Entrepreneurial financing in Atlantic Canada is expanding rapidly. Halifax alone has more than 1,200 financial services firms with 14,000 employees, and Bank of Nova Scotia and Royal Bank of Canada both trace their roots back to Nova Scotia.
So it's interesting to note that only 7 per cent of small businesses in the country are in Atlantic Canada, according to data in a 2008 report from Statistics Canada. What are the reasons? What are the solutions?
Canadian entrepreneurs propel markets forward, take advantage of challenges and find solutions. They create jobs, spur innovation, and change the world. They are known for their passion and trust, which is ever more relevant at a time when there is increasing pressure for businesses to be socially responsible. One of the world’s most successful investors, Warren Buffett, understands trust and tackles the issue of economic inequality with solutions.
When he considers investing in or buying a business, Mr. Buffett places his trust in its executives. Unlike most buyers, he holds on to them, he leaves them alone, and he trusts them to make money for him.
In Atlantic Canada, business owners are a unique bunch. Most of them will never leave the region unless they are forced to do so for job opportunities. It's a wonderful place to raise a family. It’s famous for its coastline, its countryside and its unpopulated rural areas, which are rarely found in such abundance anywhere else in the world. Its port allows easy access to international trade and therefore international sales.
When it comes to shipping by sea, Atlantic Canada has the rest of North America beat. It has year-round deep-water ports that are two days closer to Europe than any port in the United States. China and India together have a population of more than two billion and global trade is focused on these markets. Their economies are moving up the value chain and providing more sophisticated products and services.
Their continued growth provides opportunities for Atlantic Canada. These markets cannot be serviced in a cost-effective manner across the Pacific Ocean. The Suez Canal offers a quicker alternative route and geography places Atlantic Canada at a trade focal point, as reported by the Atlantic Gateway.
The Canadian government is working to continue to help increase productivity and innovation in Atlantic Canada. It offers innovation programs such as the Scientific Research & Experimental Development (SR&ED) tax credit and organizations like the National Research Council. Our Canadian R&D tax credits are the best in the world.
If you are an entrepreneur in Atlantic Canada looking for financing, you may be able to obtain it through a traditional bank. But if you have a few strikes on your credit score or you do not own a home, you may not get approved. You can turn to the provincial and federal governments, which have numerous agencies and programs to assist with access to financing and investment. Government funding programs and incentives began as early as the 1800s, when land grants were used to get people to settle in Atlantic Canada.
But government agencies and programs in Atlantic Canada follow the same policies as traditional banks when it comes to evaluating a loan for an entrepreneur. Boards can be made up of 14 people who review one entrepreneur's loan for $5,000. The boards are usually stocked with government workers – no small-business owners.
Too much red tape and the same mentality and methods used by banks present obstacles to entrepreneurs. Homegrown suggestions for increasing access to money in Atlantic Canada include changing financial policies and programs for loans to have them built on trust. Entrepreneurs with no collateral, no steady employment and no verifiable credit history are the ones left behind in Atlantic Canada. One very successful example of an institution lending money to entrepreneurs when nobody else would was displayed by Muhammad Yunus and his Grameen Bank, which experienced repayment rates significantly higher than traditional bank loans.
Another improvement the government could concentrate on is the lack of access to capital for female entrepreneurs and people with disabilities – groups that often lack collateral. In the United States and Britain, angel-investing pools have been formed that focus on both of these groups. In Atlantic Canada, there has been little activity. To assist with economic growth in the region and in the financial industry, more female and minority business owners should be included on boards, in politics and in policy decision making. Studies have shown that for every dollar a woman earns, she invests 90 cents in her family. Girls and women are a lifeline for the well being of their families, communities and countries, particularly when compared with their male counterparts.
Companies in Atlantic Canada continue to make investment in-roads and are increasingly turning to the melting pots of Silicon Valley and Asia. Angel investors from New York, Silicon Valley and Asia are noticing Atlantic Canada and finding it to be a unique investment opportunity because of its port location for exports and its innovative businesses.
Entrepreneurs in Atlantic Canada have a reputation as a tough lot and for weathering rough economic times. The region's history of investment is steeped in global partnerships. It offers a friendly investment marketplace and it continues to grow and develop partnerships with investors in the United States and Asia. Its entrepreneurs are also making inroads in other international markets for exports and sales.
International alternative financing companies are partnering up in Atlantic Canada, with providers giving entrepreneurs more options. In the United States many manufacturing companies have been using alternative financing to keep up with the growth of their businesses. Only recently have business owners in Atlantic Canada realized or been exposed to these unique financing options.
Taking advantage of innovation, upgrading financial policies and systems, and increasing access to funding and investment is key for Atlantic Canada. To flourish on the world stage businesses must be investment ready and willing to open their doors to the growing international investment community, to create strong partnerships and potential export sales, in order to help grow Canada's economy.
Special to The Globe and Mail
Lana Larder founded Halifax Finance in 2008, after seeing how difficult it was for business women to access financing to launch or grow a company. She has been in the industry for 10 years, developing expertise in consulting, finance, and readiness for angel investment. Follow Halifax Finance on Twitter.Report Typo/Error