Halifax’s Smooth Meal Prep is one of two successful businesses co-founded by Nevell Provo that have grown through the pandemic. They generate $700,000 in annual sales, are cash flow positive and employ dozens of youth in his community. Despite this success, these businesses were built on sweat alone, with no access to credit support.

“One $60 unpaid bill on my student loan killed any chance of getting bank credit,” Mr. Provo said. “I mean, my bad, but really?”

Hardship is not new to the Black community. Systemic barriers have prevented Black entrepreneurs from accessing capital and starting businesses. According to data from a survey last year exploring the challenges facing Black entrepreneurs in Canada, access to financing was absolutely the top challenge, and the one most likely to keep entrepreneurs up at night. Three quarters said they would have difficulty finding $10,000 to support their business. Financing, where it did exist, often came from personal savings and credit cards. Trust in traditional financial institutions was very low, whereas 70% said that Black-led community organizations played an important role in their business.

In retrospect, those data provided a compelling backdrop to the launch of the Black Entrepreneurship Loan Fund being managed by the Federation of African Canadian Economics, or FACE. Its CEO, Tiffany Callender, noted that the launch marked an immediate shift from negotiating an agreement with the federal government to implementing that agreement – assembling the team and delivery partners (Alterna Savings, Vancity and Business Development Bank of Canada), implementing the technology required to manage the application process, and building awareness among the Black community.

The loan fund offers a much-needed new path for Black entrepreneurs. Designed by, run by and serving the Black business community, it can offer loans between $10,000 and $250,000. It also removes long standing exclusionary barriers like low credit scores that do not accurately reflect the risk to lenders, limited business longevity, and limited personal assets – factors that may benefit entrepreneurs like Mr. Provo.

Despite these improvements, a recent article stated that: “Fewer than 1% of the applications to Ottawa’s Black Entrepreneurship Loan Fund [were] approved in [the] first year.” For context, public reports indicate that about 2,000 (or 12%) of loan fund applications were complete, about half of which have been adjudicated so far, and FACE has recommended 142 applications to the Business Development Bank of Canada (BDC) for final approval, 104 of which BDC has approved to date.

We believe it’s too early to assess progress. With any loan fund, regardless of the recipient, the loans must be repaid to enable future re-investment. For FACE and others, this demands a balancing act – developing and refining a loan adjudication process that is trusted by Black entrepreneurs, while also creating conditions for success. Regardless of background, an informed investment decision is built on a complete and fact-checked application, a viable business plan and verification that the conditions for success are in place (e.g., permits, customer engagement, management experience, mentors).

We believe that accessing ongoing support, through partners who can reliably and effectively help these entrepreneurs, will also be critical. Data should be collected and reported regularly to assess the effectiveness of business support programs because access to trusted mentors and advice can be as important to business resilience as access to financing. Doing so will define success beyond the number of loans and financial support received and requires long-term, dedicated commitment.

Measuring the progress of all efforts to support Black entrepreneurs – such as those announced by Royal Bank, CIBC and Bank of Montreal – is also crucial. It will help ensure that we develop effective systems and partnerships, resulting in a steady increase in the number of approved loans and their repayment. We also need to capture the positive impact of these loans on the lives of Black entrepreneurs. Our expectation is that annually, each organization that has announced programs to support Black entrepreneurs should release performance reports demonstrating how their investment criteria and services have steadily increased lending to this community.

We must be proactive in reimagining the types of supports needed to accelerate the success of Black entrepreneurs in Canada. Not following the highest standards would do them a disservice and hinder our collective prosperity, both today and especially into the future.

Senator Colin Deacon represents Nova Scotia.

Senator Amina Gerba represents the Rigaud division of Quebec.

The Honourable Donald Oliver is a former senator and the first Black man appointed to the Senate.