Scotiabank Financial Literacy Campaign 2023
*The following content should not be considered financial advice. Before acting upon the following information, we recommend you seek the guidance of a qualified financial or business advisor who can take your unique needs into account.
Barriers surrounding financial management are consistently top pain points for small business owners in Canada. Throughout November, in alignment with Financial Literacy Month, Scotiabank and Startup Canada will be breaking down key aspects of this complex, often overwhelming hurdle many early stage founders face. Through the curation of tailored financial resources, the case studies of leading founders, and the expertise of applicable support organizations, we can work together to empower more entrepreneurs in Canada with the financial know-how and tools they need to succeed.
This month-long series will break down four key topics critical to the financial literacy and wellness of early stage entrepreneurs:
- Accessing Government Grants for Your Business
- Funding for Black Entrepreneurs in Canada
- Finding The Right VC or Angel Investor
- The Importance of Business Advisors
Funding for Black Entrepreneurs in Canada.
Aspiring and current Black entrepreneurs in Canada continue to face compounded barriers when attempting to grow their businesses and access available support avenues. According to a 2021 survey from Abacus Data, only 2% of VC funding went to Black-led businesses, and 76% of respondents noted that their race made it harder for them to succeed as a founder. What’s more, according to a 2021 survey commissioned by the African Canadian Senate Group, only 19% of those surveyed said they trust banks to do what is best for their community. The same survey found that three-quarters of respondents would deem it difficult to find $10,000 if they needed to support their business.
For the second segment of the 2023 Financial Literacy Campaign, Startup Canada was pleased to sit down with Joan Mahaffey and Tia Upshaw to discuss funding for Black entrepreneurs in Canada. Joan Mahaffey is the Founder of EBONY Bites – a Carribean food truck company serving the Durham, Ontario region since 2019. Tia Upshaw is the CEO and Founder of Blk Women in Excellence (BWIE) – a pioneering organization dedicated to fostering economic growth, facilitating equitable opportunities, and amplifying the voices of Black women entrepreneurs.
Explore and plug into Scotiabank’s Black-Led Business Financing Program.
SC: Tia, can you tell us more about your platform and how you help Black women entrepreneurs build and scale successful businesses?
TU: Blk Women In Excellence is a platform that was created to empower, educate and support Black women entrepreneurs throughout Canada. We have so many different programs. We also started the first-ever all-Black women’s pitch competition last year and just completed the second annual competition!
SC: Joan, tell us about your business – when did you start, and what do you do?
JM: My business is a food truck business and a catering service. I purchased the truck in July of 2019 with hopes of starting fully in 2020, but then the pandemic hit, so that delayed things slightly.
SC: Take us on your funding journey – when did you first realize you would need funding, and what were your first steps in navigating this complex space?
JM: Prior to the food truck idea, I wanted to start what’s called a “ghost kitchen” but decided to go another route. After exploring the costs of a food truck and the cost to start up a new food truck, I realized it was going to be anywhere from $50,000 to $100,000.
I had a couple of dollars saved since I had just sold my townhouse, so I decided I wanted to use that to purchase the truck. I called my girlfriend, who is in money management, and she said, “Absolutely not – you’re not using that money for this. You need to go write yourself a business plan and take it to the bank”. So, that’s what I did. It took me about three months to write a business plan, I took it to the bank and was able to secure a commercial loan through the government. With that, I purchased the truck.
Get started with Scotiabank’s Business Plan Writer.
SC: How did you decide on your primary funding format? What were the draws and benefits to you and your venture?
JM: To be very honest, it was not easy dealing with the financial institution. After I submitted my application and went to meet with them, for some reason, the interest rate went from 3.9% to 5.8%.
When interest rates started climbing, I realized I would, essentially, have to pay for the truck twice. When my interest rate went from 5.8% to 9%+, I just took the money out of my savings and paid off the truck fully.
It has been difficult. I have searched for different programs trying to find assistance for Black businesses, but it’s hard. Every time you go to a location to find out more information, they want you to pay them to get a loan. It’s just not something I wanted to do.
Speak to a small business advisor to get advice tailored for you to find the right solution for your small business. They can provide you with advice that looks at your entire financial portfolio to support your goals. Book an appointment today.
Accessing Capital as a Black Entrepreneur in Canada:
SC: Tia, in a video on your website, you note that accessing capital is a massive barrier for Black founders – reaffirming a well-documented yet underserviced gap in Canada’s entrepreneurial landscape. Specifically, you mention that this is a barrier both in terms of a lack of awareness of opportunities and in securing the funds themselves. Can you speak to this challenge and what you’ve seen in your work with BWIE?
TU: How much time do we have? I’ve seen it as a Black woman entrepreneur myself over the last ten years. In the last three years working with so many Black women founders – 87 of them to be exact – I’ve seen women who had good credit and couldn’t access capital. I’ve seen people who didn’t even know about opportunities that were out there until I talked to them. Actually, when I was recently on a panel at the Halifax Startup Canada Tour stop, I asked attendees how many people knew about a certain Black entrepreneurship fund being administered by one of the largest financial institutions in Canada and guess how many people raised their hands? Two people in the entire room. So this is the problem.
I find the biggest problem lies in the fact that these organizations say the money is there – that’s fine and good, create those platforms – but if you’re not engaged with the community those funds are supposed to be directed to, it’s not truly your market niche.
I will say the onus is not entirely on financial institutions – a lot of it is our community. Our community lacks financial literacy when it comes to business. A service provider might say, “Do you want a term loan or a line of credit?” – how many people in our community would know the difference between those options, and how many would pick something unsuitable for their needs? A lot of them.
It’s not all bad, but there is so much more work that needs to be done in order for Black founders to access the money they need – we don’t need to be bootstrapping anymore.
SC: Is Canada’s existing entrepreneurial support ecosystem poised to implement the necessary changes for Black entrepreneurs?
TU: The entrepreneurial ecosystem in Canada needs to be dismantled and rebuilt. The existing ecosystem is not built for Black businesses – nor was it ever, or likely will it ever be if nothing is done. I say that because I have worked within the ecosystem and attempted to develop partnerships with non-Black organizations, and they don’t even respond back. The ecosystem is not for us, period. We need to break it and rebuild it.
Awareness of Available Support & Equipping Founders to Succeed:
SC: In the name of raising awareness of existing support avenues, what specialized funding opportunities are available for Black founders and, perhaps more specifically, Black women founders?
TU: I know that Tribe Network does have some funding right now. The Black Opportunity Fund out of Ontario has funding too. BBI has some funding to hire a consultant. The Centre for Women In Business has funds as well.
But, with all that being said, there’s a big pot of money, but who is truly going to receive this money? Technically, the money is there, and the opportunity is there – but at this point, it doesn’t really matter what you know. It’s really who you know to be able to get in and get this money.
SC: Joan, what advice do you have for other Black founders interested in exploring funding opportunities?
JM: Along my journey, I brushed off quite a few programs only to find out later that it may have worked for me. So do your homework, know your business intimately, and get as much information as you possibly can – information is knowledge.
SC: Tia, how do your programs address funding within their curriculums? How do you equip your cohorts with the tools and foundations they will need along their financing journey?
TU: I’ll stick to our most popular program for this answer – the cohort involved with the 16 week Ignite program. You come up with your business idea, then you have to reserve your business name and register your business, then we’ll go right into mind mapping and brainstorming, the market research, business plan development, financial projections, and I even do quizzes on terminology in business.
Even though we do all of that in 16 weeks, between those curriculum elements we bring in financial institutions to speak on funding and financial literacy, we bring in other organizations that may be affiliated with a specialized funding source, and our mentors are typically from financial institutions or government bodies, like Invest Nova Scotia.
Everything BWIE does is a result of direct input – because the community spoke and told us they needed this.
SC: What’s your top advice for founders regarding the “non-negotiable” elements they need to have prepared before securing funding?
TU: It would be two-fold for me. I ensure that the women in our programs have solid business plans, that their financial projections are aggressive but realistic, and that they have a marketing strategy in place. I won’t even let them in front of a bank or suggest they go in front of a bank until I can see they can do a 7 minute pitch on who they are, what their business is, and how much they need. If they can’t do that, they aren’t ready.
Now, on the funder and financial institution side of things… It starts from the head. There are so many biases that exist in financial institutions that suggest women – not Black women, but women in general – can’t be successful business owners. When you hand Black women a financial portfolio to fill out and they have nothing to include, it’s an automatic rejection.
You can’t say, on one hand, that there is money set aside for Black-led businesses and then when the Black businesses come to you you reject them all because of traditional criteria.
These programs need to be more intentional with their funding. If they have this money set aside for Black entrepreneurs, let’s be intentional and get this money out into the community.
Join Tia and the BWIE team for their upcoming training cohorts and/or events. Learn more here.
Capital Implementation and Management:
SC: Joan, what were your biggest learnings – technical and small, or overarching and big picture – from your management and operations process once the funds were secured?
JM: Knowing what areas of your business to spend money on wisely. That is a huge learning experience because you might have the urge to want all the frilly stuff, but there are more important things that need to be addressed.
Another is the reality that something will go wrong. Especially in the food truck business, something goes wrong every single day. Not only does the truck need to run properly, you also need to ensure your business operates legally – legally, permits, all the inspections you have to do and pay for. These are the types of functions that take a lot of the money – you need to be able to project these things in your operations budget.
SC: Acquiring funding is one thing, but knowing the best way to utilize the funds is another. Tia, how can entrepreneurs best prepare for the implementation phase of financing?
TU: I actually asked a bank back in May about this – if you approve a Black-led business for $100,000 in funding, what are you implementing to ensure they are able to budget said funds correctly and that they have access to an affordable payback scale?
Things keep going downhill with no intentional systems in place. I have been putting little birds in ears of financial institutions really relaying the need for post-funding classes. It can simply be a “hey, once you get a loan from us, this is how we’ll support you going forward” but there’s none yet.
SC: Where are you and your business currently along your funding journey?
JM: To be honest, I have tried to join a couple of organizations but after attending a few meetings and seeing how they operate, I just didn’t think they were for me. There are a lot of programs out there, but I have been entirely focused on getting the business going and internal business development.
SC: What’s next for you and your business, Joan?
JM: One thing that is new for next year is that I have leased a piece of property on Highway 7 and Brock Road in Pickering. In doing that, we will be more situated on a more permanent basis. We are going to make ourselves a little food truck park – so we will see how that goes!
SC: What are your plans for the future of BWIE? How is the organization evolving with the needs of Black women and their businesses across the country?
TU: We see BWIE going national! We want to be in each of the provinces so that we don’t have to navigate the rules and regulations of each province. Instead, each chapter head can collaborate with cross-country chapters and we can start to build our own ecosystem.
BWIE also wants to continue at being the best at what we do in terms of empowering, encouraging and empowering Black women entrepreneurs. But within this, we want to ensure that this organization is solely about the community at large – Black women, their children, and their children’s children.
Hopefully, going forward, we aren’t the only Black-led organization supporting Black women founders, but if we are, we’re just going to knock it out of the park!
The Canadian Small Business Space & Improving Access for All:
SC: Tia, what message do you have for funders in Canada relating to improving access for Black founders?
TU: We need you to be more intentional. We don’t need more DEI training programs for your staff, we need the stakeholders and the top guns to be more intentional around getting this money into our community. Black-led businesses can offer Canada’s economy a lot more, but we need to be given the chance.
SC: Joan, why is it important to amplify opportunities, enhance existing support avenues, and develop new solutions for funding for Black entrepreneurs in Canada?
JM: I’ve looked around and I do see a lot of Black businesses out there. The problem is that not a lot of them stay for a long time. One minute they launch, the next minute they have closed.
I think it’s daunting for a lot of people of colour. Many feel like if they go to a bank, they won’t get any help. It feels like there is nobody out there to support us. I think these fears and barriers come down to the whole race issue. It’s the fear and it’s the lack of knowledge. It’s intimidating to start a business and then depend on somebody else, who you don’t fully trust, to provide you with financial assistance.
SC: What message do you have for Black founders in Canada looking to access capital?
TU: For the Black women who will be attempting to access capital, know that it will not be easy. You’re going to have walls put up in front of you. New programs will be dangled in front of you like candy – you will get almost to the finish line and be faced with the inevitable “Oh sorry, we can’t help you.” Do not give up. Keep pushing and keep asking questions. Can you tell me what I need to do to be able to come back to you in six months? Why was I not approved? Keep asking.
Learn more about available support for Black entrepreneurs with Startup Canada’s article “Top 12 Resources for Black Entrepreneurs in Canada”. The Scotiabank Women Initiative is also available to break down barriers to help increase economic and professional opportunities for women to be successful now and in the future.