BUILDING STRONG NATIONS THROUGH MODERN FINANCE
Canada works on the belief that access to capital is critical to economic competitiveness. But the fact is, access to both conventional and creative financing has been a barrier to First Nations, Métis and Inuit communities across Canada.
Sean McCoshen, Chairman and Chief Executive Officer of The Usand Group, is changing this. His career as an investment banker focused on infrastructure financing and emerging markets for 18 years in both the US and Canada before starting The Usand Group. Now, McCoshen uses these skills to assist First Nations in overcoming barriers to obtaining capital. The idea for the company grew out of a conversation with former National Chief Ovide Mercredi.
“Ovide was very concerned about financing for First Nations communities,” says McCoshen, “and asked if I could help. We ultimately secured a $21 million loan for a community that otherwise was having significant difficulty doing so.”
This initial project opened the door for an entire company dedicated to facilitating full financial participation in the global economy for Indigenous groups, and McCoshen hasn’t looked back. The restrictions of the Indian Act and the collective ownership of land has historically handicapped the ability and interest of lenders in providing financing. In short, The Usand Group was created to help level the playing field.
Today, within six years, Usand has secured nearly $300 million in innovative and customized financial solutions for First Nation, Inuit, and Métis communities. Working alongside community members every step of the way, The Usand Group collaborates to find financial solutions that fit the needs, capacity and strengths of their client.
A Different Way
Usand’s approach to financing is a holistic and comprehensive collaboration with community members, and can be summarized as follows: the team conducts an in-depth, free assessment of the community’s finances, then they meet with the community members, council, and administration to get an integrated understanding of its needs, capacities, and visions. Once armed with this information, Usand is best prepared to negotiate on the community’s behalf with banks and third parties to structure the best financial solution for them.
“Because we look at financing as a multi-faceted approach, we work very hard at creating various ties in the community,” says Erinn Mah, COO.
Through a collaborative approach and deft knowledge of the financial system and various forms of land tenure, Usand has successfully broken many barriers, including being the first capital corporation to negotiate a bridge loan for a First Nation in conjunction with Bridging Finance Inc.; the first to negotiate an acquisition line of credit for a community; and the first financial institution to structure private financing for preconstruction and construction of community housing.
Examples of Usand’s successful negotiations on behalf of First Nation communities are ample. Facilitating the Loblaw’s and Pharmasave project with the Elsipogtog First Nation is illustrative of the types of projects communities are able to achieve with adequate and speedy access to funding. “It wasn’t the biggest deal we’ve ever done, but certainly one of the most heart warming,” says McCoshen.
For years, band members had been making the 12-kilometre commute outside their community to the nearest grocery store, causing not only strain on the community, but money to drain out of it. In collaboration with Loblaws and Pharmasave, two large Canadian corporations with over 2,500 locations, Elsipogtog was able to produce a business plan, which, though feasible, was rejected by banks.
Usand partnered with Elsipogtog to help bring the project to life. Usand’s solution of a bridge loan provided the funds to get the project started and filled in the gap between when the bank agreed to provide financing and when the community actually received the money. The bridge loan was then paid out by the Chartered bank once the market was built and the construction risks were settled, replacing the bridge debt with a lower interest rate and long-term structure. The result was Canada’s first Pharmasave owned and operated by a First Nation, which lead to increased job creation and profits remaining in the community. The success of this project also mean that Elsipogtog could immediately leapfrog into a new housing project for their community, and further economic development.
“The fact that we are going to grow our own business means over 50 new jobs for community members, which increases their personal wealth and prosperity and also provides new revenue for the community,” said Chief Arren Sock.
Narrowing the Gap
By collaborating with communities, Usand is able to tailor the best, most appropriate approach at each step, never using a one-size-fits-all mentality. The only aspect the Usand Group likes to consistently emphasize is speed of completion in order to create forward momentum for progress. “We use a multi-phased approach when looking at community loans, so that the first financial package creates a solid foundation and enough revenue to support a second phase of social and economic projects, creating a domino effect so that subsequent projects can get larger and more sophisticated,” says Mah.
“The private sector is now lending money to First Nations, which I think is absolutely fantastic, while generating a return for investors,” says McCoshen, who continues to focus on breaking down institutional barriers by creating community capacity and narrowing the capital gap. “We want to continue working with alternative lending methods to get the same level of financial products in these communities that corporate Canada enjoys.”