ACCESS TO CAPITAL

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ACCESS TO CAPITAL

• Loans, Contributions and Equity
• Donny C. Maracle
• NACCA

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Background

• Formed in the 80s and 90s at request by
  Aboriginal leaders with assistance from Federal
  Government to provide capital to Aboriginal
  Business
• Aboriginal Capital Corporations (ACCs)
• Aboriginal Community Futures Development
  Corporations (CFDCs)
• Collectively known as Aboriginal Financial
  Institutions or AFIs

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Who are We?

• 47 Independent Aboriginal-owned-and-controlled
  institutions mainly involved in developmental
  lending
• Designed to provide financial products and
  services to Aboriginal businesses
• Provided more than 15,000 loans
• Injected over 500 million into virtually all
  sectors of the Aboriginal Economy

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Who are We? (cont)

• Provides forum for AFIs to discuss mutual
  concerns and issues, represent AFIs on national
  basis and to develop products and services
  enabling its members to better serve their
  markets
• Spearheading research and development of many of
  the planned future products
• Eventual self-regulation for the AFI industry (as
  opposed to govt regulation)

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NACCA Products for AFIs

• Creditor Life Insurance protection on loans
  provided by member institutions
• Directors and Officers Liability Insurance
  coverage
• National delivery of the First Nations and Inuit
  Youth Business Program
• AFI Compliance and Performance Monitoring (first
  step toward self-regulation)

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NACCA Products (cont)

• Delivery of Access to Capital Program (14.6
  million)
• Interest Rate Buy-Down Fund
• Credit Enhancement Fund
• Enhanced Access Fund
• Support and Training Fund
• Data Collection on AFI operations
• Advocacy on behalf of the AFI industry

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NACCA (cont)

• Needs assessment, research and product
  development for AFIs
• Benchmarking Project (Analytical Research)
• To quantify the true cost of Developmental
  Lending
• Aboriginal Contractor Guarantee Instrument

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Current AFI Products and Services

• Term Loans
• Semi-Operating Loans
• Bridge Financing
• Loan Guarantees
• Contractor Bonding (ACGI)
• Business planning and advisory services
• Youth Loans and Equity Contributions
• Youth mentoring services

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What is Capital?

• Your Money
• - Personal Savings
• - Retained Earnings
• Other Peoples Money
• - Grants, Contributions
• - Debt
• - Investor Equity

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Debt and Equity Financing in Canadian Businesses
compared to First Nations Businesses1999
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NACCAS Future Direction

• Strengthening the Network (Short to Mid Term)
• Increasing AFI Efficiency
• Performance Benchmarking
• Quality Assessment ISO 9000
• Universal Risk Rating System
• Possible regulatory role for NACCA
• Virtual Natl Aboriginal Development Network and
  Business Development Officer Services
• Pre-Care
• After-Care
• Entrepreneurship Training
• Information Services
• Entrepreneurship Advocacy
• Entrepreneur Management Development
• Business loans Start-ups and Expansions

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NACCAS Future Direction

• Addressing the Cost of Developmental Lending
  (Short to Mid Term)
• Financial support of AFI operations to off-set a
  combination of distance, size of loans,
  experience of entrepreneurs, security coverage,
  etc.
• Loss Reserve Fund
• Similar to SBLA model
• Continuance of Current Programs/Initiatives
• FNIYBP
• Access to Capital Initiative
• Aboriginal Contractor Guarantee Instrument
• Loan Payment Incentive
• Rear loaded Contribution Arrangements
• Agency Banking Relationships
• Consumer products and services

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NACCAS Future Direction

• Increasing the Capital Base (Short to Mid Term)
• Capital Access Fund
• Completion of funding for existing Contribution
  Agreements
• Differs from IRB entire portfolio not pledged
• Loan Syndication Instruments (Loans over
  250,000)
• NACCA Syndication Pool
• AFI Syndication Pool
• New Loan Products
• Operating Lines of Credit
• Participation Loans
• debt with a profit participation
• Patient Debt Capital
• debt deferred based on financial performance

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NACCAS Future Direction

• Development of Equity Products (Mid to Long Term)
• Researching Market Equity Needs
• Conducting Equity Product Pilot Projects
• Yukon
• Quebec
• Quasi-Equity Investments
• Convertible Bonds
• Convertible Debentures
• Preferred Shares
• Equity Investments
• Low-end Venture Capital Fund
• Similar to LSVCCs
• Venture Capital Fund
• Passive Equity
• Patient Capital Fund
• Common Shares

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and finally

• ...Dont be afraid to go out on a limb...thats
  where the fruit is
• CYNTHIA HEIMEL