Wednesday, November 12, 2008

Microcredit in Canada

A microcredit agency in Canada just received a new infusion of cash. The Ottawa Community Loan Fund received a $100,000 grant from Citizenship and Immigration Canada.

With that news worthy event, the Ottawa Citizen did a story that filled in the background on microcredit and how it works in Canada. The leader of the fund George Brown, says the numbers of people asking for loans have greatly increased in recent months.

"Microfinancing and microcredit is huge in other countries and is a very key part of the economic infrastructure in a lot of developing nations and a lot of developed nations," says Stephen Daze, executive director of OCRI (Ottawa Centre for Research and Innovation)'s Entrepreneurship Centre.

"It's relatively new here in Ottawa and Canada, (but) it's absolutely necessary and it absolutely fills a void that is important."

Mr. Brown agrees, adding he now gets three or four calls a week asking for financial support as well as budgetary counselling. It's a problem that's worsened in recent weeks, he adds.

"(Experts) talk about the 'trickle-down' theory of economics: we make lots of wealth at the top, and it trickles down. That probably works," he says. "But likewise, it seems when things go to crap, there's also a trickle-down effect.

"Things really do tighten up."

Entraide budgetaire and Desjardins caisses popularies in Ottawa last month created Fonds d'entraide Ottawa, which they say is the first microloan fund in the province. It's got a $20,000 nest egg for the fund to draw upon and – with any luck – get back as people pay down their loans.

Clients will not only receive money, but also financial services such as budget counselling to decrease the likelihood of ending up in the same situation again.

"If we talk financial skills we feel it should start with budgeting, because it's at the heart of any financial goal that you might have," says Francois Leblanc, a budget counsellor with Entraide budgetaire for eight years.

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