Loans for entrepreneurs—with mental health issues

Rise Asset Development has graduated 22 clients with loans and not one has defaulted

Getting approved for a small business loan is a difficult process, but all the clients at Ontario micro-loan provider Rise Asset Development have an additional challenge: they have a history of mental illness, addiction or both.

With a staggeringly high unemployment rate among those with serious mental health issues—between 70 and 90 per cent, according to the Canadian Mental Health Association—Rise sees self-employment as a key strategy to get people working again. This year, it partnered with the credit union Alterna Savings to administer the loans. Rise has graduated 22 clients (with loans ranging from $3,000 to $25,000) and not one has defaulted. “We don’t want to have a high default rate. We want to make sure our loan portfolio continues to grow,” says executive director Narinder Dhami. Applicants need a business plan, and an external committee gives final approval on the loans.

Though banks can’t discriminate based on disability, many of the group’s clients are on social assistance, which is not considered as income in applying for a loan. And securing any loan for a start-up is hard, as most banks don’t see much potential for return, says John Lahey, the president and CEO of Alterna. “It’s true for anyone who wants an entrepreneurial start-up loan. The reality is that, in most cases, the banks in this country are not in that business,” he says.

One of the program’s success stories is Michael Mazzara. A loan from Rise allowed him to add credit-card processing to his online cellphone-unlocking business. Prior to starting his business, a history of anxiety and panic attacks made it impossible for the college graduate to work in a traditional setting. “I can’t just work in an office, like a traditional job, which I’m qualified for,” says Mazzara. “So what do you do when you want to be productive, when you have something to offer and want to do something?”

Dhami says employment can lower the re-hospitalization rate for people with mental illness. “When people are employed, there is an additional layer of self-confidence, social inclusion, the list goes on,” she says.