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Strengthening Aboriginal Entrepreneurship

  1. An Introduction to Tale’awtxw Aboriginal Capital Corporation
  2. Who We Are Established in 1992 Owned by 54 Coast Salish First Nations Provide services to all Aboriginal peoples in the traditional Coast Salish territory
  3. Services Provided • Commercial Loans • First Citizens Fund Loans • Business Equity Program Contributions • New Relationship Trust Equity Match • First Nation Regeneration Fund Loans
  4. First Nation Regeneration Fund • Launched in 2009 • A partnership between Tale’awtxw Aboriginal Capital Corporation (TACC) and Tribal Resources Investment Corporation (TRICORP) • Provides financing for First Nations in BC to purchase equity positions in micro-hydro projects
  5. FNRF Projects • Atlin Xeitl Hydro – 2 MW Project • Kwoiek Creek Resources – 50 MW Project • Sakwi Creek Power – 5.5 MW Project
  6. Overview – Part 1 • Summary of BEP Program: What is it? • Program Goals • Planned Results • Eligible Clients • Eligible Projects • Ineligible Projects • The Basics • The Limits • The Process • Client Obligations
  7. Summary An Aboriginal Affairs and Northern Development Canada (AANDC) program that is delivered in partnership with TACC. Non-repayable contributions issued on a project-by-project basis. Intended to improve ability of clients to obtain commercial financing at reasonable terms. From a lender’s point of view, makes a good loan better, as more security available to support loan.
  8. Program Goals To increase the number of viable businesses owned and controlled by Aboriginal Canadians, and to provide a supportive business environment. To cultivate a culture of entrepreneurship in the Aboriginal community and to improve access to business opportunities. To enhance access to capital for Aboriginal businesses that have difficulty accessing conventional commercial financing.
  9. Planned Results More Aboriginal owned and operated businesses. Support a culture of entrepreneurship in the Aboriginal community. More jobs for Aboriginal people. More loan capital available for Aboriginal businesses.
  10. Eligible Clients Individuals of Canadian Aboriginal ancestry, partnerships, corporations owned by individuals or communities of Canadian Aboriginal ancestry. On-reserve or off reserve projects within the traditional Coast Salish Territory. Includes Greater Vancouver, Fraser Valley, Sunshine Coast and Southern portion of Vancouver Island.
  11. Eligible Projects • New business starts, including capital costs, limited start up costs including inventory, marketing and operating. • Acquisitions of existing businesses. • Expansions of existing businesses: - New capital / equipment - New processes - Modernization of technology - Marketing Business planning/support is available for all eligible projects
  12. Ineligible Projects • Community infrastructure unrelated to business development • Public office buildings & public halls • Recreation and friendship centres • Gaming houses • Alcohol or tobacco production, marketing, distribution, sales • Sexually exploitive materials, services, products, marketing, distribution, • Pawn shops, pay-day loan operations • Passive investments (real estate) where applicant not actively involved. • Businesses with more than 51% of revenue from alcohol or tobacco.
  13. The Basics Elements of a successful BEP deal: • Financially mature client with 15% cash equity. • Qualifications & experience related to the proposed business project. • Good credit rating enabling commercial financing. • Strong likelihood of business profitability. • Creation of employment and business income for owner. Above all else, incrementality: new jobs, new revenues, new markets, new social benefits.
  14. The Limits • For individual owned businesses, $99,999. • For community owned businesses, $250,000. Subject to: • Reasonable equity investment based on net worth. • Demonstrated need for BEP investment. • Generally, commercial financing for about 50% of securable assets should be available. • BEP funding should not exceed 35% of eligible costs • Program funding availability.
  15. The Process 1) Filing of application • Confirmation of client eligibility • Confirmation of client equity & credit maturity • Confirmation of project eligibility • Evaluation of project potential • Evaluation of link between client and project 2) If evaluation positive • Offer business planning assistance (75%)
  16. The Process Following receipt of business plan: • Re-confirmation of screening decision • Confirmation of financing arrangements • Alternative financing – vendor, leases, etc not considered “arms length” – generally not eligible. • Evaluation and write up – includes consideration of jobs created, other social benefits, business profit/management fee for owner of greater than $15k
  17. The Agreement Details the following: • Cash equity required • Commercial financing required • BEP Contribution amount based on lesser of $ amount approved and % of eligible costs (If costs are less than planned, BEP contribution reduced proportionately) • Period of eligibility from “Effective Date” (date of project approval) to “Completion Date”. • Monitoring period – at least two years following completion date.
  18. Client Obligations Business must: • Be properly registered (name protected with BC Corporate registry, GST, Worksafe BC, municipal licensing if required, etc). • Maintain proper records and submit year end financial statements. • Obey whatever laws and regulations apply – federal, provincial, municipal, First Nations. BEP Support: • Professional fees (75%) for accounting, legal, internal systems, project management, etc.
  19. Overview – Part 2 • Typical BEP Business Planning Project • Typical Commercial Project • TACC Interpretations in Program Delivery • Particular Issues - Partnerships
  20. Typical BEP Business Plan Costs Total Costs $ % 10,000 Cash Equity 2.500 25 BEP Professional Fees $ Financing 7,500 75 10,000 100 10,000 Total Financing
  21. Typical Commercial Project Costs $ Financing $ % Capital Costs 75,000 Cash Equity 15,000 15 Operating Costs 15,000 BEP 35,000 35 Marketing Costs 10,000 Loan 50,000 50 100,000 100 Total Costs 100,000 Total Financing
  22. TACC Interpretations • 15% cash equity, can be supplemented with other equity matching. • Cash equity is necessary to demonstrate financial maturity and cannot be replaced with gifted equity. • Minimum capital project size $25,000. • Minimum marketing project size $10,000. • Business support will be considered on a case-by-case basis for non-clients. • Business planning only considered for potential BEP clients.
  23. Particular Issues Partnerships Partnerships (Aboriginal / Non-Aboriginal) • Where spousal partnerships and both partners critical, treated as 50% eligible. • Where Aboriginal partner not substantively involved, generally not eligible. • Where non-Aboriginal spouse not substantively involved, 100% eligible. • For other partnerships, BEP funding generally prorated based on Aboriginal ownership and control.