First Nations Bank, BDC earmark $100-million for business acquisitions

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First Nations Bank of Canada and Business Development Bank of Canada said Thursday they are making $100-million in financing available for Indigenous communities and economic development agencies seeking to acquire businesses.

Under the program, the two financial institutions aim to provide loans in the range of $5-million. Saskatoon-based FNBC will provide the loans, and BDC, a Crown corporation, will guarantee up to 85 per cent of the debt, they said.

The initiative follows other recent programs offering Indigenous communities opportunities to improve their financial prospects in the name of economic reconciliation.

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FNBC and BDC said they are launching the program in response to projections showing the number of First Nations, Métis and Inuit entrepreneurs is forecast to increase by 23 per cent in the next decade, more than double the rate in the rest of Canadian society. At the same time, many current owners are getting set to retire and put their businesses up for sale.

“The timing is about as good as it gets, from my perspective,” Bill Lomax, chief executive officer of FNBC, said in an interview. “We have a real desire in the country to see First Nations participate in business opportunities.”

The federal and provincial governments have set up several agencies offering programs that allow Indigenous communities to take equity stakes in major infrastructure such as power lines and pipelines, as well as critical-minerals mines and other projects. This one is focused on smaller business opportunities, he said.

“This is an opportunity for the average First Nation or Indigenous community to do something much more local, in bite-size pieces, that can help build employment in their area,” Mr. Lomax said.

There is no limit to the types of businesses that could be acquired under the financing program, he said, citing plumbing and heating, construction, food-service franchises and small manufacturing as examples.

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Isabelle Hudon, BDC’s CEO, said she saw the need to do more for Indigenous entrepreneurs when she took the job four years ago, but was cognizant that the organization had to gain the trust of the communities. That necessitated finding credible partners. FNBC and Mr. Lomax have that credibility and networks in the financial world and within Indigenous nations, she said.

“I said to Bill, ‘Why don’t we come together to play where we don’t play?’ They’re more into big-ticket-size loans, and so as we were struggling to find and support a growing number of Indigenous entrepreneurs, that’s how we came together,” Ms. Hudon told The Globe and Mail.

For BDC, the new initiative is in addition to a $250-million commitment it made last year to provide financing, training and investment funding for companies led by Indigenous, Black and female entrepreneurs. This one is specially geared to Indigenous communities looking to buy existing businesses, Ms. Hudon said.

“Usually we lend money to individuals, and that’s how we see the world – entrepreneurs create wealth and generate economic activities and the economy is growing. In the Indigenous cultures they do everything to enrich communities, so it’s not necessarily individuals," she said. “It was quite important to them that this loan-guarantee program is focused to make sure that more Indigenous communities own businesses and not only individuals.”

There is a significant amount of demand for such a program within Indigenous communities, and that is expected to increase “exponentially” as it rolls out, Mr. Lomax said.