RENEE MONTAGNE, host:
Okay, we hear all the time that small businesses are the backbone of the U.S. economy. That backbone has been under a lot of stress. Since the recession, banks have all but stopped lending to small businesses. That means many promising companies are unable to expand and to hire more people.
All this week, MORNING EDITION is looking at small businesses to get a better feel for the challenges they face.
We start this morning with a company called Native American Natural Foods. It's headquartered on the Pine Ridge Reservation in South Dakota. The company is finding that the increasing popularity of its energy bars and snacks doesn't necessarily mean it can grow. Charles Michael Ray with South Dakota Public Broadcasting has the story.
CHARLES MICHAEL RAY: The town of Kyle, South Dakota sits among the rolling prairie and rugged badlands of the Pine Ridge Reservation. This isolated community supports a handful of businesses. One of them is Native American Natural Foods, and today its employees are gathered around a speakerphone to hear some big news.
Unidentified Woman #1: I'm happy to convey the news that you have been selected as one of our six 2011 innovation award winners this year.
(Soundbite of cheers and clapping)
RAY: The group Social Venture Network is giving Native American Natural Foods the award. SVN is an organization comprised of sustainable businesses, including Ben and Jerry's and Birkenstock. Native American Natural Foods makes organic buffalo jerky and other meat products. From its base on Pine Ridge it has grown in the last five years from scratch to projected annual sales of one and a half million dollars. Co-founder Mark Tilsen says its products, like the Tanka Bar, can now be found in 4,500 stores nationwide.
Mr. MARK TILSEN (Co-founder, Native American Natural Foods): That's the ongoing joke, which is the good news is that sales have increased by 155 percent, and the bad news is sales have increased by 155 percent.
RAY: Part of that bad news is that the buffalo hot dogs the company sells have done 12 times better than projected - so now it needs to quickly come up with $80,000 to buy the raw materials needed to fill new orders. But in this economy, quick access to credit isn't so easy. And Native American Natural Foods faces even bigger hurdles. The land the company headquarters sits on has no value as collateral. That's because on Indian reservations, tribal lands are held in trust by the government. So the 6,000 square foot building that's almost paid for doesn't show up on the company's bottom line.
Mr. TILSEN: We literally went to every single lender in Western South Dakota that would talk to us. I think we met with 11 banks, and none of them would even submit the application.
RAY: There are several government programs designed to bridge the gap and spur development in Indian country. But critics like Brian Brant say they all require collateral. Brant is president of the Center for Business and Economics of the Northern Plains, an organization comprised of retired business executives who try to help younger entrepreneurs make a go of it.
Mr. BRIAN BRANT (Center for Business and Economics of the Northern Plains): The models that we have right now for lending not only into Indian Country but into businesses of this size are broken, and it's going to take a relatively sophisticated approach to change that dynamic, and I don't see any on the horizon right now.
RAY: Native American Natural Foods is still operating. But not with help of any government-backed loan. The company combined the resources of several organizations like a wealthy Minnesota tribe and a community development fund that operates in inner city Los Angles. The company managed to pull together a half million dollar loan that will allow it to meet the growing demand.
(Soundbite of cellophane crinkling)
Unidentified Woman #2: ...shrink wrap to hold everything together...
RAY: Back at company headquarters, an employee is cellophane wrapping a gift basket of organic buffalo sausage and jerky on its way out to a customer. Jobs like this one are hard to come by here. Business leaders say this won't change until they can get better access to the loans they need to help their businesses grow.
For NPR News, I'm Charles Michael Ray in Rapid City, South Dakota.