The Black Entrepreneurship Loan Fund, a component of the Black Entrepreneurship Program (BEP), is a partnership between the Government of Canada, Black-led business organizations, BDC and private sector financial institutions. The loan fund is now an investment of $291.3 million to support the success of Black entrepreneurs and business owners.
The first phase of the Fund includes a $33.3 million investment from the Government of Canada and $130 million from the Business Development Bank of Canada (BDC) as the first partner financial institution.
The second phase of the Fund includes an investment of $128 million committed from financial institutions Royal Bank of Canada, BMO Financial Group, Scotiabank, CIBC, National Bank of Canada, TD, Vancity and Alterna Savings. Additional FIs and capital may also be announced in this phase.
The Fund will provide loans of up to $250,000 to support Black business owners and entrepreneurs across Canada and lay the foundation for future success and long-term change.
How is the Loan Fund connected to other components of the Black Entrepreneurship Program (BEP)?
The Loan Fund is expected to build on the Ecosystem Fund component of the BEP, connecting with Black-led business organizations to provide business advisory services to Black entrepreneurs, and allowing them to increase their existing offerings and grow their businesses.
Over time, it is expected that the Loan Fund will feed into the Knowledge Hub component of the BEP, gathering relevant and much needed information to inform the hub’s research of understanding and mapping out Canada’s Black entrepreneurship ecosystem.
Which entity will administer the Government of Canada’s contribution to the Loan Fund?
The Federation of African-Canadian Economics (F.A.C.E.) is the legal entity designated to administer the government contribution to the loan fund. It is a federally incorporated not-for-profit created by a group of Black Business Support Organizations (BBSOs) from across Canada.
Which organizations make up the Federation of African-Canadian Economics (F.A.C.E.)?
F.A.C.E. is made up of five prominent BBSOs that joined forces to create the organization. Collectively, the group has more than 35 years of experience serving Black Canadian business communities. The founding members are:
Who will partner with F.A.C.E. in delivering the Loan Fund?
BDC has committed $130 million to extend capital to Black entrepreneurs under the Loan Fund. The BDC is a financial Crown Corporation that has been serving Canadian entrepreneurs since 1944 across the country. The BDC plays an active and important role supporting access to financing to underserved sectors, regions and entrepreneurs in Canada. It has the expertise, knowledge and capacity to work with FACE support the loan fund
Other financial institutions and credit unions committed to participating in the program and will be formally onboarded as partners in due course.
What is the micro-loan pilot program?
Alterna Savings and Vancity credit unions be partnering with F.A.C.E. to deliver a micro-loan pilot program under the Loan Fund, administering micro-loans to Black entrepreneurs from $10,000 to $25,000 in Ontario and British Columbia. Credit unions have long served underserved entrepreneurs, helping them become economically and socially empowered. Credit unions have a deep understanding of community loan funds and Alterna Savings has done so through its 20-year Community Microfinance Program.
The Government of Canada and FACE look forward to seeing the success of this pilot, and look forward to welcoming other financial institutions to deliver micro-loans across Canada.
What is the role of the delivery partners at the outset? What about their future role?
BDC and credit unions will work with and support FACE in ensuring the initial set of loan products are delivered in a timely manner to Black Canadian business owners and entrepreneurs. They will provide advice and resources and collaborate with FACE on the loan approval model that will serve the Black Canadian business community.
At the outset, BDC will commit $130M of its capital to partner with FACE and act as a fulfillment agent for the Loan Fund.
Alterna Savings and Vancity will also participate in a micro-credit pilot project under the Loan Fund, administering loans of between $10,000 and $25,000 to Black entrepreneurs.
In the coming months, FACE and the Government of Canada look forward to formally onboarding additional financial institutions as partners and will continue to work together to better serve Black Canadian business owners and entrepreneurs.
Why did the Government of Canada create a Loan Fund specifically for Black Entrepreneurs and business owners?
Black Canadian business owners and entrepreneurs make important contributions to the Canadian economy, yet they continue to face systemic barriers in starting and growing their businesses. This has been further exacerbated by the COVID-19 pandemic. The Government of Canada is working to address these long-standing, systemic barriers with its first-ever Black Entrepreneurship Program.
The Loan Fund is an important step in helping Black business owners and entrepreneurs get the financial support they need so they can start up, scale up and grow across Canada and the world.
Why are personal questions about identity being asked during the in-take section for the loan application?
FACE recognizes that Black Canadian entrepreneurs will include important individuals who have intersectional identities that are important to capture in order to maximize the available resources and programs available to them while developing their businesses. This data will not be shared with any third-party, including the partnering financial institutions or credit unions. We also respect the right to privacy and questions related to identity are not mandatory to complete or submit a loan application.
ELIGIBILITY
To be eligible for a loan, an applicant must:
- self-identify as Black or black-led (majority ownership of >51% by Black Canadian);<
- be a legal resident of Canada: i.e. Canadian citizen or permanent resident, or conventional refugee (for micro loans only), or a legal entity owned and controlled by a Canadian citizen or citizens; and
- be a minimum of 18 years.
What businesses are eligible under the Loan Fund?
Eligible businesses may include start-ups and existing for-profit small businesses in Canada. Such businesses can be corporations or sole proprietors, and for-profit social enterprises and cooperatives. Businesses must have a business plan, business registration, and recent financial statements or financial projections for start-ups.
Any Black business owners and entrepreneurs with questions, are encouraged to reach out to F.A.C.E. for further details.
What businesses are not eligible under the Loan Fund?
Not-for-profit organizations are not eligible for loans.
What is eligible for financing under the Loan Fund?
Loans can be used for:
- Capital investments - equipment, leasehold improvements, property improvement, office equipment
- Working capital - Inventory, payroll, lease payments, accounts management, rent, overhead costs
- Short-term receivable financing (i.e. financing to service a contact)
What is not eligible for financing under the Loan Fund?
Loans cannot be used to finance items such as goodwill, restructuring conventional business related debts, dividend payout, shareholder loan repayment or issuance, bonuses, stock buybacks, option issuance, or an increase to Shareholder or management committee compensation.
This list is not exhaustive. When in doubt, speak with your account manager.
LOAN CRITERIA
The loan fund will offer loans up to $250,000.
Alterna Savings and Vancity, under the micro-credit pilot, will offer loans between $10,000 and $25,000.
Who will process the loan applications?
The processing of loans is a shared process between FACE, and BDC. FACE is the initial entry point for all Black-owned Enterprises interested in applying for a loan.
HOW TO APPLY
FACE loan portal, accessible at www.facecoalition.com, will act as the electronic and initial in-take process for interested applicants to the loan fund. Loan applicants will be able to submit and communicate with a FACE client relationship manager on the progress of their loan request.
How long will it take to turn around applications?
FACE is committed to working This depends on the type of applications received and the due diligence that is required by the loan administrator and the BDC. As a result, the timelines will vary based on individual circumstances. However, there is a firm commitment to work with applicants to review their loan applications.
How will entrepreneurs served by other BBSOs get access to the Loan Fund?
The FACE model is inclusive. It is designed in a way to allow other BBSOs from across the country to participate in the evolution of the entity and submit loan applications for consideration. This ensures Black Canadians, irrespective of where they live and which BBSO they may work with, have an opportunity to access loans from the fund.
If I cannot access financing under the Black Entrepreneurship Loan Fund, where can I go for additional information?
FACE intends to refer applicants whose loan application was not approved to corresponding regional FACE member organizations and affiliates for further capacity building to support to their reapplication at a later time.
Another option could be to visit the Canada Business website to explore government funding options that might better suit your needs.
Regional Development Agencies also provide a variety of business support services, including the delivery of the Ecosystem Fund component of the Black Entrepreneurship Program.
AFTER I APPLIED
All of the BELF loans will be secured by Personal Guarantees. If the business is not able to repay the loans then the guarantor will be called upon to repay the loan. In all cases where the business is not able to repay the loan, FACE will attend to find a solution that is most fair and equitable
Who are the people who will analyze my request?
Entrepreneurship Loan Officers are analyzing all loan applications and submitting them for review to an ad-hoc committee mandated by the FACE Board of Directors which is comprised of business experts (accountant, lawyer, banker and an entrepreneur) all volunteer members from the Black community.
If my loan application is refused, will I be informed of the reasons?
The Entrepreneurship Loan Officer assigned to a file will inform an applicant of a refusal and recommend the steps to address or improve their chance for a future submission.
If my loan application is refused, will this affect my credit rating ?
No- your credit rating will not be affected by your loan application is not accepted
My credit rating is low, however, my business plan and financial statements are strong. Which one will be considered the most in the loan application?
Our adjudication model takes into consideration several factors apart from the credit score. The strength of your business plan and financial statements would generally carry more weight than your credit score alone.
I have questions about my loan application, Who should I contact ?
You are invited to call the following phone number : 1(855)560-FACE (3223)