Aboriginal Financial Institutions

Community-Based, Responsive and Innovative Lending Models

Aboriginal Financial Institutions (AFIs) are a trusted source of knowledge and information to start, build, or grow successful businesses. Each AFI is unique with respect to the services, types of funding, and client focus offered to First Nation, Inuit, and Métis entrepreneurs and community businesses.

Every AFI is independent and accountable to their own community. Their community roots give them a unique ability to place more reliance on community-based credit assessment, in order to strengthen their clients’ financial situation. This community orientation results in high acceptance rates for new accounts and a relatively good loan performance.

Key to the success of the AFI model is that each AFI is First Nation, Inuit, or Metis-controlled. This helps to build trusted relationships with Aboriginal entrepreneurs and keeps decision-making close to Aboriginal communities and the people served. Direct involvement in the governance of their AFIs enables Aboriginal communities to coordinate the financial support and related services provided to their local entrepreneurs. This model of AFI governance has a significant influence on the economic development of communities.

Aboriginal Entrepreneurs and Access to Capital

First Nation, Inuit, and Métis entrepreneurs face barriers when accessing loan capital from conventional lenders, such as banks. These barriers include lack of personal resources (collateral) to secure a loan, Indian Act restrictions, lack of savings, and remoteness from lending centres. Aboriginal entrepreneurs are too often considered high-risk borrowers and are therefore unable to borrow capital from mainstream banks.

To address these needs, Aboriginal leaders engaged the Government of Canada in a dialogue to promote a greater understanding of the business models that would meet community needs, including social impact, environmental stewardship and profitability, and created AFIs in the late 1980s to early 1990s. An AFI includes Aboriginal Capital Corporations, Aboriginal controlled Community Futures Development Corporations, and privately capitalized Aboriginal Developmental Lenders.

AFIs have a deep reach into communities across the country. They are experts in risk assessment, highly focused and dedicated to meeting the developmental lending needs of Aboriginal clients.