medical care to tens of thousands of non-Native patients, while tribal businesses funneled millions into the state’s education system. Between 2011 and 2023, employment supported by tribal businesses rose 60%, and real output value increased 61%, far outpacing statewide growth.

“Not every person that works for a tribal owned company is a tribal citizen,” James said. “When those contracts expire, or don’t get renewed, or aren’t awarded, that not only affects the tribe, but it also affects all of their employees, whether they’re Native or non-Native.”

A small business program rehauled

Trevor Skelly spends his days in the weeds of federal contracting policy. As the CEO of Gov Contract Pros, he advises entities, including tribal nations, looking to navigate the complex world of the federal contracting marketplace. For tribes, federal contracting for everything from IT services to construction projects has long been seen as a stable revenue stream, particularly when multi-year contracts land in rural areas. 

But for Skelly’s clients, federal contracts supporting small businesses have fallen off a cliff in the last year, he told Fortune, with declines particularly steep for programs designed to support small business growth in underserved communities.

Tribal governments are primarily reliant on the 8(a) program, a Small Business Administration (SBA) initiative intended to facilitate contracting for economically disadvantaged entrepreneurs. Between October and April, total 8(a) obligations to tribal businesses came out to almost $1.8 billion, according to Skelly’s analysis of government data shared with Fortune. That’s a 40% decline from nearly $3 billion the federal government issued to tribes over the same period one year prior. 

Some specific tribal groups saw even larger shortfalls. Total obligations to Alaskan Native corporations fell 46%, while funding for Native Hawaiian organizations is down 67%.

“There’s nothing even close to the spending declines that we’re seeing this year,” Skelly said. 

Under the Trump administration, the SBA has terminated hundreds of firms that had been participating in the 8(a) program, accusing them of noncompliance in the agency’s bid to identify and cancel federal awards ostensibly granted under Diversity, Equity, and Inclusion (DEI) targets. 

Kelly Loeffler, SBA’s administrator, has described the 8(a) program as a “vehicle for rampant abuse and fraud,” justifying a sweeping audit. Tribal governments have said that their participation in 8(a) was authorized by Congress, and SBA officials clarified last year that the administration’s anti-DEI executive order would not affect services provided to Native Americans. 

But even with legal protections, tribal entities may have regardless been caught up in the administration’s attack on targeted small business contracting. The SBA accepted just 65 new firms into 8(a) last year, down from more than 500 in 2024. The majority of those admitted last year joined in January before the administration handover, Skelly said, adding that no new entities at all have been added since August. 

An SBA representative told Fortune that while only 16% of all 8(a) participants are tribal entities, tribally owned businesses were awarded around $16 billion in contracting funds last year, or about 70% of the total issued under the program.

“The agency’s program-wide audit of 8(a) continues in earnest,” the representative told Fortune. “The agency continues to explore ways to ensure that the 8(a) program is delivering the best value and services for taxpayers while kicking out fraudsters who habitually abuse it.”

The high stakes for tribes

Vanishing federal contracting opportunities could be existential for tribal businesses and the economies they support. 

Tribes have diversified significantly in recent years, but breaking into federal contracts first has proved to be one of the easiest ways for tribes to acquire workers, investment, and expertise. In 2021, tribes operating in both gaming and federal contracting also managed more than three-quarters of all tribally owned businesses active in the country, according to research published last month by the Federal Reserve Bank of Minneapolis. 

For a tribe to scale its businesses and effectively expand into different sectors, experience in one of these two industries is effectively a prerequisite, according to Ava LaPlante, a researcher at the Minneapolis Fed’s Center for Indian Country Development.

“If a tribe is getting money from one specific industry or business, then they can use that to diversify into other businesses,” she told Fortune. 

While gaming remains a large source of tribal revenue, the industry takes time to scale and can be affected by geography. Federal contracting has proved to be much more accessible to many more tribes, particularly with the help of programs such as 8(a). Between 1988 and 2021, federal contracting revenue for tribes grew on average 41.6% a year, compared with 16.8% annual growth in gaming revenues over the same period, according to the Minneapolis Fed.

Targeted contracting programs for tribes were also important because of the constrained legal structures tribally owned businesses have to operate in. While state or local governments can often issue tax-exempt bonds to finance large, job-creating projects, such as infrastructure construction, schooling, or healthcare, tribes cannot easily do the same. 

Tribes operate as sovereign entities within the U.S., but this status means their governments are not required to file public finance disclosures, Cory Blankenship, executive director at the nonprofit Native American Finance Officers Association, told Fortune. This classification makes it harder for tribes to receive a good credit rating, meaning tribal governments are typically saddled with high interest rates if they need to finance projects like a business expansion.

“I’ve known tribes that have done bond issuance for gaming facilities, and rates were in the double digits, mid-to-high teens with their interest rates,” Blankenship said. “It’s just a compounding issue, when tribes don’t have a parity or clear mechanisms to utilize some of these economic opportunity programs.”

With tribal governments more likely to be located in rural areas, and less likely to succeed at financing growth the way local and state governments typically do, federal contracting has been a lifeline for their businesses and employees, regardless of whether they are tribal citizens or not. 

“The natural spillover effect and flow into non-tribal communities is tremendous,” Blankenship said. “When we’re taking care of ourselves, we’re taking care of our neighbors as well.”