Black Entrepreneurship Loan Fund
On May 31, the Black Entrepreneurship Loan Fund started accepting applications from Black business owners and entrepreneurs. It seeks to address the specific systemic barriers Black business owners have too often faced when seeking financing. It also demonstrates the Government of Canada’s commitment to addressing these barriers with long-term solutions by co-developing programs to better support Black entrepreneurs on their road to success.
The Black Entrepreneurship Loan Fund is the third pillar of Canada’s first-ever Black Entrepreneurship Program.
As part of the first phase of the loan fund, the government is investing $33.3 million and the Business Development Bank of Canada is investing $130 million. As part of the second phase, the Royal Bank of Canada, BMO Financial Group, Scotiabank, CIBC, the National Bank of Canada, TD Bank, Vancity and Alterna Savings have committed an additional $128 million.
The Black Entrepreneurship Loan Fund is administered by the Federation of African Canadian Economics (FACE), a federally incorporated not-for-profit. FACE was created by several prominent not-for-profit Black-led business groups, namely the Africa Centre, Black Business and Professional Association (BBPA), Black Business Initiative (BBI), Côte-des-Neiges Black Community Association and Groupe 3737.
Many different types of businesses are eligible to apply to the loan fund. This includes start-ups and existing for-profit small businesses in Canada, as well as those that are sole proprietorships, partnerships and for-profit co-operatives.
Since entrepreneurs and business owners have different needs, the loan fund also has a microlending component. FACE, Alterna Savings and Vancity partnered on the creation of a microlending pilot program. Offering loans ranging from $10,000 to $25,000 to help Black entrepreneurs with their small lending needs, this program will address a need expressed by the community. Based on insights gained from the pilot and the onboarding of additional financial institutions to the loan fund, microloans could be expanded across Canada over time.
Loans can be used for a variety of activities, including capital investments, working capital and short-term receivable financing. More information on what the loans can be used for is available on the FACE website.
Businesses eligible for loans must be majority owned (greater than 51%) by a Black Canadian. The applicant must self-identify as Black, be a legal resident of Canada (Canadian citizen or permanent resident) and be 18 years of age or older.
Factors that will be considered when assessing a loan application include eligibility, the capacity to repay, and the entrepreneur’s track record and personal factors. Other criteria will vary based on the loan amount and the stage of the business.
The processing of loans is shared between FACE and participating financial institutions. Loan applications will be reviewed by FACE and the underwriting (fulfillment) process will be shared by the partnering financial institutions.
The FACE loan portal, accessible at www.facecoalition.com, is the initial entry point for all Black-owned enterprises interested in applying for a loan, with the initial in-take process done electronically. Loan applicants will be able to submit documentation and communicate with a FACE client relationship manager on the progress of their loan request.
Not-for-profit organizations are not eligible for loans under the Black Entrepreneurship Loan Fund.
The Black Entrepreneurship Program is an investment of up to nearly $350.8 million—in partnership with Black-led business organizations and Canadian financial institutions—to support thousands of Black business owners and entrepreneurs across the country. The program is an important step forward in building the foundation for long-term, lasting change and making a real difference in the lives of Black entrepreneurs across the country for years to come.
In Budget 2021, the government also announced an additional investment of $51.7 million in the National Ecosystem Fund.
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