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Demand for corporation's funds on the rise.

Despite the widespread need for skills training for aboriginal people, one Sault Ste. Marie-based truck-driving training centre was in danger of bankruptcy after being denied bank funding.

Meanwhile, a Sault-area Native laid off by Algoma Steel Corp. inherited a commercial fishing licence and quota, but lacked the capital to purchase a boat and become self-sufficient.

Today, however the TransCanada Truck Driving Academy continues to train drivers and the former steelworker is in the water rather than the unemployment line, thanks to loans provided by the Ontario Metis and Aboriginal Association Development Corporation.

The Sault Ste. Marie-based development corporation has extended $6.1 million in loans to start Native small businesses in Ontario. The loans have directly created 300 jobs.

However, management of this business development fund is only part of the work of the Ontario Metis and Aboriginal Association (OMAA) which represents 150,000 Metis and close to 50,000 Natives who, like Metis, live off reserves.

The association employs about 100 people, 60 of them Metis. Staff members include chartered accountants, financial specialists, a lawyer, social scientists, educational professionals and Native negotiators.

"A lot of people have a picture in their mind of Native people. Most often it's that they are on welfare and don't want to work," admits Henry Wetelainen, president of the OMAA Development Corporation.

However, there are many good Native businessmen who want to get the job done, he says.

"Business is not uncommon to us. We were the first entrepreneurs in the country. We controlled the fur industry at one time," explains Wetelainen.

It was a one-time allocation of $7.3 million from the federal government which gave the OMAA Development Corporation (ODC) the capital it needed to begin a loans program. The corporation lends at a rate close to prime, with a minimal additional risk factor.

The development corporation will lend principal amounts of less than $10,000 and, unlike some institutional lenders, it advises borrowers on business matters to make sure the new ventures succeed. This service has helped to keep the loan delinquency rate to a respectable three per cent.

"If a guy gets in trouble we don't shut him down. We help small business - that's our role," Wetelainen says. "We go the extra mile. That's what small business needs. Banks don't do that - there's no money in that."

Development corporation loans have helped create 152 jobs in the Sault Ste. Marie, Sudbury and North Bay areas since 1989.

One of the corporation's biggest clients, however, is a logging firm in Fort Frances which employs 15 people and does several million dollars in business annually.

In southern Ontario, meanwhile, the ODC has invested $1 million in loans. One loan recipient uses imported parts to assemble computer keyboards which he then exports.

News of ODC support for small business is generating 50 to 60 enquiries per month at the office in Sault Ste. Marie. The demand for loans is expected to reach $14 million in the next two years, and the development corporation is working to obtain the capital for the loans from banks and venture capitalists.

Representatives of 20 Native capital corporations from Vancouver to the Maritimes met in the Sault recently with representatives of the Royal Bank of Canada. The week of training in loans and risk management was aimed at forging links between Native financial officers and the mainstream banking community.

Because of their Native heritage, Metis are eligible for government-sponsored grant and loan programs, but many Metis cannot pull together the 10-per-cent equity needed to obtain loans from government agencies.

The recently formed OMAA Equity Corporation (OEC) makes equity investments of up to $40,000 in new Native businesses. The equity portion helps obtain additional financing from traditional lenders.

Returns to the equity corporation are tied to a percentage of sales. Projects funded by the corporation include enterprises such as logging, trapping and fishing.

To Wetelainen, the financial arms of the OMAA exist to bring the economic level of Natives up to the level of the non-Native population. He believes this benefits everyone because when Native business succeeds, it generates opportunities for non-Native supply and service companies.

Low-income Natives and non-Natives in rural areas benefit from the work of OMAA Real Estate Limited. The OMAA subsidiary has taken over responsibility from the Canada Mortgage and Housing Corporation for the repair and construction of homes in rural areas of Ontario. Nearly 3,000 units have been constructed through the initiative, with about half the work done by Native contractors.

According to Wetelainen, for every dollar invested in housing by the OMAA, there is a $2.50 spin-off effect in the local economy.

"It's not just Native development. It's good for everybody," he says.

Funding for the housing program is provided by the federal and provincial governments.
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Smith, Guy
Publication:Northern Ontario Business
Date:May 1, 1992
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