Tribal Loans: Should You Consider Them?

Tribal loans are a type of personal loan offered by Native American tribes and tribal lenders. They allow tribes to provide lending services while operating outside of state laws and regulations.

Tribal loans function similar to payday loans or title loans, offering high-interest, short-term loans to individuals in need of quick cash, often to cover unexpected expenses or bills. The key difference is that tribal lenders are based on tribal land, which provides them sovereign immunity and exempts them from caps on interest rates and other consumer lending rules that apply to traditional payday lenders.

These loans are promoted as a way for sovereign tribes to generate revenue through their own online lending businesses. Borrowers can get fast cash, even with bad credit, without the typical credit checks or underwriting standards of banks and credit unions.

However, critics argue tribal loans skirt consumer protection laws and can lead borrowers into cycles of high-interest debt. Controversy exists around how involved tribes are in day-to-day operations versus outside payday lenders who partner with them for immunity.

This article will provide an in-depth look at the history, operations, pros, cons, regulations, major lenders, and borrower experiences related to tribal loans. We’ll also explore alternatives and the future outlook for this unique lending model. The goal is to understand what tribal loans are, how they work, and the debate surrounding these high-interest, short-term loans.

History of Tribal Lending

Tribal lending first emerged in the early 2000s as a way for Native American tribes to generate revenue and economic development opportunities. Many tribes have sovereign nation status, which grants them certain exemptions and rights under federal law. These include exemptions from state usury laws that cap interest rates on loans.

Seeing an opportunity, some tribes partnered with online payday lenders in the early 2000s to offer short-term loans at higher interest rates than allowed under state laws. The lenders claim tribal sovereign immunity to avoid adhering to state interest rate caps. In return, the tribes receive a share of the revenues generated.

This tribal lending model gained steam in the late 2000s as an alternative to traditional payday loans after many states enacted laws capping payday loan rates. Partnering with tribes allowed lenders to continue offering high-cost installment loans and avoid state interest rate limits.

Over the past decade, the tribal lending industry has faced increased legal challenges and scrutiny. Some courts have ruled that tribal lenders must comply with state laws when making loans to borrowers outside tribal lands. This has led some lenders to stop issuing loans in certain states.

Despite legal uncertainty, tribal lending continues today. Advocates argue it provides economic opportunities for tribes while critics claim it exploits tribal sovereignty to charge excessively high rates. The debate around the appropriate oversight and regulation of tribal lending continues.

How Tribal Loans Work

Tribal loans are a unique form of online lending that operate through partnerships between Native American tribes and non-tribal lenders. They leverage tribal sovereignty to offer loans that may not comply with state lending laws.

Here’s how it works:

  • Native American tribes are considered sovereign entities and have tribal immunity, meaning they are not subject to most state laws. This includes state limits on interest rates and fees for loans.

  • Online lenders will partner with a Native American tribe to offer loans under the tribe’s name. The tribe receives a share of the revenue but the lender handles all operations.

  • Because the loans are issued in the tribe’s name, the lender can bypass state lending laws under tribal immunity. This allows them to offer loans at higher rates and fees than allowed by many states.

  • For example, a lender may offer a $500 loan at an APR of 300% through a partnership with a tribe. Most states cap rates at 36% APR, so the lender uses the tribal arrangement to charge higher rates.

  • The tribe benefits by receiving revenue, while the lender benefits by accessing a market not available under regular state laws. However, the high rates mean borrowers pay far more in interest.

  • The lender typically handles all parts of the lending operation through the partnership. Borrowers deal with the lender’s website, customer service, etc. The tribe’s role is limited despite the loans being in their name.

So in summary, tribal lending allows lenders to skirt state interest rate caps and offer loans at very high rates, with the tribe as a partner receiving revenue in return. However, the high costs are borne by borrowers.

Pros of Tribal Loans

Tribal loans provide several potential benefits for borrowers compared to traditional loans.

Access to Credit

One of the main advantages of tribal loans is increased access to credit. Tribal lenders often provide loans to borrowers who may not qualify for traditional loans due to poor credit history or other factors. For people who need money quickly and have limited options, tribal loans can be an important source of financing. The lenders tend to be more flexible on credit requirements compared to banks and credit unions. This gives borrowers who may not have other choices the ability to get a loan.

Flexible Terms

In addition to access, tribal loans frequently offer more flexibility on loan terms compared to traditional lenders. They may provide longer repayment periods, allow borrowers to only pay interest for a period before starting principal payments, or have options to extend the loan duration. This can make the loans more manageable for borrowers facing financial hardship. The flexibility caters to the target customer base.

Tribal Economic Development

An additional advantage is that tribal loans provide an income source to support tribal economic development and self-sufficiency. The lending operations are often owned by Native American tribes, who use a portion of the revenues for community programs and services. So the loans can be seen as mutually beneficial for both borrowers and tribal communities. This helps promote financial growth and stability for underserved populations.

Cons of Tribal Loans

Tribal loans have come under scrutiny for their high interest rates and concerns about predatory lending practices. Here are some of the downsides to be aware of:

  • High Interest Rates – Interest rates on tribal loans can be extremely high, often exceeding 300% – 500% APR. This makes it very difficult for borrowers to pay back the loan, resulting in a cycle of debt. The high rates are designed to maximize profits for the lenders.

  • Predatory Lending Concerns – Consumer advocates argue that tribal lenders target vulnerable populations with loans they cannot afford to repay. Tactics like aggressive marketing, easy approval despite poor credit, and short repayment terms are hallmarks of predatory lending.

  • Lawsuits over Lending Practices – Tribal lenders have faced numerous lawsuits over lending practices that allegedly violate consumer protection laws. However, tribal lenders claim immunity from state laws due to their sovereignty. There have been protracted legal battles over the applicability of state laws to tribal lending operations.

  • Limited Recourse for Borrowers – Borrowers who feel they have been victims of predatory lending have limited options for recourse when dealing with tribal lenders. The tribal affiliation makes it difficult for borrowers to take legal action in many cases.

In summary, while tribal loans provide easy access to cash, the extremely high rates and concerns about predatory practices make borrowers vulnerable. Borrowers should weigh the risks carefully and explore alternatives before taking out a tribal loan. More regulation may be needed to prevent predatory lending in this rapidly growing market.


Tribal lending exists in a legal gray area that has sparked much controversy and debate. Here’s an overview of the key regulations and legal issues surrounding tribal loans:

Applicable Laws

  • Tribal sovereignty – Federally recognized Native American tribes are considered domestic sovereign nations. This grants them immunity from certain state laws and regulations under tribal sovereign immunity.

  • Federal laws – Tribal lenders are still subject to federal consumer protection laws like the Truth in Lending Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act. However, the degree that these are enforced on tribal lands is disputed.

  • State laws – Tribal lenders argue they are exempt from state usury caps on interest rates and state lending regulations due to tribal sovereignty. But some courts have ruled that tribal lenders must comply with state laws when making loans to borrowers outside tribal lands.

Regulation Challenges

  • Enforcement – State regulators claim the immune legal status of tribes makes it difficult to take action against predatory lending practices. Tribes counter they are unfairly targeted.

  • Jurisdiction – There have been many legal battles over whether tribal lenders are subject to state laws and regulations. Courts have issued conflicting rulings.

  • Oversight – Federal consumer protection agencies like the CFPB and FTC argue they have limited oversight over tribal lenders due to sovereignty. Tribes claim sufficient self-regulation.

Policy Proposals

  • Stricter federal laws – Some advocate for tighter federal laws on tribal lending interest rate caps and practices. Critics argue this encroaches on tribal sovereignty.

  • Cooperative agreements – Some states have negotiated agreements where tribes voluntarily comply with certain state lending laws. But these agreements have had mixed success.

  • Improved self-regulation – Tribes argue expanded self-regulation and cooperation with federal regulators is the best solution. Critics argue self-regulation is insufficient.

  • Repeal of immunity – Some call for repealing tribal sovereign immunity for lending activities off tribal lands. Tribes strongly oppose this proposal as an attack on sovereignty.

The debate over balancing consumer protection and tribal sovereignty continues with no easy answers. But improved transparency and cooperation may help address regulatory gaps.

Major Lenders

While there are hundreds of tribal lenders, a few major companies dominate the industry. Here are some examples of the top tribal lenders:

Plain Green Loans

One of the largest tribal lenders, Plain Green was founded in 2011 by the Chippewa Cree Tribe. They offer installment loans up to $3,000 with terms between 9-18 months. Their loans have APRs from 60-299%.

Big Picture Loans

Owned by the Lac Vieux Desert Band of Lake Superior Chippewa Indians, Big Picture Loans has provided over $1 billion in installment loans since 2011. Their loans range from $500-$5,000 with 6-18 month terms and APRs from 60-220%.


Established in 2011, Mobiloans is owned by the Tunica-Biloxi Tribe of Louisiana. They offer lines of credit up to $2,500 with terms of 9-24 months and APRs from 60-299%. Mobiloans has provided over $2 billion in loans.

Golden Valley Lending

Owned by the Habematolel Pomo of Upper Lake tribe, Golden Valley offers personal loans up to $5,000. Their loan terms range from 3-24 months with APRs from 35-850%. They have served over 750,000 customers since 2012.


Owned by the Lac Courte Oreilles Band of Lake Superior Chippewa Indians, Lendgreen offers installment loans up to $2,000 with terms of 6-24 months. Their APRs range from 60-850%. Lendgreen has provided over $14 million in online loans.

Borrower Experience

Applying for a tribal loan is relatively easy compared to traditional loans from banks or credit unions. Borrowers can apply online or over the phone, with minimal paperwork required. Approval decisions are made quickly, sometimes instantly. This makes tribal loans attractive for those who need fast cash.

Once approved, funds are deposited directly into the borrower’s bank account, usually within one business day. Loan amounts typically range from $500 to $2,500, with terms between 6 months to 2 years. Interest rates are much higher than traditional loans, often exceeding 300% APR.

Borrowers must authorize automatic payments from their bank account to repay the loan. If funds are insufficient on the due date, lenders will attempt to withdraw payment multiple times, triggering overdraft fees. Borrowers have no option to reschedule payments if needed.

Default rates on tribal loans are high, given the short repayment terms and high interest rates. If a borrower defaults, the lender can continue to withdraw payments indefinitely until the debt is settled. They may sell the debt to third-party collection agencies, who can be aggressive in recouping the money owed.

Defaults can severely damage credit scores and lead to lawsuits if the borrower fails to repay. Some tribal lenders claim sovereign immunity from state usury laws, making legal recourse difficult for borrowers. Many people find themselves in difficult financial situations or endless debt cycles after taking out a tribal loan.


Many consumers turn to tribal loans because they have limited options for accessing credit. However, there are some alternatives that borrowers may want to consider before taking out a high-interest tribal loan:

Credit Unions

Credit unions are nonprofit financial cooperatives that provide financial services to their members. They often have lower fees and interest rates than payday lenders. To join a credit union, you typically have to meet certain eligibility criteria, such as living or working in a certain area. Credit unions offer small personal loans that can be an alternative to payday loans for some borrowers.

Advance from Employer

Some employers may be willing to provide an advance on your paycheck if you are experiencing a temporary cash shortfall. This allows you to access money you have already earned without paying fees or interest. Of course, this option depends on your relationship with your employer.

Borrow from Friends or Family

For some people, borrowing a small amount from friends or family can tide them over until their next paycheck. This avoids the high interest and fees of a payday or tribal loan. Be sure to only borrow what you can reasonably pay back.

Credit Counseling Services

Nonprofit credit counseling services can help you manage debt and create a budget. They may be able to work with creditors to establish a debt management plan with reduced interest rates and monthly payments. This can help borrowers get out of debt traps.

Personal Loans from Banks or Online Lenders

While you may not qualify for the best rates if your credit is limited, some banks and online lenders offer personal installment loans that can be an alternative to payday loans. Interest rates are capped in many states. Be sure to compare interest rates and fees.

Paycheck Advance Apps

New financial technology apps will provide an advance on your paycheck for a monthly subscription fee and no interest. This can assist with cash flow without piled-on fees.

Peer-to-Peer Borrowing

New peer-to-peer lending networks allow people to borrow and lend money to each other. Interest rates are set by lenders and tend to be lower than payday loans. This expands options for accessing affordable credit.

The key is to explore alternatives to avoid getting caught in a cycle of high-interest debt. With some planning and research, there may be more affordable short-term borrowing options for your situation.

Future Outlook

The tribal lending industry is facing an uncertain future with several key trends emerging.

First, increased regulation and legal challenges threaten the sovereignty protections these lenders rely on. Several states have enacted laws capping interest rates on short-term loans, which tribal lenders argue infringe on their self-governance. However, courts have generally upheld these state laws when challenged. If this trend continues, it could severely restrict the business models of tribal lenders.

Second, consumer advocates and policymakers continue to push for reforms to protect borrowers from predatory lending practices. There is growing scrutiny on the high interest rates and fees associated with tribal loans. While the industry defends its products as providing access to credit for underserved consumers, pressure is mounting for stronger consumer protections.

Third, fintech innovations and alternative lending models are emerging as potential disruptors. More people are turning to payday alternative loans, credit builder loans, and other products offered by fintech startups and community banks. These could provide comparable access to credit without the concerns over predatory lending.

Finally, tribal lenders are adapting their practices in response to these headwinds. Some are lowering rates and partnering with third-party lenders to diversify products. Others are shifting focus to more business lending. However, the industry remains controversial and its future highly uncertain. With growing pushback, tribal lenders will likely need to evolve to survive.

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