Last month, we donated a portion of all our sales to Momentum in support of micro loans for female entrepreneurs. We did this to mark one year since we launched SophieGrace — what better way to celebrate than by giving back to other women who might need a boost?
We want to tell you more about this micro loan program and the people it supports. First, you need to know about Momentum. The Calgary organization offers trades training, numerous small business programs, as well as money management courses to people living on a low income, all with the aim of combining social and economic strategies to reduce poverty.
The organization’s micro loans for businesses program started more than two decades ago, in 1999. Laura Wells, donor engagement coordinator at Momentum, says the program was based on microcredit used to fight poverty in Bangladesh. There, in the 1980s, economist Muhammad Yunus founded Grameen Bank, to make small loans to people living in poverty without requiring collateral. (Yunus was later awarded a Nobel Peace Prize for this work.)
“When Momentum started micro loans here in Calgary, we knew that it was a totally different context [than Bangladesh], being an urban centre,” Wells says. Calgary is a city with a lot of prosperity, she notes, but also a lot of disparity. With that came a need for lending to entrepreneurs unable to access credit elsewhere.
Momentum’s micro loans for businesses are available to people who have completed one of the organization’s business training programs. “We know people quite well by the time they apply for a loan,” Wells says. That means loans are based on character instead of assets, like at a traditional financial institution.
The importance of that personal connection continues throughout the repayment of the loan, which ranges from two to five years. If a participant can’t make a payment, Wells says it’s common for them to call Momentum’s loans facilitator and work together on a solution. That’s led to an impressive 99% loan repayment rate.
Loans range from $2,000 to $10,000 — a figure that may seem small, but can make a huge difference. Plus, all those small loans add up… since 1999, the amount of micro loans lended through Momentum totals more than $3 million.
People receiving loans run businesses in a range of industries, Wells says. There’s Royal Ambassador Professional Cleaning Services, owned by Nicole Raguette, who has been able to successfully end the cycle of poverty for her family. Another recent loan recipient was Hudson Spirit Cake, specializing in cakes infused with alcohol. It’s run by Pansie Hudson, who worked for years in the hospitality industry in the Cayman Islands.
A micro loan can be used for a variety of business costs, from licensing and registration to tools, equipment, advertising, marketing and more. “There's so many different ways that people use it; it's kind of mind boggling,” Wells says. Lizzie Small, the owner of SouperSpudz, a food truck and catering business, for example, used part of her loan to wrap her food truck with bright, distinctive branding.
While anyone can apply for a micro loan, it’s primarily women who do: out of 78 active loans in 2020, 48 went to female-owned businesses. Newcomers to Canada also make up nearly half of loan recipients.
Such demographics speak to broader issues. While entrepreneurs across the country face challenges securing capital, research shows both new immigrants and women have a harder time accessing financing. The size of the business can also be a barrier, with small firms more likely to be rejected for bank loans than mid-sized firms.
Wells says many of the women receiving micro loans have already overcome significant challenges in their lives, like leaving violent relationships or escaping rough situations in their home countries to come to Canada. Many turn to entrepreneurship because there’s few other options. “A lot of time, the other option is to work a minimum wage job, or maybe a minimum job wage job won’t even make sense because they have to pay for childcare,” Wells says.
While starting a business is high-stakes, these women are well suited to the challenge. “As an entrepreneur, you have to be able to have a lot of grit and be willing to stick with something, and these folks know how to do that,” Wells says. “It's really a huge privilege to be part of giving people the tools and the support that they need to be able to get there.”
Thanks to you, our customers, we’re also able to be a small part of Momentum’s important work supporting women entrepreneurs. We’re passionate about this work, and are looking forward to more opportunities this year to raise funds for the micro loan program. Stay tuned.