CIBC’s loan program for Black entrepreneurs launched

CIBC has launched a $15-million business loan program for Black entrepreneurs, joining other banks in offering a specific program for the demographic.

The Black Entrepreneurship Program (BEP) offers loans of between $5,000 to $250,000 to Black business owners, and is supported by a team of 39 specialists.

David Leuty, senior vice-president of business banking with CIBC, said the BEP has attracted inquiries from more than 625 business owners since it launched Jan. 31.

Loan terms will vary by applicant, but the BEP is “designed to err on the side of being generous,” Leuty said. “Some of the parameters around risk appetite and the like are going to be more relaxed for a program like this, because the spirit is to get money out the door and to help folks.”

For example, he said debt-service coverage could be more generous, and that equipment loans could go up to 10 years, which is longer than the traditional amortization. Further, loans will not require collateral, but may require a personal guarantee from the business owner and/or a general security agreement from the business.

If an entrepreneur’s business or application is not yet ready for the loan program, CIBC would refer them to the Canadian Black Chamber of Commerce for mentoring and education to either bolster their loan application or prepare for a future one.

Unsuccessful loan candidates who would benefit from seed money instead will be eligible for grants from the Black Opportunity Fund, to which CIBC donated $2 million for that purpose.

In addition to that seed money, the BEP has earmarked $13 million for CIBC loans. Leuty doesn’t rule out renewing the program in future if demand warrants.

Research has shown that anti-Black systemic racism, particularly at banks, creates widespread barriers.

A survey of 342 Black entrepreneurs released in May 2021 found that only 19% of Black entrepreneurs said they trust banks to do what is right for them and their community. Another report released in April 2021 found that 78.5% of Black female entrepreneurs had trouble accessing financing.

Leuty said BEP specialists have been directed to “take as wide a view as possible” when considering businesses for the program, acknowledging that banks have traditionally underserved the Black community.

“Part of our journey is to expand our mindset and appetite around what type of businesses we’ll support,” he said. “Where that represents new ground for a bank, change can be a bit bumpy, but that’s where we need to move to.”

Leuty said he hopes lessons learned from the BEP will inform the bank as a whole: “We learn and benefit from these types of initiatives as much as our target audience.”

CIBC’s initiative follows the launch of a similar loan program by Royal Bank of Canada in October 2021. That same month, Toronto-Dominion Bank announced a new strategy aimed at improving the experiences of Black customers.

The BEP is separate from the Black Entrepreneurship Loan Fund announced in May 2021 by the federal government. A spokesperson for CIBC said the bank continues “to engage with a number of organizations and government on previously announced programs.”

Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.