Government-backed Indigenous Growth Fund receives $3 million investment from Block

A government-backed loan fund for Indigenous entrepreneurs has received its first private sector investment with a $3 million commitment from U.S. fintech Block Inc. SQ-N

The Aboriginal Growth Fund, which was launched in the 2019 federal budget and made its first disbursements in March, is managed by the National Aboriginal Capital Corporations Association (NACCA), an umbrella group of more than 50 vetted lending organizations. by Aboriginal people, known as Aboriginal Financial Institutions or IFAs.

The fund directs capital to AFIs so they can lend to entrepreneurs in their communities. Indigenous entrepreneurs face systemic barriers to lending at other financial institutions, such as on-reserve ownership restrictions that make it more difficult to post collateral for bank loans.

Block’s investment was announced Thursday and is in addition to $150 million in public funds from the federal government, the Business Development Bank of Canada and Farm Credit Canada.

Shannin Metatawabin, chief executive of NACCA, said it was important for the long-term prosperity of the fund and indigenous communities to work with private sector partners.

“The Government of Canada cannot always be relied upon to provide all the capital to the Aboriginal community,” said Mr. Metatawabin. “We need the capital market to participate and we need instruments created that allow them to participate in the way they understand and get interest back.”

Block’s $3 million investment makes it a limited partner of the fund and allows it to redeem the investment over time.

The tech company, which also offers a range of financial products for small businesses through its Square arm, said in a press release that the money came from a US$100 million pledge to direct the money. to underserved groups.

Mr. Metatawabin said the Indigenous Growth Fund is courting more private sector investors by arguing that the fund is a good way to achieve environmental, social and governance (ESG) goals.

“I think Indigenous people are a big part of the S criteria,” he said.

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