Indigenous businesses face barriers to accessing COVID-19 relief programs, survey finds

Like many businesses, Carlene MacDonald’s beauty salon has been hit hard by the pandemic.

A member of the Millbrook First Nation in Truro, Nova Scotia, MacDonald has been cutting the hair of his clients in and around the Truro region for almost 15 years. But that was before the pandemic hit in early 2020, and she quickly found out that much of her business had dried up.

MacDonald’s husband is a carpenter who managed to keep working outside, so the couple managed to keep food on the table. But times were tight.

“Basically we just tightened our purse strings as much as possible, picking and choosing what we were spending money on,” she said.

As the provincial and federal governments moved to put in place programs to keep businesses like hers afloat during the pandemic, MacDonald said she didn’t bother applying to them. A friend with six full-time employees went through the help request process and ended up getting the equivalent of $ 200, so MacDonald doubted it was worth it for herself.

“I don’t mean to sound ungrateful, but the work you had to do in addition to keeping your salon going… it was almost not worth it.”

A new report released this week suggests MacDonald was not alone, especially in the Indigenous business community. As COVID-19 has shaken businesses indiscriminately, Indigenous-owned businesses face circumstances that have made navigating the pandemic particularly difficult.

Obstacles encountered

According to the report from the National Association of Indigenous Finance Corporations, the National Indigenous Economic Development Council and the Canadian Council for Indigenous Business, Indigenous business owners were much less likely to find the help they needed during the pandemic, even if the government took steps to try to alleviate their burden.

In a survey of 825 Indigenous-owned businesses across the country between December 18, 2020 and February 1, 2021, nearly half of entrepreneurs who responded said financial requirements were a major barrier to entry. for help during the pandemic. Three-quarters said their businesses had been negatively affected by the pandemic, a percentage that is according to Statistics Canada data on all types of businesses.

But more than a quarter of Indigenous homeowners who applied for some kind of government assistance package struggled to meet minimum requirements, according to the survey.

Participation in the survey was voluntary and was based on a self-selection method, which means that the data are not weighted and do not constitute a truly random sample. But it nonetheless paints a picture of the unique issues facing a key group of Canadian entrepreneurs.

While the future certainly looks brighter now than at this time last year, even after everything they’ve been through, nearly half of those polled said they couldn’t survive the next six. months without help.

Tabatha Bull, CEO of the Canadian Council for Aboriginal Business, said in an interview with CBC News that she credits the government for offering a wide variety of programs designed to help people and businesses in a hurry, from the grant emergency salary from Canada. (SSUC) to income support programs such as the Canada Emergency Benefit (CEB) to more business-oriented loan programs such as the Canada Emergency Account for Business (CEBA).

But Bull said the programs did not take into account the specific circumstances many Indigenous businesses face and therefore were not as effective as they could be.

WATCH | Tabatha Bull explains some of the challenges Indigenous businesses face:

Problems with the loan structure

The CEBA, for example, requires an existing relationship with a financial institution such as a bank to obtain funding. But about a third of Indigenous businesses do not have a relationship with traditional banks, according to the survey.

SSUC was also a problem because a lot of native businesses are structured as something called a Indigenous Economic Development Corporation, in which a First Nation government is a shareholder of the company.

This is an advantage when dealing with banks, which like to see collateral such as real estate when giving business loans. But many businesses on reserves do not have real estate assets because of the provisions of the Indian Act, the federal law that governs many relationships with Indigenous communities.

Having a government as a shareholder can be of great help when trying to convince a bank to lend you money, but it was a hindrance in dealing with some COVID-19 relief, due to the way the programs were structured.

“There was that kind of dichotomy where you structured your business because of the Indian Act so that you could get a loan and get financing, but when the wage subsidy rolled out she said you had a government as a shareholder, so they were not eligible, ”Bull said.

“[The problems] have been fixed, but this caused a delay. “

These issues are well known to Shannon Pestun, who is Métis and co-founder of Finance Cafe, a Calgary-based startup that aims to help small business owners develop their financial literacy.

“Indigenous entrepreneurs … tend to be smaller and more individual owners working from home [so they] do not have the same access to financial and social capital, ”she said

Difficult to apply

She is not surprised that many Indigenous businesses have struggled to get the right kind of help to survive the pandemic.

“The relief programs are really hard to access,” Pestun said, noting that the initial financial demands of some of the support programs were particularly onerous as they required a number of staff and the company had suffered some loss. financial before being eligible. for help – a bar that many one-man businesses cannot reach.

This is one of the main reasons why more than a quarter of Indigenous businesses in the survey said they requested non-government help to survive during the pandemic.

“A lot of business owners don’t know what their business will look like six months from now and how much money they’ll need to survive,” she said.

The government seems to know it has missed the mark with aboriginal businesses, but says it is a work in progress.

“We recognize that Indigenous businesses face unique challenges and may have been disproportionately affected by this pandemic due to their unique structure,” said Marie-Emmanuelle Cadieux, Director of Communications for the Minister of Indigenous Services.

“Indigenous businesses and entrepreneurs are not out of the woods yet,” Cadieux said. “But we will continue to listen and respond to the needs of Indigenous partners.”

Economists and policymakers claim that COVID-19 caused an “assignment,” in that it had a disproportionate impact on women from an economic perspective. More than half of the firms in the survey were in the service sector, and Pestun says indigenous women are even more likely to work in the service sector, which tend to be “the companies hardest hit by the crisis.” pandemic ”.

WATCH | Why the pandemic has hit women harder than men economically:

The federal government is planning a national child care program as a way to help women – who have suffered the brunt of the pandemic-related job losses – get back to work. It’s key support that one economist says is the key to “covering it”. 2:02

Indigenous women business owners may have greater difficulty proving their credit history, she said, or dealing with lower incomes or gaps in their work experience.

“Bankers are looking at this,” she said.

Ultimately, Pestun said it was in everyone’s interest for the system to work better with Indigenous businesses, especially those owned by women, because “they create businesses that not only use knowledge and skills. traditional culture, but also businesses that help their communities, ”she said.

“Being able to have your own business and work towards economic self-sufficiency is really important for aboriginal women.