The global economic impact of the Covid-19 pandemic is catastrophic, with trade upended and countless businesses forced to close indefinitely. A recent survey led by the Indigenous Business Covid-19 Response Taskforce found that nearly half were likely to fail after three to six months if they didn’t receive support.
In late April, the Canadian government announced $307 million in funding for Indigenous businesses during the pandemic as a “first step” to addressing this concern. This included $204 million for an Emergency Loan Program (ELP) to be administered by the National Aboriginal Capital Corporations Association (NACCA).
Previous emergency wage subsidy 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, interest-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 businesses across Canada. Many businesses have already begun accessing the economic relief.
“This initiative is very useful, and we are grateful to the federal government,” stated Jean Vincent, Chair of NACCA’s Board and CEO of the Société de crédit commercial autochtone, an AFI located in Wendake, Quebec.
NACCA is a not-for-profit organization established in 1997 to support the economic inclusion of Indigenous peoples in Canada. It advocates on behalf of AFIs to build their capacity and to increase self-reliance and sustainability of Indigenous ventures.
Since receiving the emergency loan funds in late May, NACCA has allocated $123 million for delivery 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 businesses 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 mainstream 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 Covid-19 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 happen, it has a dramatic effect on family income and on Indigenous communities 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 proprietors and employ their families, often operating with low liquidity and facing difficulties accessing private credit. NACCA has struggled to meet growing demand for loan capital from ever increasing numbers of Indigenous entrepreneurs and has long advocated for further investments in business development.
Over 30 years, AFIs have delivered 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 support may receive a $30,000 loan and a $10,000 non-repayable contribution. 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 businesses with the capital they need to cover operating costs while restructuring 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 government announced a further $133 million to help Indigenous businesses, comprising $117 for small and community-owned enterprises and $16 million for the tourism sector.
“Indigenous businesses are the driving force of many local economies,” said Indigenous Services Minister Marc Miller. “With this additional support, Indigenous communities and businesses will have the flexibility they need to respond to their unique economic needs through this difficult time.”