Bridging the gap

Bridging

the gap by Patrick Quinn

Indigenous businesses are accessing emergency loans from Aboriginal fnancial institutions

The global economic impact of the Covid-19 pandemic is cat astrophic, with trade upended and countless businesses forced to close indefinitely. A recent survey led by the Indigenous Business Covid-19 Response Taskforce found that near ly half were likely to fail after three to six months if they didn’t receive support.

In late April, the Canadian govern ment announced $307 million in funding for Indigenous businesses during the pandemic as a “first step” to addressing this concern. This includ ed $204 million for an Emergency Loan Program (ELP) to be administered by the National Aboriginal Capital Corporations Association (NACCA).

Previous emergency wage sub sidy legislation was criticized for not addressing an estimated 30,000 Indigenous companies, which often operate with a limited partnership model that isn’t eligible within the subsidy criteria.

This federal funding is intended to give access to short-term, inter est-free loans and non-repayable grants. It is distributed by Aboriginal Financial Institutions (AFI), which offers financial logistical support for First Nations, Inuit and Métis busi nesses across Canada. Many businesses have already begun accessing the economic relief.

“This initiative is very useful, and we are grateful to the federal gov ernment,” stated Jean Vincent, Chair of NACCA’s Board and CEO of the Société de crédit commercial autoch tone, an AFI located in Wendake, Quebec.

NACCA is a not-for-profit organi zation established in 1997 to support the economic inclusion of Indigenous peoples in Canada. It advocates on behalf of AFIs to build their capaci ty and to increase self-reliance and sustainability of Indigenous ventures.

Since receiving the emergen cy loan funds in late May, NACCA has allocated $123 million for deliv ery by over 30 AFIs. The Tale’awtxw Aboriginal Capital Corporation, the first AFI to provide support under the program, has now issued over 80 loans to Indigenous entrepreneurs in British Columbia.

“Indigenous-specific supports are so important to protecting First Nations, Métis and Inuit business es impacted by Covid-19,” said NACCA CEO Shannin Metatawabin. “Disproportionate numbers operate in sectors that are heavily affected by social distancing measures.”

Many Indigenous businesses face barriers to accessing main stream loan and government support, Metatawin added. They include the remoteness of many communities, impediments in the Indian Act, and poor socio-economic conditions.

NACCA began seeking a Covid19 response tailored to the needs of Indigenous entrepreneurs when the crisis first hit in March. Working with Indigenous Services Canada, the association put forward a plan to help Indigenous businesses survive and recover.

“When events like Covid-19 hap pen, it has a dramatic effect on family

“Indigenous-specifc supports are so important to protecting First Nations, Métis and Inuit businesses impacted by COVID-19

- Shannin Metatawabin, NACCA CEO

income and on Indigenous communi ties in general,” stated Matt Tapper of the Ulnooweg Development Group, an AFI in the Maritimes. “The ELP is going to be another support that Ulnooweg’s clients can lean on in these unprecedented times.”

Many Indigenous businesses across the country are sole proprie tors and employ their families, often operating with low liquidity and facing difficulties accessing private credit. NACCA has struggled to meet grow ing demand for loan capital from ever increasing numbers of Indigenous entrepreneurs and has long advocat ed for further investments in business development.

Over 30 years, AFIs have deliv ered more than 47,000 loans totalling $2.7 billion, with a 97.5% repayment rate. Each year, they make over $120 million in loans to roughly 500 Indigenous-owned start-ups and 750 existing businesses.

Businesses applying for ELP sup port may receive a $30,000 loan and a $10,000 non-repayable contribu tion. These loans are filling a gap for many companies that don’t qualify for the Canada Emergency Business Account program.

“The ELP is providing small busi nesses with the capital they need to cover operating costs while restruc turing their business to align with Covid-19 safety measures and, in many cases, transition their business to e-commerce,” said Pam Larson, CEO of the Clarence Campeau Development Fund in Saskatchewan.

Last month, the federal govern ment announced a further $133 million to help Indigenous businesses, comprising $117 million for small and community-owned enterprises and $16 million for the tourism sector.

“Indigenous businesses are the driving force of many local econ omies,” said Indigenous Services Minister Marc Miller. “With this addi tional support, Indigenous communities and businesses will have the flexibility they need to respond to their unique economic needs through this difficult time.”