No conventional bank in its right mind would give Cleoni Crawford a loan.
And she can recite, from memory, the responses she got when she tried.
" 'You're going to need a co-signer, there's nothing we can do.' 'Do you have any assets, do you have any savings?'"
She rolls her eyes, holds her hands up, empty. "Um, hello?"
Ms. Crawford was operating her fashion-design business out of her home at Jane and Sheppard, lugging clothing samples on the bus to visit potential clients.
She also had a credit rating that would give a banker the shakes. In 2006, within seven months of graduating from the University of Toronto with a pile of student loans, she defaulted on her credit-card debt.
That record didn't matter to the loan review committee at Black Creek Microcredit Program. Did she have a business plan, they asked?
"I'm like, 'Look, I have all of that. I can get it to you in two days.' "
Last month, her loan came through - $5,000 that translates into the first and last month's rent on her first office, and a machine for her clothing.
Ms. Crawford was Black Creek's inaugural client - a test run for a community initiative that launched last Tuesday. Its organizers hope it will help transform Toronto's Jane-Finch neighbourhood, which for a decade has been one of the city's most notorious pockets of poverty.
It's both an audacious idea and a disarmingly simple one: To turn a notoriously marginalized community into an incubator for local entrepreneurship by making seed money available to people who can't get their hands on the cash they need to start a business.
The microcredit initiative that won the Grameen Bank's Muhammad Yunus a Nobel Peace Prize is better known for its work in Bangladesh and Kenya than Burlington and Kamloops. But from coast to coast, Canadian institutions have been quietly testing out microfinance. The approach varies, but the underlying goal is the same - to boost economic self-sufficiency among people with a shaky or limited credit history and little collateral.
Low-income Canadians are stuck in a Catch-22, explains York University economics professor Brenda Spotton Visano. They want to start or expand their business, but need capital; to get a loan, they need equity or a credit rating they don't have.
The beneficial effects of enabling entrepreneurs are obvious, she says. On an economic level, you have people off social assistance and paying taxes; if they're successful, they employ others. But there are less tangible effects on a community, as well.
"You start to make a difference where the community comes together ... there are people in my community who not only believe in me but they're going to support me. That's where you start to see indicators around self-actualization start to improve."
In Black Creek's case, Access Community Capital is the guarantor on loans from Alterna Savings Union. Would-be borrowers submit a business plan, sit through an interview with someone on the loan review committee and, if their plan is sound, get a $5,000 loan as well as access to business-mentoring programs.
One thing these agencies aren't is self-sustaining. You can't run a microloan organization that will make enough from investments and interest payments to keep it afloat, even with the high repayment rates that Access and other institutions have enjoyed.
"It's not self-financing, it should not be expected to be self-financing," Prof. Spotton Visano said. Access's programs exist thanks to volunteers. But they're hoping grants or donations will enable them to hire salaried staff.
That lack of profitability is often a disincentive for commercial banks to offer microloan components; groups like Alterna, which is providing the loans for Black Creek's program, do so as part of their corporate social responsibility arm.
"We look at a totally different skill-set [than in traditional retail loans] We look at the skills the individual brings, we look at their business plan, we look at their technical and operational skills," said Susan Henry, manager of corporate and social responsibility.
"It's a core piece for Alterna. ... We believe in servicing our community."
Some Canadian groups that began offering microloans are expanding into services such as housing loans, business training and funding for social entrepreneurship, says Seth Asimakos, who runs the Saint John Community Loan Fund and tracks national trends.
"The microfinance landscape here [in Canada]is much different from in the developing world just because of different histories of life and culture," Mr. Asimakos said. "We've had to adapt. But we're filling a niche for people in the rebuilding stage, who recognize they've made mistakes and want to make it right."
Desjardins Group works with organizations in Ontario and Quebec to give microloans to small business owners. It also gives interest-free loans of $500 to $1,500 to people in urgent need, such as having to pay rent or a heating bill. The latter aims to avoid people turning to "abusive" high-interest short-term loans, and counsel people about budgeting. It's mostly given to lower-income single women or single mothers, and the average repayment rate is 89 per cent. Vancouver City Savings Credit Union offers them to immigrants who lack a credit history and also to lower-income residents. They've expanded to include loans for professional certification or to buy tools such as kitchen knives or massage tables.
Rising recessionary joblessness caused applicants for its microfinance programs to more than double last year, to 150. And VanCity wants to expand further - to microinsurance to cushion small businesses, making overseas remittances easier and cheaper, establishing alternatives to higher-cost payday lending and ramping up financial literacy programs.
"It's an area of profound interest," says Catherine Ludgate, manager in community business banking, "and we know the demand is great."
Hélène Nicole Richard is a microcredit success story: In 2006, the single mother had no credit rating, no equity and was supplementing her substitute-teacher's income with child-support cheques and rooms rented to Japanese language students.
ENCOURAGING WHAT'S GOING RIGHT
The Black Creek Microcredit Program launched this week, but the community microloan initiative has been more than a decade in the making.
Barry Rieder traces it to June, 1999, when the shooting death of three-year-old Breanna Davy shattered the Jane-Finch community, and then galvanized it. Shock and anger over the crossfire killing gave rise to a series of meetings from different city and community organizations to determine how to revitalize the neighbourhood.
Beautification was one suggestion. And a needs assessment.
"I told them where to go, and said it would do nothing for the social infrastructure," said Mr. Rieder, the minister who conducted Ms. Davy's memorial service and who has won accolades for his activism in the Jane-Finch community.
His frustration with multiple needs assessments was that they continued "to define the community in a negative way - what's the teenage pregnancy rate? What's the dropout rate? What's the crime rate? All those things need to be addressed, but in itself [that assessment]becomes a problem."
He would much rather assess a community's potential. And that's where the Black Creek Community Capacity Project comes in - to "figure out what was going right" and to improve, among other things, employment and economic engagement.
Now, Mr. Rieder is chair of the microcredit program, one of what Access Community Capital Fund hopes will be many microloan chapters (the first started in Riverdale several years ago).
Gerry Campbell, Access executive director, says he would like to see the fund expand, take on riskier clients and give them more cash.
"I've been around for eight years or so," he said. "I know the $5,000 is not enough to help some people get their businesses going."
But Mr. Rieder argues that the idea of a community lending organization, staffed by and serving local residents, is as important as the money it provides.
"The community base is important because it's when people realize that it's local community members that are believing in them, they're more likely to pay back the loans - it's not just a bank or people that they don't know," he said. "Having local loan review officers who know the community best, they're going to have a better understanding of which businesses work and which ones don't."
What would help, he says pointedly, is some more permanent or reliable source of funding that would let them hire staff and make the fund more stable.
Councillor Maria Augimeri described the microloan program as "a ray of hope" for a community that could use one.
Anna Mehler Paperny