Despite their booming businesses, this group of entrepreneurs find it harder and more expensive to borrow
Canada’s finance industry places too many barriers in the way of Black women entrepreneurs.
That’s one of the key takeaways from a new study that shows that this group of motivated individuals often struggle to access financing to drive the growth of their businesses.
As part of an ongoing issue with support for Black entrepreneurs, last year, a group of business leaders and Black executives formed the Black Opportunity Fund.
The women featured in this new report found a cohort that is highly educated with almost two thirds having higher levels of university education than the general population of Black women. Many decided to start their business as the result of racism in the workplace or to fill gaps in products and services for their community.
But despite their drive, almost 8 in 10 said that access to financing was an issue, followed by the cost of borrowing (74.7% agree or strongly agree) and access to equity or capital (69.9%).
The Black Business and Professional Association (BBPA) found that around half of the 700 women surveyed started their business in 2020-21 with most posting revenues of less than $100K.
"The importance of this report can't be overstated. It provides us with an opportunity to better understand the issues that Black women entrepreneurs are facing and shows that we must increase our support of this population as we look at Canada's economic recovery,” said Nadine Spencer, an entrepreneur and president of the BBPA. “It also shows the incredible resourcefulness, resilience and innovation of Black women entrepreneurs."
Financing options
The overwhelming majority of applicants used personal financing (81.4%) while 22% used government loans, grant or subsidies, 22% used financing from business owners and just 17% used credit from financial institutions.
Dr. Mohamed Elmi, Director of Research, Diversity Institute, says that Black women entrepreneurs are doubly disadvantaged by also facing barriers as women.
He says that more support is needed.
“There are new supports that offer hope: the Government of Canada is investing in targeted support through its new Black Entrepreneurship Program, for example,” he noted. “We also need to address bias in the ecosystem. We pour billions of dollars into our tech-oriented innovation ecosystem, which is justified because tech is potentially high growth. But businesses in other sectors – services, culture, food, retail – also create and sustain jobs, families and communities."
