95% Of Black Businesses Were Denied Funding By The Federal Government

Under the Employment and Social Development Canada (ESDC), Funding Earmarked For Black Businesses, was only given to 5% of applicants.

Starting a business can be terrifying, starting a business as a black entrepreneur in Canada is twice as scary. Unlike many other cultures within Canada, the vast majority of black entrepreneurs do not derive from generational wealth; most of them are first or second-generation immigrants with dreams of living a comfortable life. A life that also requires them to send money home to loved ones as they continue to provide for themselves and their own families right here in Canada.

Although there are many business start programs within Canada and opportunities for financing for small businesses, there are monumental hurdles to overcome to even be remotely considered for any funding, for example:

Many programs require you to have a matching capital to put up as collateral for your project to be considered fundable. Then there are those opportunities that will provide a small amount of seed money with the condition you have to quit your full-time job and these amounts are usually within the $5,000 range.

Everyone that has ever started a small business especially when it involves family, knows it’s not always feasible for the principle owner to quit their day job. And if they were in a financial position to do so, they would too quit. Many entrepreneurs maintain a full time job because it is their primary source of income and it is what is being used to fund the business and keep it afloat

In Canada, there are many programs offered by the various levels of government that provide funding for small businesses, but none has ever specifically geared towards business development or incubation for the Black community and Black Entrepreneurs until the call for submissions that were issued on June 26, 2020, by the Employment and Social Development Canada (ESDC).

When this funding was announced it was unprecedented and it was also at the height of the Black Lives Matter movement. The timing we must admit seemed very fortuitous, but, never yet, the community was thankful that for once, a government in Canada appeared to be genuine in its intent about putting financial resources in place to help Black businesses to succeed.

The funding for Black businesses was a national story and it was a joyous time for Black entrepreneurs and established businesses and Non-profits to celebrate. The community as a whole had the sense that there was a real possibility of financial assistance for the Black business community. To oversee this important step for funding within the Black community, Prime Minister Trudeau added this to the portfolio of the ESDC which is overseen by Minister Ahmed Hussen who also happens to be the only member of Cabinet from the Black community.

Minister Hussen from a distance appeared to be the perfect representative for Black entrepreneurs and immigrants, seeing as he is an immigrant himself and has risen through the ranks of Canadian politics.

However, that was not the case. In speaking with many leaders within the Black community, they felt Minister Hussen let them down. Many of them are hesitant to express their disappointment publicly for fear of reprisal.

The thought that any business in Canada is unwilling to speak up about a flawed process and its leadership speaks volumes. One person highlighted an interaction they had with the Minister when he was the Minister of Immigration and it was not pleasant. All we can say is that they felt the Minister was distant and he did not seem genuine.

The rollout of the ESDC program under the guidance of Minister Hussen was an absolute disaster and according to the office of the ESDC, 95% of the Black businesses that applied for funding were denied by the government of Canada.

“Employment Social Development Canada (ESDC) received over 1,700 applications requesting $126 million in funding. As a result, not all eligible organizations can be funded, given the budget allocated to the call. Final selection was based on strength of the application as well as geographical coverage.

“Given the overwhelming number of applications submitted, the Department needed additional time to assess and recommend eligible projects. Specifically, this meant that instead of communicating decisions in mid-September, applicants were notified in January.

“Currently, over 90 successful organizations announced in January 2021 are being contacted to finalize their funding agreements. A full list of these organizations projects will be available in March 2021, once all the agreements are in place. The information will also be available on the Government of Canada’s Open Government site under proactive disclosure for grants and contributions.” Said the office of Public Affairs and Stakeholder Relations ESDC in an email to The Daily Scrum News.

The email further added that “Budget 2019 provided $25 million over five years starting in 2019–20, for projects and capital assistance to celebrate, share knowledge and build capacity in Canada’s Black communities.” Public Affairs and Stakeholder Relations ESDC

According to the ESDC $25 million was to be distributed throughout the Black community which was already allocated in the 2019-2020 budget. The ESDC sat on making a funding announcement for over one full year later.

The Minister’s office could have made the funding announcement over a year ago and funds could have been flowing throughout the Black community. On July 2, 2020, was the first time the ESDC indicated funding was available for Black businesses and only gave them a month to apply.

One thing is certain, the Minister’s office and the ESDC can not equate their inadequacies to COVID-19. The pandemic saw record amounts of funding by the Canadian government to the tune of $240 billion.

It’s dishearting to know that a program like the ESDC that was geared towards the betterments and improvements of Black businesses only had a 5% funding rate.

The Minister’s office and the ESDC were ill-prepared to handle the appetite for funding. How can they not foresee the demand in applications given that funding to the Black business sector as never been prevalent?

“We received a much higher volume of proposals than expected due to significant interest from the community. As a result, the Department will inform applicants of the funding decisions in early 2021 instead of late September 2020 as indicated in the Applicant Guide.” Said The ESDC

This was one of several messages received by the applicants that applied for funding well after the closing date. In actuality, the date for awarding funding had shifted so many times, it was impossible to get accurate information coming out of that department of the ESDC.

It is important to note Minister Hussen is also the Minister that oversees Service Canada which is the department that is responsible for administering the Canada Summer Jobs program. In 2020, approximately 120,000 applications would be approved to fill 120,000 jobs. This means the total number of applications received was significantly higher.

If the ESDC staffed with approximately 25,000 employees could not adequately process 1,700 applications, it is not unreasonable to think there can be hiccups to the Canada Summer Jobs program under the guidance of the Minister Hussen.

The Daily Scrum News followed up with the office of the ESDC by email asking for additional clarity regarding the delay in the rollout of the funding announcement to Black businesses.

Questions regarding the geographic breakdown which also included riding specific distribution, cause of delays, and potential increases to funding limits, to which the office of the E.S.D.C responded, from 2018 to 2019, the government of Canada has made available up to $64 million in funding accessible to the Black community.

This funding was meant for projects that supported improving the mental health of the Black community, fostering cultural growth and preventing racism. The government has also launched a $221 Black Entrepreneurship program with the hopes of developing justice reforms, modern policing structures and standards geared towards Black Canadians.

It is however important to note, although funding may appear to have been available, we do not know the percentage of Black recipients that were successful in the applications. Furthermore, in the follow up email received from the E.S.D.C, they were no mention of funding to the Black business community from 2015 leading up to 2019. An oversite, perhaps?

When prime minister Trudeau took a knee and signaled his solidarity with the Black community, it provided unimaginable hope of what the future can be for the Black community.

The Prime Minister tasked Minister Hussen to oversee what is arguably the most significant direct financial investment for Black businesses to date and he failed.

Had Minister Hussen been a first-time Minister he may have gotten the pass, however, he is a two-term Cabinet appointee and owes the Black community a genuine apology.

More great reading