The federal government says it will forgive up to half of the value of loans given to Indigenous entrepreneurs through a pandemic emergency fund.
The Indigenous Business Initiative was launched in the spring of 2020 to provide emergency, interest-free loans of up to $60,000 to Indigenous-owned businesses. The program was modelled after the Canada Emergency Business Account (CEBA), the government’s main emergency loan fund.
Like CEBA, up to a third of the COVID-Indigenous Business Initiative loan did not have to be repaid. Unlike CEBA, which was run through Canada’s major banks, the Indigenous loans were administered by the National Aboriginal Capital Corporations Association (NACCA) and the Métis Capital Corporations.
The 2022 federal budget, tabled earlier this month, announced that the non-repayable portion would soon increase to 50 per cent of the value of the loan.
About $160-million has been given to more than 3,000 businesses through the program.
Indigenous business groups said they welcomed the relief measure, though they are still waiting for details from the government about how it would work.
Shannin Metatawabin, chief executive officer of NACCA, said his organization pushed for the creation of the loans in the first place because many Indigenous businesses were not eligible for CEBA.
He said Indigenous entrepreneurs face systemic barriers, such as not being able to own land for those operating on-reserve, which makes it more difficult to post collateral for traditional bank loans.
He said the increase in the emergency loan forgiveness was a recognition that the pandemic has been especially hard on Indigenous entrepreneurs because of the high proportion of service-based businesses that are affected by travel and capacity restrictions.
“Even though it’s interest-free, it’s still a loan,” Mr. Metatawabin said. “This pandemic was nobody’s fault. The last thing you want to do is put it on an entrepreneur to carry additional rocks on their back.”
Tabatha Bull, president of the Canadian Council for Aboriginal Business, said her organization has increasingly pushed for grants instead of loans because of concerns about debt load from Indigenous businesses that they’ve surveyed.
“Some businesses – about a third – actually didn’t apply for financial support because they couldn’t take on any additional debt,” she said.
Nicolas Moquin, a spokesperson for Indigenous Services Canada, said the government expects the forgiveness to come into effect within the next few months at a total cost to Ottawa of about $82-million.
Dan Kelly, president of the Canadian Federation of Independent Business (CFIB), which lobbies on behalf of 95,000 small businesses, said the policy makes sense.
“I think they absolutely deserve a larger chunk of loan forgiveness,” he said. “It will – as the budget admits – give them a better chance of survival by eliminating more of the debt.”
CFIB has been lobbying the federal government to increase the nonrepayable portion of CEBA loans as well. Mr. Kelly said the loan forgiveness could be targeted at sectors that have been disproportionately affected, such as hospitality.
In a webinar that CFIB held with Finance Minister Chrystia Freeland on April 14, the minister suggested she was open to the idea. The government already announced in January that it was going to extend the deadline to repay CEBA loans by one year, to Dec. 31, 2023.
“On COVID debt, I am very aware that that is something people are thinking about,” Ms. Freeland said during the webinar. “That’s why I started right off the top talking about the CEBA extension. I’m very glad that we did that. It does give businesses breathing space until December 31, 2023. Beyond that, let me just say I hear you. And let’s keep on talking.”
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