Aunalee Boyd-Good (left) and Sophia Seward-Good are co-owners of Ay Lelum, a fashion business located in the Snuneymuxw First Nation, in Nanaimo on Vancouver Island.Rick Etkin Productions/Supplied
A new Indigenous investment fund has placed a $10-million stake with Nuu-chah-nulth Economic Development Corp., a Vancouver Island-based lender whose clients include fashion house Ay Lelum and the business development arm of Huu-ay-aht First Nations.
The investment, announced Monday, is the first one from the Indigenous Growth Fund, a $150-million fund set up last year and managed by the National Aboriginal Capital Corporations Association. The association is an umbrella group for more than 50 Indigenous-controlled lending organizations, which are known as Aboriginal Financial Institutions, or AFIs.
The new funding will allow NEDC, which is an AFI, to provide more and larger loans to businesses in the sectors it already serves, which include forestry, tourism, fisheries and fashion, the corporation’s general manager, Al Little, said on Monday.
“There’s been growth in the average size of loans and the volume of loans. There’s been a lot of increase,” Mr. Little said.
“So the additional funds will definitely help us continue providing those funds to small business.”
The IGF is a federally backed fund designed to boost investment in Indigenous-owned small-to-medium-sized enterprises.
NEDC, launched in 1984, has about $60-million under management and has provided loans totalling about $12-million a year over the past few years, Mr. Little said. The additional capital from IGF means NEDC will be able to meet increased demand for loans of $1-million each or more, while still serving clients who are looking for loans in the $50,000 to $75,000 range, he said.
NEDC is a non-profit, and it reinvests income back into its operations. Until the recent cash infusion, it was having to turn down loan applications from qualified borrowers. It now expects to be able to serve more of those prospective customers.
AFIs were set up by the federal government in the late 1980s to serve Indigenous-owned businesses that may not qualify for conventional bank financing, often because of restrictions against using on-reserve homes or property as security.
That was the case for Ay Lelum, a fashion business located on the Snuneymuxw First Nation, in Nanaimo on Vancouver Island.
The company has won international acclaim for its designs but has struggled to borrow money to buy equipment and build a production facility, co-owner Sophia Seward-Good said.
“My sister and I were told that we were great businesswomen but that you need to have equity or collateral to get a loan,” she said.
With their personal accounts tapped out from business expenses, and with banks not considering reserve property as security, they were stuck.
When the sisters learned last year that they had been approved for a loan from NEDC, they were in shock, Ms. Seward-Good recalled.
The loan, the amount of which she declined to disclose, will allow Ay Lelum to build a facility where her family can design and manufacture products, welcome customers and hold workshops.
The IGF said in a statement that it will continue to channel investment through the AFI network.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.