Migrants and refugees are often excluded from traditional sources of capital due to a lack of credit history and collateral and low-income levels. In some cases, researchers find that some minority entrepreneurs are excluded from accessing capital due to discrimination of lenders and investors. To address these barriers, small and medium enterprise (SME) loan programs provide migrant-owned businesses with access to capital to grow. These loans are larger than micro-finance programs (e.g., Nova Scotia Loan Guarantee Program guarantees loans of up to $500,000). Some loan programs also offer training programs and business networking supports to migrant entrepreneurs.
Some examples loan programs that serve migrant-owned SMEs include:
The Province of Nova Scotia provides a guarantee to the lenders (local credit unions) for loans up to $500,000 made to eligible businesses, which includes all types of businesses operating in Nova Scotia, with the exception of residential and commercial real estate, beverage rooms and taverns and any venture of ‘questionable ethical or legal nature’. The program has a specialized lending stream for migrant SMEs and social enterprises, which includes a 90% government guarantee on the loans. To qualify for this program, borrowers must be permanent residents of Canada for no longer than five years, or a Canadian citizen born outside of Canada and now a resident for at least one year, or a Canadian living abroad but returning home and facing credit challenges. Networking opportunities, orientation and other non-financial supports are offered to qualifying newcomers as part of the program.
The Fresno CDFI fund targets migrant and refugee farmers and social enterprises in particular by providing debt financing to stimulate investment in urban and rural neighbourhoods. The majority of its investment is made in minority owned business.
Contribute your examples of SME lending and investing programs for migrants and refugees.