In 2006 we began designing one of Canada’s first social finance products. We set out with the goal of incentivizing businesses to hire from disadvantaged communities.

Community Employment Loan Program

The Community Employment Loan Program (CELP) was designed by Social Capital Partners as a way to test the effectiveness of combining a social finance strategy with an incentive program to encourage small business owners to hire more individuals from their community who are at a disadvantage in finding employment.

Creating a Different Model

Our Community Employment Loan Program facilitates access to subordinated debt financing for entrepreneurs, franchisees and small business owners who commit to hiring workers via community agencies and other employment service providers. The terms of these Community Employment Loans are linked directly to outcomes: for every employee an entrepreneur hires from one of our community partners, the interest rate on the loan decreases.


Proving the Win-Win

Our Community Employment Loan Program facilitates access to subordinated debt financing for entrepreneurs, franchisees and small business owners who commit to hiring workers via community agencies and other employment service providers. The terms of these Community Employment Loans are linked directly to outcomes: for every employee an entrepreneur hires from one of our community partners, the interest rate on the loan decreases.


Partnering for Scale

After years of experimentation and refinement, SCP brought the program to RBC Generator, the impact investing arm of RBC’s Social Finance initiative. RBC Generator has purchased $250,000 of the Community Employment Loan portfolio managed by SCP, and has made an additional commitment of up to $450,000 over a 3-year period. RBC’s involvement has helped provide more employment opportunities across more organizations, geographies and sectors.

 

“By linking interest rates to employment outcomes, SCP is demonstrating how financial incentives can drive social good in a way that makes sense for business owners. SCP is a leader in the social finance landscape in Canada, and through this initiative RBC hopes to further engage the private sector in using business to drive positive social impact.”

— Sandra Odendahl, Head, RBC’s Social Finance initiative

 

After making over 80 successful loans, we knew it was time to scale this loan offering. To do so, we partnered with the Government of Ontario and leading financial institutions.

Rate Drop Rebate

Rate Drop Rebate is a unique partnership that brings together financial institutions, the Government of Ontario and Social Capital Partners to deliver an innovative loan program that reduces unfair barriers to employment, helps grow the province’s small and mid-sized businesses and create a fairer economy for all.

Creating a fairer job market

Thousands of qualified workers in Ontario face unfair disadvantages when looking for employment. Groups that are particularly affected include new Canadians, people living with disabilities, youth with limited work experience, individuals with limited education or formal training, older job seekers and Aboriginals.

We are partnering with five financial institutions and the Ontario Government to deliver Rate Drop Rebate, a pilot project that’s helping to change this. Based on Social Capital Partners’ highly successful Community Employment Loans Program, Rate Drop Rebate aims to help 1,100 people secure good jobs by providing recruitment services and financial incentives to small and mid-sized business owners who hire people facing barriers to employment. Rate Drop Rebate is currently being trialled in Hamilton, London and Ottawa.


How it works

Rate Drop Rebate helps Ontario’s small businesses by providing a cash back rebate on the loans or lines of credit they need to grow their operations, as well as recruitment services to help them find the right workers. For every new employee hired through Rate Drop Rebate and retained for a minimum of six months, qualifying business owners receive a cash back rebate on a loan or line of credit arranged through one of our six partner financial institutions. The rebate will be equivalent to a 1% reduction in the interest rate on a term loan (up to a maximum reduction of 4%) or the actual interest paid over six months on the business’ line of credit (up to a maximum of two years interest-free).

Financing

The interest rebate is paid for by the Government of Ontario. However, the program is effectively self-financing as the payout only occurs after an employment outcome has been achieved that generates greater savings to public finances in areas such as reduced social assistance payouts.

Rate Drop Rebate Partners

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Pilot Project

Objective

With our Community Employment Loans Program, which has helped 80 businesses make 480 hires, Social Capital Partners demonstrated this model works and can make a tangible difference. The Rate Drop Rebate pilot has potential to create a much greater impact and show this idea can be applied broadly in different communities. The pilot will demonstrate the robustness of using banks, credit unions and community service organizations to deliver the project.

From our previous experiences with Community Employment Loans, we found that effectively addressing the needs of employers during the employee recruitment and retention processes was the single most powerful tool we had to generate job opportunities for those who most need them. Rate Drop Rebate has, therefore, been designed with the needs of both employer and job seeker in mind, providing high levels of support to both and viewing each as equally important clients and partners. The pilot project will provide further evidence of the effectiveness of this approach.

Systems Change

We aimed to roll out Rate Drop Rebate across the entire province of Ontario after the pilot, which could reach 100 times the number of people that have been helped by our Community Employment Loans Program. A study we conducted together with Deloitte estimated that a province-wide roll out would result in up to $140 million in net savings to the Ontario government, 45,000 job placements and introduction of 11,000 businesses to this hiring channel.


Rate Drop Rebate also has the potential to create a broader change in the way we think about tackling social issues. By providing a mechanism for businesses and financial institutions to talk together about breaking down barriers to employment, Rate Drop Rebate is bringing powerful new actors into an area previously considered largely the domain of government. We see clear potential in this collaboration for further insights and innovation that will help drive social change and create a fairer employment market for all.

 

Media Coverage

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