Less than 1 percent of applications to the Ottawa Black Entrepreneurship Loan Fund were approved in the first year

Sheriff Ganiyu works on renovations to his business, the Titi African Foods grocery store, in Richmond Hill, Ont., on April 3.Tijana Martín/The balloon and the mail

The federal government’s Black Entrepreneurship Loan Fund has only approved about 100 of 16,000 applications, a situation that has caused financial problems for some of those waiting for funds.

Ottawa announced the loan fund last May as a way to help black business owners in need of capital, which has been a longstanding barrier for some in the community. Entrepreneurs can apply for loans between $25,000 and $250,000, with an interest rate of between 6 and 8 percent.

Many black business owners were enthusiastic about the program when it launched. Thousands of applications poured in, quickly overwhelming the Federation of African Canadian Economy (FACE), a coalition of black business groups that had been created to manage the loan fund. The money for the fund comes from the federal government and the Business Development Bank of Canada. BDC has final approval of the loans.

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Since May 31, the fund has received 16,000 applications. According to government, FACE, and BDC data, 935 of those applications have been reviewed, with 142 receiving initial acceptance from FACE and 104 receiving final approval from the BDC. Nineteen loans are still under review by the BDC. FACE has approved a total value of $14.7 million in loans, with $8.6 million repaid so far. The fund’s budget is $160 million.

FACE and the government blamed the low number of approvals on a lack of paperwork. FACE said it deemed 14,000 files to be incomplete.

But black entrepreneurs who have spoken to The Globe and Mail say they have submitted what was asked of them and have spent months without being able to contact anyone at FACE about the status of their applications.

Sheriff Ganiyu, who runs the Titi African Foods grocery store in Richmond Hill, Ontario, and produces a line of Zobo beverages, applied for a loan shortly after the program was announced last year. He said his initial contact was positive: He spoke with a loan officer, submitted the requested documentation, and gave her the impression that he would qualify for a $100,000 loan.

He went ahead and bought two shipping containers of produce for his business. He said that he had to use four credit cards at most to make the purchase, but he hoped that the loan money would arrive quickly and cover the expenses.

Ten months later, Mr. Ganiyu said his application has still not been processed. He is now in debt and hopes to buy critical equipment for his business, such as new freezers for meat.

She said she recently finally got her loan officer back on the phone and was told there was no time frame for deciding her application.

“How can a loan application not have a time frame?” Mr. Ganiyu said. “It’s not personal money, it’s government money, for black people. … You’re supposed to make our lives easier. You made him even more miserable.

An employer filed a lawsuit against FACE over the application process.

Angela Lindow, owner of the media company Rio Dayne Inc., filed a lawsuit in Ontario Superior Court in January alleging breach of contract. In her lawsuit, Ms. Lindow said that after applying for the loan in June, she was quickly assigned a loan officer, who gave her verbal confirmation that she would receive a $250,000 loan and followed up with an email requesting a copy of her photo ID and a voided check, which she provided.

Ms. Lindow said in the lawsuit that she later entered into contracts for goods and services worth a total of $210,390, but became concerned when the loan funds never reached her account. She said that in August she was told that the loan officer was no longer handling her case, and in late September, she was finally told that FACE would not make the loan. Ms. Lindow said in an interview that FACE told her that they had decided that she could not repay the loan within 6 1/2 years, which she denies.

Sheriff Ganiyu next to the plumbing work that stopped at his business.Tijana Martín/The balloon and the mail

FACE declined to comment on the lawsuit. The organization has not yet filed a defense brief.

Tiffany Callender, executive director of FACE, said it is a new organization that has had to grow quickly. “We have developed a rigorous and transparent process to meet our goals and we are very proud of what we have achieved so far,” she said in a statement.

FACE received an additional $9 million from the federal government on Friday to hire more staff and process applications more quickly. FACE said it plans to launch a call center this month to answer questions from applicants.

The government also suggested that loan applicants should seek help from members of the National Ecosystem Fund. The federal initiative has earmarked $92 million for organizations that provide business coaching and mentoring to Black entrepreneurs.

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