By: Susan Henry, Director, Community Impact & Financial Inclusion

I often say money and credit determine access to opportunities; the path to socio-economic advancement can be daunting for those with lower income or without established credit. Traditional banking systems, historically, have not been favourable to certain groups seeking to improve their lifestyles through entrepreneurship.

The concept of community financing, ranging from informal trust-based lending to more structured microfinance initiatives, has existed for centuries. In recent times, microfinance has evolved into a powerful instrument for fostering Community Economic Development, particularly among socially underserved groups such as women, BIPOC, new immigrants, racialized Canadians, and low-income individuals.

Microfinance plays a role in breaking down barriers faced by racialized communities when accessing financial resources. The risk profile for entrepreneurs relying on microfinance differs significantly from traditional commercial lending, as many lack demonstrable cash flow, established clientele, a record of successful sales, and sometimes, an established credit repayment history.

Research by Dunn Pierre Barnett & Canada Limited in 2022 revealed that a substantial number of Black-owned businesses in Canada face challenges in accessing financing. The Alterna Community Microfinance Program addresses this imbalance by actively supporting Black entrepreneurs within the Microfinance Program, increasing participation from 34% in 2020 to 86% in 2023.

Having been in operation for over 20 years, Alterna’s Community Microfinance Program aims to tackle socio-economic inequity by providing opportunities for financial independence and breaking down barriers to banking. The program’s success led to Alterna’s involvement in the Black Entrepreneurship Loan Program (BELF), leveraging Alterna’s strength and ability to deliver tailored financial solutions for smaller businesses, including Black-owned businesses. Our influence led to the creation of the BELF micro-loan pilot program.

The Alterna Community Microfinance Program difference is that it goes beyond being a mere financial institution administering loans; it sees each entrepreneur/business/loan as a multi-dimensional story.

As we engage with Black communities, our commitment is rooted in the purpose of our Community Microfinance program: to foster local economic inclusion.

Our approach extends far beyond mere transactional support. We deliver comprehensive services, offering personalized one-on-one consultations, financial education, essential tools, and capacity-building workshops to enable underserved entrepreneurs to thrive. Each entrepreneur, business, and loan is approached as a multi-dimensional narrative. Taking the time to comprehend the lived experiences and intersectional identities of our members, we delve into the communities they belong to, the challenges they may confront, and the opportunities and successes they strive to achieve.

This holistic entrepreneurial support serves to bridge both the financial and social dimensions for the entrepreneur, fostering resilience and growth. It’s a collaborative effort, driven by community partners who share our commitment to uplifting individuals and communities. These partners, like ACBN and SETSI, help us identify individuals who are most likely to benefit from the program.

Afro Caribbean Business Network (ACBN)

“Our experience working with Alterna has been very positive as it has allowed our organization to create a program that fills a funding gap entrepreneurs face. Alterna has been instrumental in supporting ACBN to build its own capacity so we can be a resource for the Black Business community. Engaging with the Alterna team to create our own Microloan fund has allowed us to support entrepreneurs who are too risky for traditional lending and those who do not fit the criteria being set by the big banks.

Thanks to the partnership with Alterna, ACBN has been able to obtain additional funding from Foundations and Angel investors and give input about the entrepreneurs we serve and the support they need on Social Finance roundtables at the government level and with private investors.” 

Social Economy Through Social Inclusion (SETSI)

“The SETSI team has had a remarkable working relationship with Alterna. Alterna has been critical in establishing culturally appropriate services and products for members of the Black community and partnering to advance the sustainable livelihoods of Black constituents across Ontario. Classism, challenges related to social mobility, economic exclusion, as well as systemic and structural anti-Black racism are all persistent issues faced by many. Alterna has consistently engaged community partners with actionable insights to co-shape solutions and prototype initiatives for some of the most vulnerable. Alterna has remained a stellar advocate at many important tables, working hand in hand with community allies to enact meaningful and sustainable systems change-related economic policy to leave no one behind. Intentionality truly matters and Alterna has consistently rolled up its institutional sleeves and worked alongside grassroots organizations to engage in social innovation and social impact work.”

Recognizing the multi-dimensional nature of racial disparities, Alterna strives to address social, financial, and economic exclusion. By actively engaging with underrepresented groups, Alterna aims to increase business owners' and leaders' visibility and representation.

Beyond microfinance, Alterna extends its impact through sponsorship and financial education presentations to organizations. Partnering together, Alterna and these organizations host events like homeownership seminars and financial education workshops, fostering an environment beyond access to capital to include community support.

But I say the journey shouldn’t end at entrepreneurship; it is merely the beginning.  Investing in Black communities through support for entrepreneurs has proven we, as a financial institution can have an impact. As an industry, let’s all apply these lessons to many other facets of community financial development such as asset development, like improving access to homeownership for Black families.

About Susan Henry

Susan Henry boasts over 25 years of experience dedicated to ‘Financial Inclusion for all.’ She is a driving force behind Alterna Savings’ award-winning Community Microfinance Program and the Community Loan Funds Partnership Programs, disbursing $8.6M in loans since 2000, benefiting BIPOC, new Canadians and women. Susan’s expertise was honed through participation in Harvard University programs and advising policymakers. She’s collaborated with U.S. credit unions and played a role in designing Canada’s Black Entrepreneurship Loan Fund Micro Loan Pilot. She currently sits on the Advisory Council for the Financial Resilience Institute and is an advisory member of the Canadian Women’s Foundation Economic Development Committee.