The Business Development Bank of Canada (BDC) has launched a new community banking initiative it says will help grow the number of small business owners that can access financing.
Through BDC Community Banking, the Crown corporation is looking to partner with more than 80 community-based lending organizations to provide new financing and advisory capabilities to entrepreneurs who need more support. These include business owners that live in rural or remote areas, have little credit history, are from younger age groups, or have “unconventional business models.”
“They get the best of both worlds, the community groups that know and support them best and the financial weight of BDC behind them.”
Adil Hassam
BDC
BDC will back the selected partners with co-lending, indirect lending, loan guarantees, and advisory services. BDC currently has less than ten Community Banking partners, which include Futurpreneur, the Federation of African Canadian Economics, and Québec City-based Evol.
By combining the know-how of local organizations and its expertise in financing and advice, BDC claims it is aiming to help up to 100,000 small business owners access new financing in the next 10 years.
BDC said the community banking initiative is part of an effort to reverse a decades-long decline in entrepreneurship. According to a 2023 BDC report, there are 100,000 fewer Canadian entrepreneurs in the country now compared to the year 2000, despite a population increase of more than 10 million in the same timeframe.
“What we’ve seen so far from working with organizations such as Futurpreneur, Evol, and [the National Aboriginal Capital Corporations Association] is that by working together, it creates an exponential impact for entrepreneurs,” BDC’s vice-president of Community Banking, Adil Hassam, said in a statement. “They get the best of both worlds, the community groups that know and support them best and the financial weight of BDC behind them.”
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The Government of Canada’s last legislative review of BDC—which covered between 2010 and 2022—called for the bank to take more risks to finance underserved entrepreneurs. Since then, BDC has launched big new funds for women and Black and Indigenous entrepreneurs.
While BDC has previously leaned on partner organizations to source investments, such as its Thrive Lab initiative, the difference with community banking lies in its indirect approach, Miguel Barrieras, BDC’s chief community banking and impact officer, told BetaKit in an email statement. While programs like Thrive Lab have partners source and recommend businesses for BDC to directly invest in, the spokesperson said Community Banking will support small businesses indirectly through a network of partners.
“Canada’s economy needs more support, now more than ever, and there’s not a minute to waste,” Barrieras said. “By working with our 80 partners, we can do it faster and better.”
Feature image courtesy BDC.