Evidence of meeting #39 for Indigenous and Northern Affairs in the 41st Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was business.
A recording is available from Parliament.
Chairman and Chief Executive Officer, First Nations Bank of Canada
It's one to one.
Conservative
Kyle Seeback Conservative Brampton West, ON
It's one to one, so they're not like schedule I banks at all.
Conservative
Kyle Seeback Conservative Brampton West, ON
Okay.
When we talk about the issue of getting financing, I want to talk first about business financing.
We had some people here on March 12. Chief Manny Jules came to speak at the committee. He said that the “most common method of access to capital in Canada is home equity” and that “over 50% of all business start-ups use home equity”. Then he went on to say that, as we've talked about, the Indian Act under section 89 of course effectively prevents that. How big an impediment do you see that being with respect to getting small business loans?
Keith, you provided me some alternatives. As a lawyer, I used to do collection proceedings, and taking assignment of a contract is not an awesome way of trying to collect money from a debtor.
How big an impediment is this?
Director, Corporate Development, National Aboriginal Capital Corporations Association
It's offset to a large degree by the client equity programming that Industry Canada and AANDC have put in place. That's really to replace the absence of home equity.
Director, Corporate Development, National Aboriginal Capital Corporations Association
The client's business plan is developed. If it is shown to be viable, a contribution toward the establishment of that business is made, and the financing, whether it's from an AFI or a conventional institution, then falls into place.
Conservative
Kyle Seeback Conservative Brampton West, ON
Okay, but that would mean that a first nation business basically is going to be limited to getting those funds through some of those particular programs.
Director, Corporate Development, National Aboriginal Capital Corporations Association
Yes.
Chief Executive Officer, National Aboriginal Capital Corporations Association
Yes.
Conservative
Kyle Seeback Conservative Brampton West, ON
They're not going to be able to access in general any traditional forms of capital.
All right. That leads me to my next question, then. How available are these programs for first nation businesses? Is everyone who wants one of these loans that you're describing able to get one? If not, why not?
Chief Executive Officer, National Aboriginal Capital Corporations Association
As I mentioned earlier in my presentation, it has become quite limited and has been reduced over the last 20 years in a very significant way.
Chief Executive Officer, National Aboriginal Capital Corporations Association
Well, way back when we started, the funds that were available.... It included a little bit of both, but we were talking about $50 million to $75 million being available to entrepreneurs, which they could access—
Conservative
Chief Executive Officer, National Aboriginal Capital Corporations Association
It's $24 million.
Conservative
Kyle Seeback Conservative Brampton West, ON
Is that due to moneys not being repaid and therefore the cash pool having been depleted over time? Or is it just that the actual amount available has gone down over time regardless of repayment?
Director, Corporate Development, National Aboriginal Capital Corporations Association
It's funding reductions.
Conservative
Kyle Seeback Conservative Brampton West, ON
Funding reductions have taken place.
So you would say that the demand for these loan products exceeds the supply.
Chief Executive Officer, National Aboriginal Capital Corporations Association
Yes, absolutely.
Chief Executive Officer, National Aboriginal Capital Corporations Association
We're limited to developing what is available, right, so if you have a smaller pot of money, it's going to limit you. If you were to increase that, I don't know how it would look. I think we'd see some innovation there.
Conservative
Mathieu Ravignat NDP Pontiac, QC
Meegwetch, Ms. Whiteduck, for being here, and to the others for your presentations.
It's nice to see somebody from Kitigan Zibi at committee. I know you're quite active, as you mentioned when we met briefly in the community. Thank you for that.
I wanted to touch a bit on the AFI funding model and in particular on whether or not you agree that the current funding model base affects the provision of services or the ability to engage in long-term loans and larger business projects.
Both the first nations in my riding, Kitigan Zibi and Barriere Lake/Rapid Lake, have potential for some very large natural resources extraction projects that are very controversial, as you know. I'm concerned about knowing whether or not the funding model could be improved to ensure that these kinds of large projects both reflect the needs of the community and provide a funding model that is sustainable.
Chief Executive Officer, National Aboriginal Capital Corporations Association
Again, in terms of the AFIs, we're quite limited, and it's limited for a reason. As you look into long-term development, you're really looking at a different kind of capital requirement if these projects are viable. The AFIs are focused on developmental lending. They're loans that are limited, in a range of $250,000. There's the possibility that they will grow into bigger loans, but I don't see it becoming much bigger than that, because then we're talking about different financing structures.
