The federal government’s Black Entrepreneurship Loan Fund has approved only about 100 out of 16,000 applications, a situation that has caused financial distress to some of those awaiting funding.
Ottawa announced the loan fund in May last year as a way to help black business owners in need of 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 kroner with an interest rate of between 6 percent and 8 percent.
Many black business owners were enthusiastic about the program when it was 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 manage 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.
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Since May 31, the foundation has received 16,000 applications. According to data from the government, FACE and BDC, 935 of these 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 disbursed so far. The fund’s budget is $ 160 million.
FACE and the government owed the low number of approvals for lack of 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 that they 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 range of Zobo drinks, applied for a loan shortly after the program was announced last year. He said his first contact was positive: he talked to a lender, submitted the paperwork he wanted, and got the impression that he would qualify for a $ 100,000 loan.
He went ahead and bought two shipping containers worth a product for his company. He said he would need a maximum of four credit cards to make the purchase, but expected the money from the loan to come quickly and cover the expenses.
Ten months later, Mr. Ganiyu that his application has still not been processed. He now carries debt and is waiting to buy critical equipment for his business, such as new meat freezers.
He said he recently managed to get his loan advisor back on the phone and he was told there was no time frame to decide his application.
“How can a loan application have no time frame?” said Mr. Ganiyu. “It’s not personal money, it’s public money, for black people.… You’re supposed to make our lives easier. You made it even more miserable.”
An entrepreneur has filed a lawsuit against FACE due to 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 a verbal confirmation that she would receive a $ 250,000 loan and followed it up by email. with a request for a copy of her photo ID and an invalid check that she provided.
Ms Lindow said in the case that she then entered into contracts for goods and services worth a total of $ 210,390, but became concerned as the loan funds never entered her account. She said she was told in August that the loan adviser was no longer considering 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 that she could not repay the loan within 6½ years, which she denies.
FACE declined to comment on the lawsuit. The organization has not yet given a defense.
Tiffany Callender, CEO of FACE, said it is a new organization that has had to grow rapidly. “We have developed a rigorous and transparent process to meet our goals and we are very proud of what we have achieved so far,” she said in a statement.
FACE on Friday received an additional $ 9 million from the federal government to hire more staff and process applications faster. FACE said it plans to launch a call center this month to answer applicants’ questions.
The government also suggested that loan applicants seek help from members of the National Ecosystem Fund. The federal initiative has directed $ 92 million to organizations that offer business coaching and mentorship to black entrepreneurs.
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