Administrators of the Federal Black Entrepreneurship Loan Fund, which has rejected more than 85% of applications so far, have not created a way for rejected applicants to seek an independent appeal of decisions, although it does. part of the directors’ contract. with the federal government, documents show.
Ottawa announced the loan fund last May as a way to help Black business owners in need of capital, which has been a long-standing barrier for some community members. Entrepreneurs can apply for loans between $25,000 and $250,000. The program is run by the Federation of African-Canadian Economics (FACE), a coalition of five black business organizations, with funds provided by the federal government and the Business Development Bank of Canada. BDC has final loan approval.
More than 16,000 entrepreneurs applied for loans, but few got one. Since the launch of the fund, 1,176 applications have been reviewed and 173 applications approved by FACE and BDC, for a total value of $16 million in loans as of July 13. The total amount of funding available for loans is $160 million.
Entrepreneurs who were denied loans were supposed to have access to a “transparent” appeal system, according to the contribution agreement between FACE and the federal government, which was obtained by The Globe and Mail under the access to information law.
“This process should provide for a multi-step independent review of the original decision,” the text of the agreement reads.
However, this appeal system was never implemented. In fact, many black entrepreneurs who have applied to the program and spoken to The Globe say they were either not given a decision or were turned down, without being given a reason.
Yomi Olalere, president of the Ontario College of Management and Technology, a private career college in Toronto, said he applied for a loan last year. He said he spent time and money preparing his application, which included a business plan, audited financial statements and personal tax records.
His request was denied in February. FACE’s short message – which Mr Olalere shared with The Globe – said that after a “holistic review” the organization would not make a loan. The message did not explain why the request was denied or provide an option to appeal. Instead, the post encouraged him to check out a list of black business organizations he could go to for advice.
He said it was frustrating to wait months and not know why he was turned down. “It’s all so shrouded in mystery,” Mr. Olalere said.
Yasmine Abdelfadel, spokeswoman for FACE, said loan seekers can raise concerns about their cases with the organization’s escalation manager.
She said FACE’s credit adjudication committee, which adjudicates loan applications, is also willing to review certain files.
Alice Hansen, spokeswoman for Small Business Minister Mary Ng, said the appeals process was a recommendation from government officials. Ms Hansen said while FACE was initially overwhelmed by the thousands of applications received, the organization has made progress in recent months to improve the candidate experience.
“It’s quite different now than it was a year ago,” she said.
The documents also provide more information on FACE’s growing budget.
As The Globe previously reported, the Black Entrepreneurship Loan Fund was originally intended to be administered by FACE with the six major Canadian banks, but they eventually left the project before it was launched.
According to the contribution agreements, FACE’s initial budget of $325,865 included the hiring of three staff members. This agreement was signed on February 17, 2021. Two weeks later, the organization said it could not meet government deadlines without a team of 20 employees and additional resources. The contract was amended and total funding increased to $2,497,700, of which $1,650,000 went to salaries and benefits.
FACE received an additional $9 million in funding as of April 1 to run operations through March 31, 2025.
The federal government has also awarded $92 million to 38 organizations that offer coaching and mentoring to black entrepreneurs through the Ecosystem Fund.
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