Federal COVID-19 Indigenous business relief still leaves 'critical gaps,' says financial organization

A First Nations financial organization in the Atlantic region is voicing concern over the exclusion of band-owned, non-taxable businesses in federal financial relief programs during the COVID-19 pandemic.

In April, the federal government announced $306.8 million in short-term, interest-free loans and non-repayable contributions through programs like the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Business Account (CEBA).

The announcement followed projections from First Nations financial institutions that showed potentially billions of dollars in lost revenue for First Nations across Canada.

"While this funding is supportive of many of our community member owned businesses, it does not take into account our need for support for our band-owned businesses," said Chief Terry Paul, of Membertou First Nation in Nova Scotia.

In 2002, Membertou First Nation's corporate division became the first Indigenous organization in the world to receive ISO status, which is an internationally recognized business certification. According to its website, the community's 12 corporations include an insurance firm, a gaming commission, realty, internet technology and geographic mapping operations.

Paul said Membertou's administrative costs, community services and the livelihoods of the band's 240-plus employees rely on the revenue the corporate division generates, due to decades of "shortfalls" in federal funding.

"[They're] employees of the Membertou band council … we've done extensive financial forecasting and we're at risk [because] our band-owned businesses have been closed since March 16," Paul said.

'Critical gaps in support'

The funding was directed at small and medium-sized Indigenous operations but was not available to public institutions, including "municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals," according to the Canada Revenue Agency website.

It is being administered by the National Aboriginal Capital Corporations Association (NACCA) and distributed through regional Indigenous financial institutions, like Ulnooweg Development Corporation, which oversees the finances for First Nations businesses in Atlantic Canada.

In an April 30 letter obtained by CBC News, shared with Atlantic region First Nations and the federal departments of Indigenous Services and Fisheries and Oceans, Ulnooweg Chief Executive Officer Todd Hoskin said the eligibility criteria for the financial aid "inadvertently create critical gaps in support" that need to be addressed urgently.

In the letter, Hoskin takes issue with the funding's exclusion of local governments, which include band-owned and operated non-taxable economic development projects, non-profit organizations, businesses that are co-owned by a First Nation, and "unincorporated business activity" like community fisheries.

"Simply, [these businesses] are extensions of the First Nation governments. The profits go to further the pursuits and objectives of the government … which is the Chief and Council providing for the people," Hoskin told CBC News. 

In the letter, Hoskin recommends that the federal government expand the relief programs to First Nations businesses "irrespective of their corporate structure," or by creating a new program specifically for those types of non-taxable businesses.

Hoskin said the federal government restricted how financial organizations like Ulnooweg can distribute the $306 million fund. 

"Explicitly we've been told that it can't be used for [band-owned] businesses, which puts Ulnooweg in a funny place, because our past clients include our community businesses," Hoskin said. 

"That money is going to be greatly helpful for small- and medium-sized businesses, so I don't want to take away from that. We're just highlighting that there's still a gap," Hoskin said. 

Indigenous Services Canada did not respond to questions about why non-taxable and band-owned businesses were ineligible for the current financial relief program.

In an emailed statement, ISC said the COVID-19 financial relief programs "are works in progress," and that while there may be further announcements related to supporting Indigenous businesses, it did not provide a timeline for future developments.

"The government has stated several times that they want to ensure no one and no businesses fall through the cracks," the statement read. 

The statement outlined that of the $306.8 million in funding, $180 million is for interest-free loans and $60 million for non-repayable grants.