Northwest hopes to grow bonds: Grow Bonds hailed as solution to lack of venture capital.

There is new hope for small-and medium-sized businesses looking to start or grow in Northern Ontario.

The Northern Ontario Associated Chambers of Commerce (NOACC) has proposed to the provincial government a program to make grow bonds available to people in Northern Ontario wanting to increase economic prosperity.

"Hopefully it will be one of the mechanisms by which we can start to take control of our own economy in Northern Ontario," says Tannis Drysdale, president of NOACC.

The grow bonds idea came out of discussions on the northern economy and what the missing links were to developing access to venture capital. NOACC looked for ways northerners could help themselves, and found the answer in a Manitoba-based grow bonds initiative. After investigating the program, NOACC came to the conclusion grow bonds would be an asset in northwestern Ontario, and the Manitoba model would reflect them best.

"The bottom line is it would create jobs, new wealth and keep wealth in Northern Ontario that we currently send to southern Ontario and other places," says Drysdale.

With Grow Bonds, Northern Ontarians are investing in their own local economy. and future and any citizen of Ontario would be able to purchase a bond.

"For the first time in many northerner's lives they will be able to invest in a business that is in their own community."

The major benefit of purchasing a grow bond would be that the principal is guaranteed, says Drysdale. There would also be an interest rate offered on the bond.

"There are not many northerners who can put together a half-a-million dollars to invest in a new business, but there are thousands and thousands of northerners who could invest $1,000 each in a business operation in Northern Ontario," says Drysdale. "If we can capitalize on that, and some of the entrepreneurship in the North, we will start to build a more diversified economy."

Support for the initiative is strong and is expanding. The Ontario Chamber of Commerce (OCOC) came out with a policy decision stating they were supporting a regional initiative. The Ministry of Northern Development and Mines (MNDM) has worked with NOACC to help bring the program to Northern Ontario. Grow Bonds North has also been endorsed by the Northwestern Ontario Municipal Association (NOMA), the Northwestern Ontario Development Network (NODN) and NOACC itself.

"I cannot think of a single policy that I have fronted at NOACC in the past that has been so well received universally by every group, and that includes the Government of Ontario."

Grow Bonds North is now waiting for a "thumbs up" from the minister of finance, which would indicate the ministry would be willing to write the regulation and the MNDM could go ahead and start running the program.

"At this point we are very optimistic that sometime in the next 12 months we will be issuing grow bonds in Northern Ontario," Drysdale says.

The MNDM, through the Northern Ontario Heritage Fund Corp. (NOHFC), would allocate a sum of money to guarantee bond issues in Northern Ontario. Based on an analysis of the relative size of the northern economy to the rural Manitoba economy, a 'rotating fund of $30 million, allocated over 10 years has been proposed. A Grow Bonds Corp. or a sub-corporation of the NOHFC would administer the fund and work with local economic development officers, northern development officers and entrepreneurs to locate, market and allocate funds.

A business attempting to participate in the program would go through a process, which would take about six to eight weeks to complete.

First, the entrepreneur is provided assistance in creating and detailing a business plan through. a local business/economic development adviser working for one of the three levels of government. The proposal is then forwarded to the local municipal council for approval, keeping in mind the community's own economic development plan.

Next, the proposal is forwarded to the Grow Bonds Corp. and the provincial regulatory body that reviews bond issues.

Finally, the minister of northern development and mines signs off on the project and bond issues are advertised.

The Manitoba program has been considered a success because it addressed access-to-capital problems in rural Manitoba. It has been running since 1991, and through 28 deals the total amount of grow bonds raised in the province today is $14.5 million.

"It has been well received because people like to invest their money into something that will create new local jobs and new opportunities," says Alex Mulvenna, Manitoba Grow Bonds project manager.