by Nancy Gardiner
Northern News Services

NNSL (Oct 20/97) - To help increase access to capital and management support, aboriginal entrepreneurs can take advantage of a new loan program. Run by the Business Development Bank of Canada, the new initiative was announced in late September.

Growth capital for aboriginal business is available through the BDC. What makes it attractive is its flexibility for equity requirements, says Jim Richardson, national director for aboriginal banking with the Business Development Bank of Canada.

Loans up to $25,000 are available for business startups with customized management support. And up to $100,000 can be tapped by existing businesses.

The loans are more flexible in what is sought for collateral.

Management support is available through a special alliance with CESO Aboriginal Services, which has 4,400 volunteer advisers.

The growth capital loans can help aboriginal businesses acquire fixed assets, finance franchise fees, cover startup costs or replenish working capital depleted by capital expenses.

Aboriginal entrepreneurs own and operate more than 20,000 businesses in Canada.

Eligible applications should have a commercially viable business proposal and marketing plan, equity and most importantly, a competent, experienced management team.

"We've recently given out a $1.8 million loan to a band that owns a Best Western hotel," says Richardson.

Aboriginal businesses are involved in airlines, software, gas bars, stores, office services and supplies. Unfortunately, in the past, knowledge-based business has been bypassed.

"There's not a proliferation of companies that are knowledge-based," says Richardson. "But more and more we're seeing an emergence of higher technology-related, knowledge-based types of businesses. Before they weren't around at all. There's been progress -- not one we could applaud -- but inch-by-inch, it's a cinch."

The aboriginal banking unit has been trying to increase its level of activity on the aboriginal market. In March 1997, an agreement was struck with the CIBC to provide a full package of financial products to target aboriginal clients. Then the BDC signed a separate agreement with the Royal Bank.

The BDC buys money on the market, marks it up, and sells it as loans, explains Richardson. "We buy T-bills, bonds or marketable securities, pay a percentage to buy, then take the money and lend it out at a higher interest rate," he added.

The BDC is strictly a lending financial institution owned by the government of Canada. The Crown Corporation's focus is on Canadian small and medium-sized business, on emerging and export sectors of the economy.