Lessons from the pandemic have led to greater investment in black-owned businesses
Eleni Eyob always wondered if her mother would have been a successful restaurateur if she had only had access to capital.
As a refugee in Canada, her mother’s Ethiopian cuisine paved her way to financial stability. By cooking home-cooked meals in her kitchen, Eyob’s mother was able to help the family save enough money to put down a down payment on their first home in Canada.
However, the money she earned was not enough to open her own restaurant. It’s an all-too-often common experience that’s beginning to change, thanks to direct investments and loans for Black-owned businesses made through the African Canadian Economic Federation (FACE), in partnership with the Development Bank of Canada (BDC).
And that’s why decades later, Eyob is grateful for a $50,000 loan she finally got for her organic hair products business.
The loan has already paid off, allowing Eyob to tour Canada and the United States to showcase its products and build a strong client base.
As the owner of a business that caters to people with differently textured hair, Eyob has spent years showcasing his line of products. Yet non-racialized investors and bankers didn’t seem to understand the market she was targeting and saw her business as a risk despite its potential and the considerable money, skill and effort she had put into herself.
« I just felt like traditional spaces like banks didn’t understand any slightly ethnic business model, » she explained over the phone. « [Unless] you have diversity on the forums where you’re going to present and present, they’re so out of touch with this space that even when they see the numbers, they’re still very hesitant to fund it.
Her experience is emblematic of just one of the various systemic issues that impede the upward social mobility of marginalized communities.
RBC released a report earlier this year that highlighted how people of color, or visible minorities, weren’t able to accumulate as much savings and wealth during the pandemic as non-racialized populations. There are various reasons for this, including lower homeownership rates. But the report also identified the underrepresentation of racialized minorities as business owners as another aggravating reason.
“In Canada, (visible minorities make up) one-fifth of the population, but only 13% of private business owners. Breaking this pattern would benefit the economy as a whole,” reads an analysis of the RBC report.
“For example, if visible minorities owned businesses at a rate comparable to the general population, more than 100,000 new businesses would be created, each with the potential to hire between eight and 10 workers,” the analysis concludes.
FACE CEO Tiffany Callender hopes the non-profit will become a catalyst to help create wealth and support entrepreneurship among Black communities in Canada. The organization was formed after five grassroots business associations came together to advise the government on its COVID-19 supports for small businesses and celebrated its first anniversary last week. He highlighted a milestone: $17.7 million in investments in 230 Black-owned businesses across Canada, with another 72 businesses set to receive an additional $10 million.
« When we created the Black Entrepreneurship Loan Fund, it was looking at the pandemic in terms of the impact on black businesses and a long-standing issue in terms of accessing resources so they can survive COVID and hopefully , thrive,” Callender shared with me.
“Now we are facing an economic downturn, and it looks like a recession and rising inflation and rising interest rates, so what is the path for black businesses to survive this? It’s that they need to have access to capital to be able to ensure that their businesses can function and operate in this economic space.
Hard-learned lessons – finally.