Good afternoon. I am pleased to be here today.
We came here to talk to you about what we do at Chantier de l'économie sociale en finance sociale.
Chantier de l'économie sociale is a network of social enterprises. To us, social enterprises are collective enterprises with a social mandate that use economic activities to achieve their end goals. There are several thousand in Quebec and even more across Canada.
After our creation in 1996, we realized rather quickly how difficult it was to find funding for this type of enterprise. Shortly thereafter, in 1997, we created a fund called the Réseau de l'investissement social du Québec—RISQ—which has $12 million in place. This fund provides risk loans to social enterprises, a bit like its acronym suggests, in other words, investments without any form of guarantee. Initially, this fund was built up through donations from private businesses and by a loan from the Government of Quebec. That loan has since been renewed once, but it has allowed us to build up capital and finance enterprises with a social mandate.
RISQ's loans are relatively small. There are seed money loans that start at $5,000 and can go as high as $200,000. These are loans that financial institutions, banks and caisses populaires have a hard time lending because even though they are small loans, they require an analysis that is almost as involved as for a larger loan. The profitability for such loans is harder to justify for regular banks.
We soon realized that the $200,000 limit was not high enough. We then created another investment tool called Fiducie du Chantier de l'économie sociale. It is a trust fund that can provide loans up to $3.5 million. The trust fund was capitalized in part by the federal government through a program that no longer exists, but allowed us to capitalize part of the fund. The rest came from contributions from labour-sponsored funds, or funds from Quebec unions, the largest being the FTQ labour-sponsored funds and the Fonds d'action de la CSN. Both groups combined put $20 million in the fund.
The trust fund finances the same type of enterprises, those with a social mandate, but differs in that it provides patient capital. In other words, the enterprises do not have to pay back the capital for the first 15 years. What is more, they pay only part of the interest and at year 15, they have to pay back the loan in full, usually by finding financing on the regular market. Since the trust fund has not existed for 15 years yet, this hasn't happened yet. The enterprises are paying back their loans over time.
The interesting thing about this is that those who contributed to the fund through an investment, through the labour-sponsored funds and the Government of Quebec, agreed not to get their interest or capital for 15 years. For the labour-sponsored funds especially, it is a type of investment in their investment portfolio. We understand that they couldn't invest all their money that way, but this still allows us to support enterprises. The fact that it is patient capital, makes more liquid assets available to the enterprises in the critical first years.
We created all these tools. We continue to be in tune with the needs of the enterprises. We are working on developing other fund to try to respond to other needs, when they are expressed. Obviously, we were able to do this thanks to the government's support, which allowed us to provide the initial cash injection.
This allowed us to raise rather significant private capital in a niche that is usually ignored by the big banks.
Soon the trust fund will have invested all its money. It will either have to recapitalize or wait for year 15 to get money again. Some $50 million was invested in enterprises and things are going very well. It is truly a success. This could apply elsewhere.
So ends my presentation. I am available to answer your questions.