Pulling out of poverty: Micro-loans helping marginalized Sault residents.

AuthorKelly, Lindsay
PositionFinance

A new financing program in Sault Ste. Marie is helping residents transition from social assistance to entrepreneurship.

Developed by the Sault's District Social Services Administration Board (DSSAB) in partnership with the city's Economic Development Corp. (EDC), the new micro-loan program is open to residents who are currently part of the Ontario Works program.

Eligible recipients can receive a loan of up to $5,000 toward their business startup, in addition to guidance and mentorship from local businesspeople to help get their venture off the ground.

Mike Nadeau, the Sault's commissioner of social services, said micro-loans have shown to be a successful strategy in helping people become empowered and escape poverty.

"What we've found is there are only three ways to help someone exit social assistance: they go back to school, they get a job, or they start a business," Nadeau said. "So we thought, how can we address it, because the current systems that are there, (OW recipients) don't seem to be accessing those."

Ontario Works recipients typically have challenges navigating structured, government systems, he added, and the DSSAB found there were few self-employment startups within its caseload for the area. That's when the DSSAB approached the EDC.

Together, the organizations have spent the last year developing a pilot program that would address some of the challenges faced by Ontario Works recipients. The program is fully funded by the DSSAB, and the EDC assesses business readiness, offers guidance, and administers the loans.

This program differs from more traditional loan programs in the flexibility it offers for paying back the capital, Nadeau said.

"Typically with a loan program, there's a stronger emphasis on starting to repay that loan right away," he said. "We're flexible. We want to make sure the individual has sufficient cash flow, because they're starting from such a disadvantaged position, so we need to ensure that there's an under standing that loan repayment would not start immediately."

Dan Hollingsworth, the EDC's executive director of business development, said the EDC is using some of its other entrepreneurship programs--Summer Company and Starter Company are examples--as models for the micro-loan program.

The EDC will help recipients flesh out their business idea, test the business case, and set them up with training in areas such as managing the business and its finances, marketing, and operations.

Some of the business...

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