Developmental Financing for Aboriginal Businesses

Abstract

While there is a growing demand for financing services for Aboriginal small and medium enterprises (SME), those that are seeking support services through mainstream financiale institutions are faced with many barriers. As a result, Aboriginal Financial Institutions (AFI) are now the primary financing source for Aboriginal SMEs that cannot receive suchaccess services through mainstream institutions. The federal government provides financial assistance to AFIs; however each institution is independent, owned by and accountable to their community. AFIs are currently operateing under an unsustainable business model. There is growing demand for loan capital; however, the level of federal government funding is shrinking as the effectiveness, efficiency, and viability of AFIs is being increasingly assessed. In response to these challenges, the National Aboriginal Capital Corporation Association (NACCA) and the federal government have initiated new programs, such as the Aboriginal Developmental Lending Assistance (ADLA) program which compensates AFIs for developmental loan losses. Despite these initiatives, such complex challenges call for further changes within the programming of Aboriginal SME financing and management support services in CanadaThe National Aboriginal Capital Corporation Association (NACCA) is the central voice for AFIs and supports and coordinates those AFIs that hold a membership to the national association.