Progress and Challenges for Black Entrepreneurs in Canada: Insights from Stakeholder Interviews
Between July and December 2023, Senators Amina Gerba and Colin Deacon conducted extensive interviews with key stakeholders to assess the progress and remaining obstacles in supporting Black entrepreneurs in Canada. This initiative builds upon their 2021 report, which revealed that 76% of Black entrepreneurs feel their race makes success harder, and 75% struggle to find even $10,000 for their business. This blog post summarizes their findings and recommendations for fostering a more inclusive entrepreneurial ecosystem for Black entrepreneurs across Canada.
Key Insights from Stakeholder Interviews
Trust and Access Barriers for Black Entrepreneurs
The interviews confirmed a critical challenge: only 19% of Black entrepreneurs trust banks to act in their best interests and that of their community. This trust deficit has historically limited Black entrepreneurs’ access to crucial resources like capital, procurement opportunities, mentorship, and business networks.
Financial Literacy Challenges Facing Black Entrepreneurs
Stakeholders identified financial and business literacy gaps among some Black entrepreneurs as a significant hurdle. These challenges include:
- Difficulties providing necessary documentation
- Challenges building comprehensive business plans
- Limited understanding of loan requirements
These issues often slow down the loan adjudication process for Black entrepreneurs and create additional barriers to accessing capital.
Persistent Systemic Bias Against Black Entrepreneurs
Despite various initiatives, systemic biases continue to affect lending and adjudication processes for Black entrepreneurs. Traditional reliance on credit scores can disproportionately disadvantage Black entrepreneurs, especially newcomers who may lack:
- Established credit history
- Generational wealth
- Traditional collateral
Stakeholders called for more modern tools to assess creditworthiness, focusing on cash flow, payment activity, character, and other qualitative metrics that better reflect the reality of Black entrepreneurs.
Capital Deployment Issues Affecting Black Entrepreneurs
The slow deployment of capital was noted as a significant issue for Black entrepreneurs, often linked to:
- Incomplete applications
- Misunderstandings about requirements
- Varying levels of institutional understanding regarding the specific needs of Black entrepreneurs
Technology and Support Needs for Black Entrepreneurs
The report highlighted several areas where technology and comprehensive support could improve outcomes:
- New approaches to data collection to combat systemic biases
- Investment in technology to streamline processes
- Caution regarding AI-based loan adjudication potentially entrenching existing biases against Black entrepreneurs
- Recognition that financial support alone is insufficient for Black entrepreneurs
- Need for pre- and post-loan support, including financial literacy training
- Acknowledgment that social factors like transportation, healthcare, and childcare—often neglected in program design—can be significant barriers for Black entrepreneurs
Current Initiatives Supporting Black Entrepreneurs
The Black Entrepreneurship Program (BEP)
This collaborative effort involves the Government of Canada, Black-driven businesses, and financial institutions to support Black entrepreneurs. The program includes:
Black Entrepreneurship Loan Fund (BELF)
- Administered by the Federation of African Canadian Economics (FACE)
- Capital contributions from the Government of Canada and BDC
- FACE offers loans up to $100,000 for Black entrepreneurs
- BDC funds and disburses loans between $100,000 and $250,000
- Includes a microloan pilot program through Alterna Savings and Vancity for smaller loans
Other BEP Components
- National Ecosystem Fund supporting Black entrepreneurs
- Black Entrepreneurship Knowledge Hub
Bank Initiatives for Black Entrepreneurs
Several major banks have launched dedicated programs to support Black entrepreneurs:
- CIBC partnerships and funding programs
- National Bank of Canada (NBC) initiatives
- TD Bank mentorship and financial education programs
Additional Support Programs
- BKR Capital: The first Black-led VC fund in Canada, focused on investing in technology companies founded by Black entrepreneurs
- Supporting Black Canadian Communities Initiative (SBCCI): A federal grants program aimed at building capacity for Black entrepreneurs and their communities
Challenges and Opportunities for Black Entrepreneurs
Information and Coordination Gaps
Despite best efforts, information-sharing gaps persist between organizations supporting Black entrepreneurs, potentially causing some to “fall through the cracks.” Stakeholders suggested developing a centralized, customer-centric solution to better serve Black entrepreneurs.
Program Sustainability Concerns
The uncertain future of the BEP raises concerns about long-term support for Black entrepreneurs. Stakeholders overwhelmingly emphasized the need for permanent funding to create lasting change and support Black entrepreneurs effectively.
Funding Adequacy and Structure
While initial investments have shown promising results for Black entrepreneurs, many stakeholders believe:
- The current funding amounts need significant increases
- Support organizations may need structural adjustments
- Equity financing remains underutilized for Black entrepreneurs
Growth and Scaling Challenges
Current support programs often focus on startups, with insufficient attention to helping established Black entrepreneurs scale their businesses. This represents a significant gap in the support ecosystem.
Social Factors and Data Collection
- The impact of social factors on Black entrepreneurs’ success needs greater consideration
- More comprehensive data gathering is crucial to understand the nuances and challenges faced by Black entrepreneurs
- Non-profit organizations supporting Black entrepreneurs require stronger capacity building
Market Access Opportunities
Expanding market access for Black entrepreneurs presents significant opportunities through:
- Domestic market development
- International trade opportunities
- Leveraging diasporan connections
- Increasing government procurement opportunities
Public Policy Recommendations for Supporting Black Entrepreneurs
Based on stakeholder insights, the report offers several recommendations to better support Black entrepreneurs:
- Permanent Funding: Establish a permanent BEP with substantially increased funding for Black entrepreneurs
- Financial Literacy: Provide access to high-quality financial literacy programs to improve loan readiness among Black entrepreneurs
- Inclusive Metrics: Include key performance indicators in federal programs to track progress on inclusivity for Black entrepreneurs
- Diverse Capital: Promote access to equity financing, including angel and venture capital for Black entrepreneurs
- Procurement Reforms: Ensure Black entrepreneurs gain access to government procurement opportunities
- Standardized Reporting: Implement consistent standards for reporting success metrics across BEP organizations serving Black entrepreneurs
- Knowledge Sharing: Prioritize forums to share learnings and improve program outcomes for Black entrepreneurs
- International Connections: Develop strategies to foster business partnerships and trade opportunities for Black entrepreneurs internationally
- Complementary Policies: Prioritize policies like Consumer-Driven Banking to support credit history building for Black entrepreneurs
- Innovation Programming: Develop innovation programs in collaboration with Black entrepreneurs and their businesses
Conclusion: Building an Equitable Future for Black Entrepreneurs
The report recognizes notable progress in supporting Black entrepreneurs in Canada over the past three years. However, it emphasizes that this work remains far from complete. Creating a truly equitable environment where Black entrepreneurs can reach their full potential requires:
- Continued collaboration among all stakeholders
- Addressing persistent systemic barriers facing Black entrepreneurs
- Enhancing data collection to better understand the needs of Black entrepreneurs
- Ensuring sustainable and adequate funding for programs supporting Black entrepreneurs
The insights and recommendations in this report serve as vital guideposts in the ongoing journey to foster an inclusive ecosystem where Black entrepreneurs can thrive and significantly contribute to Canada’s economic growth and diversity.
