Slaves no more

Circle loan programs help women conquer the new economy

by MARIA TRATT

In 1994, Liberata Infusino, a graduate of Concordia University's Fine Arts program, was supporting herself and her then-13-year-old son on the meagre income that Unemployment Insurance accorded her. Infusino wanted to start a business but lacked the focus and resources to get her idea off the ground. Today, at 41, she is fully self-sufficient, working out of her home as an investment advisor and brokering her products through Aynsley Lavergne Financial Services, Inc. She attributes her dramatic reversal of fortune to the training and support she received while participating in the Aurora Business Project, one of the three Montreal circle loan programs.

For coordinator Debbie Harrison of the Aurora Business Project, a program exclusively for women run out of the YMCA in NDG, circle loan programs fill a crucial economic void. "What traditional financial institutions don't recognize is that the economy is in a state of evolution and that now is the time to prepare as many people as possible to be independent workers," she says.

Or even if they do recognize the arrival of the new economy, they are not adapting to it. According to Harrison's data, Canada currently has the highest number of independent workers since the Depression. Yet both governments and banks remain set in their ways when it comes to lending.

Representatives from the Banque Nationale and the Bank of Montreal were unwilling to release information on the rate of default for loans issued to the self-employed, but qualifications to apply for such assistance substantiate Harrison's claim that loans are exceedingly difficult to obtain.

"We require that you provide us with a business address, operating income and costs, personal assets and total liabilities, along with other information," says Jocelyn Dumas, head of press relations and financial communications at the Banque Nationale. "But we are always interested in a good business idea."

However, Dumas gives no data to corroborate his claim, stating that the bank's self-employment program, instituted in May 1996, is still too new to estimate the percentage of applicants denied the project's line of credit.

The Bank of Montreal offers training in areas of business-plan development and marketing as part of their small business loan package, but prerequisites are as stringent as they are numerous: financial statements for the past three years, a business and industry profile and a personal financial statement, to name but a few items on their checklist.

Circle loan programs are not only free, funded primarily by individual donations, but the collateral needed to obtain a loan is of a social rather than a financial nature. Circle loan projects consist of a group of four to seven people. To apply, you must be 18, have a business idea and be committed to the group and its collective responsibility: all members of the group act as co-signees for each individual loan, which means that participants are effectively borrowing the money from one another. Initial loans do not exceed $1,000.

Initiated in 1976 in Bangladesh, the circle loan program first came to Montreal in 1990, when the Grand Plateau Community Economic Development Corporation launched Les Cercles d'emprunts de Montréal. Since 1991, more than $110,000 has been lent and over 230 people have completed the training. While the transplant of this Third World economic development program to the First World has been a success, the switch from the circle loan program's original rural setting to an urban environment necessitated changes.

Of the two million circle loan borrowers worldwide, 94 per cent are women. By comparison, the 1996-97 survey conducted nationwide on the behalf of the Canadian Bankers' Association paints a distinctively different profile of people presently holding small business loans, 51 per cent of whom are men. "Traditionally, women have had more problems accessing credit and are typically the dependent in a family. When on their own, they have less financial resources, less confidence and are ill-equipped to sell themselves despite their skills and ideas," says Harrison.

"Forty per cent of our participants are immigrants, 25 per cent are single mothers, 95 per cent are living below the poverty line and the average age ranges from 30 to 45," she says. Long after they have completed their training, circle loan graduates like Infusino, who gave her first seminar on investments at Aurora and remains in contact with the women of her group, continue to be nurtured by their experience.

"Anyone can have an idea, but ask the loans officer at your local branch to help you develop it and see the reception you get," Infusino says. "Finances aside, the support alone gives these projects a dimension that is crucial to self-employment."