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Micro-loans helping marginalized Sault residents

A new financing program in Sault Ste. Marie is helping residents transition from social assistance to entrepreneurship.
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Micro-Loans
In Sault Ste. Marie, recipients of Ontario Works benefits are now eligible for a micro-loan program that will help them transition to business ownership.

A new financing program in Sault Ste. Marie is helping residents transition from social assistance to entrepreneurship.

Developed by the Sault’s District Social Services Administration Board (DSSAB) in partnership with the city’s Economic Development Corp. (EDC), the new micro-loan program is open to residents who are currently part of the Ontario Works program.

Eligible recipients can receive a loan of up to $5,000 toward their business startup, in addition to guidance and mentorship from local businesspeople to help get their venture off the ground.

Mike Nadeau, the Sault’s commissioner of social services, said micro-loans have shown to be a successful strategy in helping people become empowered and escape poverty.

“What we’ve found is there are only three ways to help someone exit social assistance: they go back to school, they get a job, or they start a business,” Nadeau said. “So we thought, how can we address it, because the current systems that are there, (OW recipients) don’t seem to be accessing those.”

Ontario Works recipients typically have challenges navigating structured, government systems, he added, and the DSSAB found there were few self-employment startups within its caseload for the area. That’s when the DSSAB approached the EDC.

Together, the organizations have spent the last year developing a pilot program that would address some of the challenges faced by Ontario Works recipients. The program is fully funded by the DSSAB, and the EDC assesses business readiness, offers guidance, and administers the loans.

This program differs from more traditional loan programs in the flexibility it offers for paying back the capital, Nadeau said.

“Typically with a loan program, there’s a stronger emphasis on starting to repay that loan right away,” he said. “We’re flexible. We want to make sure the individual has sufficient cash flow, because they’re starting from such a disadvantaged position, so we need to ensure that there’s an understanding that loan repayment would not start immediately.”

Dan Hollingsworth, the EDC’s executive director of business development, said the EDC is using some of its other entrepreneurship programs — Summer Company and Starter Company are examples — as models for the micro-loan program.

The EDC will help recipients flesh out their business idea, test the business case, and set them up with training in areas such as managing the business and its finances, marketing, and operations.

Some of the business ideas suggested so far centre on endeavours of a creative nature, while others are more labour-intensive, such as landscaping and snow removal. Hollingsworth anticipates most of the eligible businesses will be service-oriented, but he’s optimistic about the possibilities.

“We never know where the next big win’s going to come from,” he said. “We’ve had some very small clients start up as a one-person, two-person company, and in some cases in Sault Ste. Marie, they become 200-person employers.”

A third partner, a new organization called the Centre for Social Justice and Good Works, is helping the DSSAB identify business professionals in the community who would be willing to act as mentors to the new entrepreneurs.

Those professionals will provide their services free of charge; a lawyer could help draft an incorporation document, for example, while an accountant could help with bookkeeping.

Additionally, those local professionals can help the new entrepreneurs establish business contacts, make referrals, and identify new markets for them, Nadeau said.

“Typically, people from marginalized communities are lacking social capital, so some of the established professionals in the community have higher social and political capital,” he said.

“They may help them identify markets for their business through their business and professional networks, because if you’re marginalized, you don’t know the networks to access the long-term contracts, for example.”

The pilot project will run for one year, after which it will be re-evaluated by the DSSAB, which will make a recommendation to continue the program or shelve it.

Nadeau and Hollingsworth are hopeful the program will be successful enough to merit its extension.

“Our goal is to work with 10 individuals,” Hollingsworth said, “and we’re hoping that we have a fairly good success with those.” 



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