Fewer than 1 per cent of applications to Ottawa’s Black Entrepreneurship Loan Fund approved in first year


Sheriff Ganiyu, works on the renovations at his business, Titi African Foods grocery store, in Richmond Hill, Ont., on April 3.Tijana Martin/The Globe and Mail

The federal government’s Black Entrepreneurship Loan Fund has only approved about 100 out of 16,000 applications, a situation that has caused financial distress for some of those waiting for funds.

Ottawa announced the loan fund last May as a way to help Black business owners who require capital, which has been a long-standing barrier for some in the community. Entrepreneurs can apply for loans of between $25,000 and $250,000, with an interest rate of between 6 per cent and 8 per cent.

Many Black business owners were enthusiastic about the program when it launched. Thousands of applications poured in, which quickly overwhelmed the Federation of African Canadian Economics (FACE), a coalition of Black business groups that had been set up to administer the loan fund. The money for the fund comes from the federal government and the Business Development Bank of Canada. BDC has final approval of the loans.

Canada’s big six banks almost came together to help Black entrepreneurs – but then they went their separate ways

Since May 31, the fund has received 16,000 applications. According to data from the government, FACE and BDC, 935 of those applications have been reviewed, 142 received initial acceptance from FACE and 104 received final approval from BDC. Nineteen loans are still under review by BDC. A total value of $14.7-million in loans has been approved by FACE, with $8.6-million paid out so far. The fund’s budget is $160-million.

FACE and the government blamed the low number of approvals on missing paperwork. FACE said it considered 14,000 files to be incomplete.

But Black entrepreneurs who have spoken to The Globe and Mail say they have submitted what was asked of them and have gone months without being able to reach anyone at FACE about the status of their applications.

Sheriff Ganiyu, who runs the Titi African Foods grocery store in Richmond Hill, Ont., and produces a line of Zobo drinks, applied for a loan shortly after the program was announced last year. He said his initial contact was positive: He spoke with a loan officer, submitted the requested paperwork and was given the impression that he would qualify for a $100,000 loan.

He went ahead and bought two shipping containers worth of product for his business. He said he had to max out four credit cards to make the purchase but expected the money from the loan to arrive quickly and cover the expense.

Ten months later, Mr. Ganiyu said his application still hasn’t been processed. He is now carrying debt and waiting to purchase critical equipment for his business, such as new freezers for meat.

He said he recently managed to finally get his loan officer on the phone again and he was told there was no time frame for deciding his application.

“How can a loan application have no time frame?” Mr. Ganiyu said. “It’s not personal money, it’s government money, for Black people. … You are supposed to make our lives easier. You made it even more miserable.”

One entrepreneur has filed a lawsuit against FACE over the application process.

Angela Lindow, owner of media company Rio Dayne Inc., filed a lawsuit in Ontario Superior Court in January alleging breach of contract. In her lawsuit, Ms. Lindow said that after applying for the loan in June, she was quickly assigned a loan officer, who gave her verbal confirmation that she would receive a $250,000 loan and followed it up with an e-mail requesting a copy of her photo ID and a void cheque, which she provided.

Ms. Lindow said in the suit that she then entered into contracts for goods and services worth a total of $210,390 but became concerned when the loan funds never arrived in her account. She said she was told in August that the loan officer was no longer handling her case and, in late September, she was finally told that FACE would not issue the loan. Ms. Lindow said in an interview that she was told by FACE that they had decided she could not repay the loan within 6½ years, which she disputes.

Sheriff Ganiyu next to the plumbing work that has been halted at his business.Tijana Martin/The Globe and Mail

FACE declined to comment on the lawsuit. The organization has not yet filed a statement of defence.

Tiffany Callender, chief executive officer of FACE, said it is a new organization that has had to grow quickly. “We have developed a rigorous and transparent process to meet our objectives and we are very proud of what we have accomplished so far,” she said in a statement.

FACE received an additional $9-million from the federal government on Friday to hire more staff and process applications more quickly. FACE said it plans to launch a call centre this month to answer applicants’ questions.

The government also suggested loan applicants should seek help from members of the National Ecosystem Fund. The federal initiative has directed $92-million to organizations that provide business coaching and mentorship to Black entrepreneurs.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.



Source link

About the author

Divyansh Singh

Talks about #technology #innovation #investing and #business.

View all posts

Leave a Reply

Your email address will not be published. Required fields are marked *