Black Entrepreneurship Loan Fund - Frequently asked questions
What is the Black Entrepreneurship Loan Fund?
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 and 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). BDC, Vancity and Alterna Savings are the first partner financial institutions in the launch of the Loan Fund.
The second phase of the fund includes an investment of $128 million committed from these financial institutions: the Royal Bank of Canada, BMO Financial Group, Scotiabank, CIBC, the National Bank of Canada, and TD Bank. Additional financial institutions 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 National 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 (FACE) 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 (BBSO) from across Canada.
Which organizations make up the Federation of African Canadian Economics (FACE)?
FACE 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:
- Cote des Neiges Black Community Association
- Groupe 3737
- Black Business Initiative
- Black Business and Professional Association
- Africa Centre
Who will partner with FACE in delivering the loan fund?
The Business Development Bank of Canada (BDC) has committed $130 million to extend capital to Black entrepreneurs under the loan fund. The BDC is a Crown corporation that has been serving Canadian entrepreneurs across the country since 1944. 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 in administering the loan fund.
FACE will seek to work with other financial institutions as partners in due course.
What is the microloan pilot program?
Alterna Savings and Vancity credit unions will be partnering with FACE to deliver a microloan pilot program under the loan fund, administering microloans from $10,000 to $25,000 to Black entrepreneurs 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 Micro-Finance 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 microloans across Canada.
What is the role of the delivery partners at the outset? What about their future role?
The Business Development Bank of Canada 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. It 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, the Business Development Bank of Canada will commit $130 million in capital to partner with FACE and act as a fulfillment agent for the loan fund.
Alterna Savings and Vancity will also participate in a microloan pilot program under the loan fund, administering loans of between $10,000 and $25,000 to Black entrepreneurs.
FACE and the Government of Canada look forward to onboarding additional financial institutions as partners in the coming months 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.
Who is eligible under the Black Entrepreneurship Loan Fund?
To be eligible for a loan, an applicant must:
- self-identify as Black or Black-led (majority ownership of >51% by Black Canadians);
- be a legal resident of Canada: i.e. Canadian citizen or permanent resident, or conventional refugee (for microloans 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. 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 FACE 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.
How much can be financed and what is the maximum loan amount I can access under the Black Entrepreneurship Loan Fund?
The loan fund will offer loans up to $250,000. FACE can provide loans of up to $100,000. Loans above this amount will be risk shared with the Business Development Bank of Canada.
Alterna Savings and Vancity, under the microloan pilot program, will offer loans between $10,000 and $25,000.
Who will process the loan applications?
The processing of loans is shared between FACE and the Business Development Bank of Canada. FACE is the initial entry point for all Black-owned enterprises interested in applying for a loan. Loan applications will be reviewed by FACE, and the underwriting (fulfillment) process will be shared by the Business Development Bank of Canada.
How to apply
Where can I apply for the Black Entrepreneurship Loan Fund?
The FACE loan portal, accessible at Federation of African Canadian Economics (FACE), will act as the electronic and initial intake process for interested applicants. Loan applicants will be able to submit and communicate with a FACE client relationship manager on the progress of their loan request.
When will applications begin to be accepted?
The loan fund will start accepting applications on May 31, 2021.
How long will it take to turn around applications?
FACE is committed to turning around applications in a timely manner. Time for turnaround will depend on the type of applications received and the due diligence that is required by the loan administrator and the Business Development Bank of Canada. As a result, the timelines will vary based on individual circumstances.
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 Government of Canada's Business Benefits Finder to explore funding and other support options that might better suit your needs.
Regional development agencies also provide a variety of business support services, including the delivery of the National Ecosystem Fund component of the Black Entrepreneurship Program.
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