How Canada Can Rebuild Trust and Accelerate Access to Capital for All Entrepreneurs
Canada’s robust and resilient economy owes much of its strength to the rich tapestry of diversity woven into its economic fabric. A driver of innovation and global trade appeal, the country’s pool of varied talent not only benefits our businesses but enables them to become more adaptable and competitive on the global stage. With that in mind, there are a number of ways we are not doing enough to support all of Canada’s innovators.
Gaining access to capital is a difficult endeavour for any entrepreneur but those from diverse communities, including Canada’s BIPOC population and LGBTQ2+ community, often face additional barriers to securing crucial funds. In a recent Canadian Business panel discussion on the topic, a group of experts identified one foundational fracture contributing to this issue: trust, or lack thereof.
“Without understanding unique cultural contexts, it’s increasingly difficult for us to deploy the capital that we have available for all of Canada’s entrepreneurs,” said Isabelle Hudon, president and CEO of the Business Development Bank of Canada (BDC). It’s important that banks and credit unions take this insight to heart and, through concrete actions, put all entrepreneurs at the centre of their product and service offerings. A road map to building trust must include creating new partnerships and hiring talent that understands firsthand the needs of the communities they serve.
A second major challenge stems from the obstacles that entrepreneurs from financially underserved backgrounds often encounter. Historically, lending models do not favour entrepreneurs from socioeconomic backgrounds that limit their access to equity. As a result, it’s natural for them to seek capital from spaces where their challenges are understood. “The first place many Indigenous entrepreneurs seek capital is from within their own communities,” said Steven Morse, CEO of the Métis Voyageur Development Fund. “That, quite often, includes the Métis Voyageur Development Fund among other regional Indigenous financial institutions.”
Despite a long road ahead, progress is being made. Another example of support for Canada’s financially underserved communities is Meridian Credit Union’s business accelerator funding pilot program in partnership with the BDC. This program’s goal is to increase access to capital for entrepreneurs often excluded from traditional lending models and encourage business owners seeking capital to grow their businesses.
As Ontario’s largest credit union, Meridian has a mandate to invest in communities and support the small businesses that drive Canada’s economy. This comes in multiple forms including traditional banking services, plus additional resources to help business owners start, manage, and grow their companies.
Productivity for Canada’s businesses is still not where it needs to be. We believe the way forward is to invest in an ecosystem that supports all entrepreneurs and empowers them with the resources and financial confidence to succeed in a way that is equitable and sustainable.