Second chance: development corp helps when banks won't.

• Author: Kelly, Lindsay
• Position: FINANCE

With $8 million in its coffers, the Nickel Basin Federal Development Corp.'s annual budget isn't big, but it's effective. The corporation is a high-risk lender that loans money to entrepreneurs and business startups after the bank has said no.

Based in Sudbury, the corporation is one of several non-profit money-lending institutions across northeastern Ontario that provides financial support to small and medium-sized businesses that otherwise might not have access to funding.

"Generally you have to be declined by your financial institution because we don't want to be competing with the banks," explained executive director Rainer Paull. "Then we'll sit down and talk to people."

Assistance is offered in the form of commercial term loans, loan guarantees, or equity financing, with the ultimate goal of creating employment in the city.

Two years ago, Nickel Basin provided $600,000--pooled from the partner organizations--for preferred shares in a company that was under threat of buyout by an American company. Because of the corporation's actions, the company was able to leverage more funding from the bank, and 64 jobs stayed in Sudbury.

But even as a high-risk lender, the standard criteria for money lending apply. Potential business owners have to have a solid business plan that outlines what market their business will serve, their product or service, and their financial projections.

Good management is an equally important indicator, because "good management will get you through the rough times," Paull said.

"You can do a loan and be secured all over the place, but if the management's no good, you're going to end up having to liquidate assets, which is a real pain because you're never going to get your money," he said.

In good times--like now, when a flurry of activity related to mining has boosted the economy--Nickel Basin's role is actually diminished.

But if there's an issue at hand, it's that clients are now fighting to keep employees who are lured away by larger companies who can offer a better wage, Paull said.

It's a "fierce fight" to keep skilled workers on the payroll, but Nickel Basin can help by working with clients to find a solution that lets them keep the business until the situation improves.

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"We help them in the sense that we'll...