Investigation finds that indigenous businesses face obstacles in accessing COVID-19 relief programs
Like many companies, Carlene MacDonald’s beauty salon has been hit hard by the pandemic.
As a member of Millbrook First Nation in Truro, NS, MacDonald has been cutting hair for clients in Truro and Antigonish and surrounding areas for nearly 15 years. But that was before the pandemic broke out in early 2020, and she soon discovered that many of her businesses had dried up.
MacDonald’s husband is a carpenter and he has been working outside, so the couple managed to put food on the table. But time is pressing.
“We basically just tighten our wallets as much as possible and pick the things we spend money on,” she said.
Although the provincial and federal governments began to develop plans to keep companies like her alive during the pandemic, McDonald said she didn’t bother to apply for these plans. A friend of six full-time employees went through the process of applying for help and finally received the equivalent of $200, so MacDonald doubted whether he was worth the time or effort.
“I don’t mean it sounds ungrateful, but the work you have to do in addition to keeping the salon running… is hardly worth doing.”
A new report released this week shows that MacDonald is not alone, especially in the Aboriginal business community. Although COVID-19 has hit companies indiscriminately, the situation faced by indigenous companies makes responding to the pandemic uniquely challenging.
According to the report According to reports from the National Association of Aboriginal Capital Companies, the National Aboriginal Economic Development Council, and the Canadian Aboriginal Business Council, even if the government is taking measures to try to alleviate the epidemic, it is unlikely that Aboriginal business owners will get the help they need during the pandemic. many. Their burden.
In a survey of 825 indigenous companies nationwide between December 18, 2020 and February 1, 2021, almost half of entrepreneurs stated that financial requirements were the main obstacle to obtaining assistance during the pandemic.Three-quarters of people said their business was negatively affected by the pandemic. This percentage is Comply with Statistics Canada’s data on all types of businesses.
However, the survey found that more than a quarter of indigenous people who applied for some kind of government assistance program had difficulty meeting the minimum requirements.
Participation in the survey is voluntary and relies on self-selected methods, which means that the data is not weighted, nor is it a truly random sample. But it still depicts the unique problems faced by key Canadian entrepreneurial groups.
Although the future now certainly looks brighter than it was at this time last year, even after they experienced all of this, almost half of the interviewees stated that they would not be able to survive the next six months without help.
In an interview with CBC News, Tabasa Bull, CEO of the Canadian Aboriginal Business Council, said that she appreciated the government’s various emergency plans to help people and businesses. Canadian Emergency Wage Subsidy (CEWS) Income support plan, such as Canadian Emergency Response Benefit (CERB) To more business-centric loan programs, such as Canadian Emergency Business Account (CEBA)).
But Bull said that these plans did not take into account the specific situations faced by many indigenous companies, and therefore did not achieve the desired results.
Watch | Tabatha Bull explains some of the challenges faced by indigenous companies:
For example, CEBA needs to establish existing relationships with financial institutions such as banks to obtain funds. But the survey found that about one-third of indigenous companies have nothing to do with traditional banking.
CEWS is also a problem because the structure of many indigenous companies is called Aboriginal Economic Development Corporation, Where the aboriginal government is the shareholder of the enterprise.
This is an advantage when dealing with banks, because banks like to see collateral such as real estate when issuing commercial loans. However, due to the provisions of the Indian Act, many companies on reservations do not have real estate assets. The Act is a federal law governing many transactions with indigenous communities.
When trying to persuade the bank to borrow money from you, having the government as a shareholder can be very helpful, but due to the way the plan is structured, there are obstacles in handling certain COVID-19 relief.
“There is this dichotomy, you organize your business according to the Indian Act so you can get loans and funds, but when the wage subsidy is introduced, it says you have a government as a shareholder, so they are not eligible,” Burr said.
“[The problems] It was fixed, but this caused delays. “
Shannon Pestun is a well-known problem. Métis is the co-founder of Finance Cafe, a start-up company based in Calgary that aims to help women in small businesses with financial knowledge.
“Indigenous entrepreneurs… tend to be smaller and more self-employed individuals who work from home [so they] Can’t get the same financial and social capital,” she said
Difficult to apply
She is not surprised that it is difficult for many indigenous companies to get the right type of help to survive the pandemic.
“Relief plans are really difficult to obtain,” Peston said, noting that the original financial requirements of some support plans are particularly onerous because they require a certain number of employees, and the business has suffered a certain amount of financial loss before being eligible to seek help-many Standards that a single-person enterprise cannot meet.
This is an important reason why more than a quarter of indigenous companies in the survey reported seeking non-governmental assistance to survive the pandemic.
“Many business owners don’t know what their business will look like in six months, or how much cash they need to survive,” she said.
The government seemed to know that it missed the goal of indigenous companies, but said it was a work in progress.
“We recognize that indigenous companies face unique challenges, and because of their unique structure, they may be disproportionately affected by this epidemic,” said Marie Emmanuel Cardieu, Director of Communications, Minister of Indigenous Services. -Emmanuelle Cadieux) said.
“Local companies and entrepreneurs have not yet come out of the predicament,” Cardieu said. “But we will continue to listen to and respond to the needs of Indigenous partners.”
Economists and policymakers say COVID-19 caused “her cession”, Because it has a disproportionate impact on women from an economic perspective. More than half of the companies in the survey are in the service industry, and Pestun said that indigenous women are more likely to work in the service industry, which is often the “companies hit hardest by the pandemic.”
Watch | Why from an economic point of view, the pandemic hits women harder than men:
She said that female indigenous business owners may face greater challenges, such as proving credit history, or dealing with issues such as low income or gaps in work experience.
“Bankers are studying this,” she said.
Finally, Pestun stated that the system works better with indigenous businesses, especially women-owned businesses, and is good for everyone, because “the businesses they are creating not only use traditional knowledge and culture, but also help their communities,” she says.
“It is very important for indigenous women to be able to own their own company and strive to achieve economic self-sufficiency.”