Special News

By Minnie Karanja

Black-owned businesses to access funding through $221m Black Entrepreneurship Program

Black-owned businesses make invaluable contributions to Canada’s economic growth, however, the absence of funding for Black entrepreneurs has hindered their growth and reduced their capacity to create new jobs. Moreover, the COVID-19 pandemic has exposed and exacerbated the existing systemic barriers against the Black community in Canada. To address some of these challenges, in September 2020, the Canadian government announced the launch of the Black Entrepreneurship Program in which the government will directly invest $93 million over the next four years while Canadian financial institutions including RBC, BMO Financial Group, Scotiabank, CIBC, National Bank, TD, Vancity, and Alterna Savings will contribute $128 million in lending support. While announcing the program, Prime Minister Justin Trudeau, said that “the pandemic has shone a light on the inequalities that disproportionately affect Black Canadians, and has underscored the need to restart our economy in a way that allows all Canadians an equal chance to succeed.” He acknowledged the leadership, advocacy, and expertise of Black business owners and Black-led organizations – of which the Black Business Initiative was part – in the development of the program which he said would “help support Black entrepreneurs and create new opportunities for Black-owned businesses, so they are well-positioned for our economic recovery.” As part of the program, up to $53 million has been set aside to develop and implement the novel National Ecosystem Fund to support Black-led business organizations. The fund will provide business owners and entrepreneurs with access to funding and capital as well as other supports such as mentorship, coaching and business training. Another part of the program is an investment of up to $33.3 million that will go through the Black entrepreneurship loan fund that will see loans of between $25,000 and $250,000 provided to Black entrepreneurs. The last part of the program, for which up to $6.5 million will be dedicated, is the creation of a new Black-led Entrepreneurship Knowledge Hub that will collect data on the state of Black entrepreneurship in Canada and help identify Black entrepreneurs’ barriers to success as well as opportunities for growth. This funding is the first of its kind in Canada and according to Rustum Southwell, the CEO of Black Business Initiative, it represents a huge commitment from the government to invest in the sector. “Financial investment is a valuable tool in addressing the challenges within the Black community. It will provide opportunities for wealth and quality job creation. Through this program, Black entrepreneurs will have access to credit to scale their businesses.”

While the funding is certainly welcomed in the Black community, there is still more that needs to be accomplished to end Anti-Black systemic racism in Canada. Southwell adds that credit and finance is only one side of the equation and more work is yet to be done in other sectors from Justice to housing to education and other areas where Black communities are disproportionately affected. “Innovative solutions will be required to move the needle on these issues.” Louis-Edgar Jean-Francois, CEO of Groupe 3737, a business accelerator innovation hub based in Montreal, and one of the Black business leaders that advocated for the creation of this program, is confident that the program provides an opportunity to try innovative solutions.

He explains that traditional vetting methods such as credit scores and collateral used by banks to qualify individuals for loans have long excluded Black entrepreneurs and is working with banks to develop other innovative ways to make sure that Black entrepreneurs with solid business plans to scale their businesses are not denied funding. “This funding is important to Black entrepreneurs – current and emerging ones. They will have access to resources they would not normally have access to for scaling their businesses and creating more job opportunities. It usually takes about $50,000 to $250,000 for a business to grow its employees from about two to 10. Established entrepreneurs will also access support to sustain operation and have additional resources to scale their businesses and create even more job opportunities,” said Jean-Francois To build on the momentum of the Black Entrepreneurship Fund, a coalition of Black Canadian business executives and leaders came together in December 2020 to create the Black Opportunity Fund aimed at dismantling systemic racism by supporting 450 Black-led organizations.