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Communities of Opportunity: Community Futures Development Corporations

Community Futures Development Corporations have been assisting small businesses in Northern Ontario for more than 25 years.

Community economic development success stories typically showcase thriving local businesses, but the organizations that helped them to that stage are often overlooked. Recently, the spotlight has been cast on the Community Futures Development Corporations (CFDCs) as the impact of their effectiveness in helping small business in Northern Ontario for over 25 years has been documented in testimonials, an industry award, and two recent studies.

“If it were not for the services of Nord-Aski REDC, our company would have faced bankruptcy," said George Graham, managing partner, Thunderhouse Forest Services Inc. "We're grateful for the services and support provided during hard times."

The recession hit Thunderhouse Forest Services Inc., a forestry consulting firm, hardest in 2009. The Community Futures group in Hearst, Nord-Aski REDC, assisted the company to re-structure and re-finance, when traditional lenders were not providing support to the sector.

"Our forest inventory program has grown by six full-time positions since receiving financial support through the Community Futures Program," said Graham. "Thunderhouse has recovered to pre-recession level of 45 positions."

Nordex Explosives Ltd had a similar experience when the mining industry fell flat.

"The Kirkland & District Community Futures office… helped us from the brink of bankruptcy… to build up our credibility and then the traditional financial institutions got on board," said Jim Taylor, CEO Nordex, in a video testimonial aired during their acceptance of the 2014 Entrepreneur of the Year Award at the Community Futures Ontario Conference.

"In 2003, we had three part-time employees, and one pick-up truck…Ten years later, we had 75 full-time employees, and 40 trucks on the road."

Nordex went from sales of $900,000 to close to $20 million in 10 years.

"Overall, we differentiate ourselves from traditional lenders by understanding that one size doesn't fit all," said Bernstein. "We focus on future business potential and we don't stop looking at a declining sector, or a limited net worth for a startup. Our community focus has also brought many a bank to the table to enable larger funding packages."

CFDCs are autonomous not for profits, who provide access to capital for small- and medium-sized businesses and social enterprises, and free business technical support and planning services.

There are 24 CFDCs in Northern Ontario, all federally funded through FedNor. Repayable financing is available up to $150,000 for business start-up, expansion, modernization, acquisition, and stabilization that creates or maintains jobs. 

Both Thunderhouse and Nordex received funding through their Northeastern Ontario Investment Pool, which provides access to larger capital funding requirements. Companies can access up to an additional $350,000 per business from the regional pool created by participating CFDC members.  

"Almost $30 million is currently invested in Northeastern Ontario businesses through this Investment Pool," said John Bernstein, Executive Director, South Temiskaming Community Futures Development Corporation.
 

Thunderhouse also received funding for two Northeastern Ontario Youth Internship positions (NEOYIPs) in 2015, which Community Futures has been administering since 2014. 

Supported by FedNor, internships cover up to 50% (to a maximum of $31,500) of the eligible costs of salary, employee benefit expenses, and approved training related expenses for a 12-month full-time intern position which forwards innovation, the digital economy, or expands trade.

“The interns we hired have brought a lot to Thunderhouse and to our community," said Graham. "I highly recommend the NEOYIP for employers who are looking to build capacity and bring young talent into their business.”

"We're proud to partner with FedNor on these initiatives and are well positioned to take on this role," said Bernstein. "We're on the ground in the communities, with local knowledge, and are known for being able to deliver in a timely manner."

A similar internship program, also supported by FedNor, is available for Francophone private sector businesses. The Entrepreneurs Francophones PLUS (EFP) started in 2011 to support business enhancement and job creation. "What's truly amazing is the 91% retention rate of the EFP interns following their placements," said Bernstein.

In addition to internships, Francophone private sector businesses can access funds in support of marketing activities (contribution of 75% of eligible costs to a maximum of $5,000).

Another kudo highlighting CF relevance and importance came when the Northern Ontario CFDCs received the Award of Excellence for Innovation at the 2016 Community Futures Ontario Conference for their 'Head Start in Business' Program. Funded through FedNor and the Ontario Trillium Foundation, the program teaches youth about entrepreneurship career opportunities. "From in-school presentations to hosting entrepreneurship events and competitions, in the last four years, we have introduced over 10,000 youth in Northern Ontario to entrepreneurship," said Bernstein. 

Two recent studies on CFDCs further showcase the impact the Community Futures Program is having in Ontario. 

A Conference Board of Canada Report found that for each $1 of direct Community Futures (CF) Program lending, real GDP was lifted by $4.50.  The report concludes that the program provides a net positive return on investment.

In a separate FedNor Business Number Analysis, the CF Program is also lauded.  

"When comparing CF-assisted business to non-CF business of comparable size within comparable industry sectors, Statistics Canada data shows that CF-assisted businesses experienced higher average annual growth in sales, more positive employment and payroll growth, and had consistently higher business survival rates than the comparable group," said Bernstein.

"These reports demonstrate that CFDCs are highly relevant in helping to create and maintain economically sustainable communities, which is the ultimate outcome of the CF Program. While many of us see the positive results of our efforts in each of our respective communities, it’s gratifying to see that hard work validated in the conclusions of these two reports."

While Bernstein is proud of the return on investment that CFDCs generate, and the impact that the businesses have on local communities, he is quick to defer the limelight: 

"The success of the Community Futures Program stems from the autonomy of our local volunteer boards who draw on their knowledge of the community to guide decision-making.  This gives us the flexibility to implement local solutions that make sense in our communities and allows our local small businesses to do what they do best – create jobs."  

From Muskoka to Moose Factory, there are 16 CFDCs across northeastern Ontario. 

"We pride ourselves on being flexible, approachable, accountable, service-oriented, and responsive," said Bernstein. "Ultimately, the goal of lending is to see businesses thrive and local economies boom by ensuring that entrepreneurs can access the capital and training they need for success."

In addition to business lending and planning services, CFDCs also provide support for community-based projects and strategic community planning and socio-economic development.