Ottawa Black Entrepreneurship Loan Fund applicants unable to appeal denials despite promises of transparency

Administrators of the federal Black Entrepreneurship Loan Fund, which has rejected more than 85 percent of applications so far, have not created a way for rejected applicants to seek an independent appeal of decisions, even though it is part of the contract of the administrators. 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 longstanding barrier for some in the community. Entrepreneurs can apply for loans between $25,000 and $250,000. The program is run by the Federation of African Canadian Economy (FACE), a coalition of five black business organizations, with funding provided by the federal government and the Canadian Business Development Bank. BDC has final approval of the loans.

More than 16,000 entrepreneurs have applied for loans, but few have received them. Since the fund was launched, 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 funds available for loans is $160 million.

Entrepreneurs who were denied loans were supposed to have access to a “transparent” appeals 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 Act. information.

“This process should provide for a multi-step independent review of the original decision,” the text of the agreement said.

However, that appeals system has never been established. In fact, many black businessmen who have applied for the program and who have spoken to The Globe say they have not received a decision or have been denied, without being given a reason.

Yomi Olalere, president of the Ontario College of Management and Technology, a private career college in Toronto, said she 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 brief message, which Mr. Olalere shared with The Globe, said that, after a “comprehensive review,” the organization would not provide a loan. The message did not provide an explanation as to why the request was denied or provide an option to appeal. Instead, the message encouraged him to consult a list of black business organizations he could turn to for advice.

He said it was frustrating to wait months and then not know why he was denied. “Everything is so shrouded in mystery,” Olalere said.

Yasmine Abdelfadel, a spokeswoman for FACE, said loan applicants can bring concerns about their files to the organization’s escalation manager.

He said FACE’s loan award committee, which decides on loan applications, is also willing to review some files.

Alice Hansen, a spokeswoman for Small Business Minister Mary Ng, said the appeal process was a recommendation from government officials. Ms. Hansen said that while FACE was initially overwhelmed by the thousands of applications it received, the organization has made strides in recent months to improve the applicant experience.

“It’s quite different now than it was a year ago,” he said.

The documents also provide more information about FACE’s growing budget.

How did the Globe previously reportedthe Black Entrepreneurship Loan Fund was initially going to be managed by FACE in conjunction with Canada’s big six banks, but they eventually abandoned the project before it was launched.

In accordance with the contribution agreements, FACE’s initial budget of $325,865 included the hiring of three staff members. That deal was signed on February 17, 2021. Two weeks later, the organization said it couldn’t meet government deadlines without a team of 20 employees and additional resources. The contract was modified and the total funding increased to $2,497,700, of which $1,650,000 was for salaries and benefits.

FACE received additional funding of $9 million beginning April 1 to see its operations through March 31, 2025.

The federal government also awarded $92 million to 38 organizations that provide business advice and mentorship to Black entrepreneurs through the Ecosystem Fund.

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