In a
study of its social enterprise micro-lending program,
Alterna Savings found that in a decade of small loans, they've helped business owners create jobs while creating loyal customers. The credit union is now
calling on Canada's big banks to implement similar programs and on governments to encourage them to do so.
The loan program, which give loans of less than $15,000, typically to entrepreneurs who do not qualify for conventional business loans. The
Carleton Centre for Community Innovation, which conducted the study, found that of the 14 per cent of the program's 340 borrowers that they interviewed, 21 per cent were able to stop receiving government assistance and support themselves from their businesses as a result of the loans. Fully 62 per cent of participants have hired between two and four employees. If the results are representative of all borrowers, it adds up to well over 900 total jobs created.
The program is not directly profitable, according to Alterna VP Kimberley Ney. "It almost breaks even," she says, "But we look at it as a long-term strategy. Borrowers have brought us over $1 million in subsequent banking business. they tend to be pretty loyal, because when no one else would look at them, we were there."
The study also found substantial social benefits to the program, and Ney says the government could help such initiatives spread by, for instance, guaranteeing loans (more than 90 per cent are fully paid off) or changing social assistance rules so beneficiaries could receive loans without being immediately cut off.
Writer: Edward Keenan
Source: Kimberley Ney, SVP Marketing, Communications and Corporate Social Responsibility, Alterna Savings
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