Canadian Youth Business Foundation tackles youth unemployment

Canadian Youth Business Foundation tackles youth unemployment

The Canadian Youth Business Foundation has helped more than 5,600 budding entrepreneurs get off the ground.

Paintlounge image

Richard Lautens / Toronto Star
Samantha Chan left a job at Citigroup to pursue her dream and started Paintlounge, a cafe/space where anyone can paint. A loan from the Canadian Youth Business Foundation helped get her started.

By:Vanessa Lu Business reporter

Amidst constant bleak news about a weak economy and companies downsizing, more young people are choosing to start their own business to blaze a path for themselves.

The Canadian Youth Business Foundation, begun in 1996 as a way to fight young unemployment, has helped more than 5,600 budding entrepreneurs get their business off the ground.

It helps with everything from writing a business plan to finding financing — up to $15,000 from the foundation and $30,000 from the Business Development Bank of Canada — to matching participants with volunteer mentors for two years.

While some are paired directly in related field, such as restaurateur to restaurateur, but other times it could be financier linked to art gallery owner. That mentor will help the entrepreneur through the difficult times.

“We really think the mentors are the secret sauce,” said foundation CEO Julia Deans. “Sometimes, they are not business owners themselves, but their skill set is one that the entrepreneur lacks.

“An entrepreneur needs to be master of so many things. A mentor can help fill in the gaps,” she said.

The program started as a way to help young people secure financing because they often don’t have collateral or credit history, morphing into a more formal services of building small businesses across the Canada.

Candidates must be aged 18 to 39, raised from the original 35, to open up possibilities for new immigrants as well as others who have been the workforce or who may have take time off to start families.

“I think it’s becoming common knowledge that young people aren’t going to find jobs for life, and they are going to help create their own opportunities, and that may include creating their own business,” Deans said.

The low-interest loans are for five years, with only interest due in the first year. They can be paid back at any time.

After five years, more than half of the businesses helped by the foundation are still operating. The default rate on loans is about 12 per cent.

For some businesses, the foundation loan is critical to help them leverage more traditional funding – at banks or for other government programs.

Ultimately, Deans says candidates are judged on the “strength of their business plan and the strength of their character.”

“Are they somebody we believe will repay the money and give their all to the business?” Deans said.

While governments may say the program tackles youth unemployment, Deans sees it as much more.

“They are so full of energy, optimism and passion. You get the feeling you could give them any problem and they could figure it out,” she said.

“They really think the sky’s the limit.”

Toronto Star | Toronto, Ontario