B.C. set to backstop $1B in loans to First Nations-led projects
Amid credit downgrades, the provincial government has launched a program guaranteeing commercial loans to accredited First Nations bodies, commercial entities
A 2019 photo from the introduction of the Declaration on the Rights of Indigenous Peoples Act in the B.C. legislature. | Province of BC/Flickr
The provincial government announced June 16 the launch of a $1 billion loan guarantee program for First Nations-led commercial projects.
The First Nations Equity Financing Program is “intended to address common barriers to capital access, including limited credit history, insufficient collateral and high borrowing costs” faced by Indigenous individuals, groups and enterprises, according to a statement from the Ministry of Finance.
The program will support projects with a loan guarantee of up to 20 per cent of the project’s total capital costs; the minimum loan guarantee will be $5 million (for a $25 million project) while the maximum will be $400 million.
The ability to first secure an equity loan from a commercial lender is among the primary requirements. Therefore, the government is not providing any money from its coffers directly, and will only be involved in the event the borrower defaults.
The ministry is leading the program's operations. It claimed it has “established rigorous eligibility and due-diligence requirements” to see that the risk of defaulting is low.
As such, as a requirement, the ministry will look at the capacity of applicants to repay the loan using project-generated revenue. The project must include “new capital construction or significant capital expansion.”
Only B.C.-based Indigenous governing bodies, such as band councils, and B.C.-based First Nations development corporations with “formal government support,” plus any incorporated entities they may have, are eligible to receive loan guarantees.
The projects must be located “within the applicant's territory” and “show clear commercial viability with sufficient expected returns.”
The ministry says it has also “committed to provide opportunities for equity participation in small- and medium-sized projects.”
For the first three years of the program the ministry expects to pay operating costs and then have fees for the loan guarantees to cover those costs, similar to federal government programs.
Business in Vancouver asked the ministry for details on the operating costs. The ministry said it had no estimates; rather, costs are covered by existing ministry budgets. It expects that the program will recover its operating costs through user fees based on a percentage of the loan’s remaining balance each year.
While backstopping these projects should theoretically provide better interest rate relief for the applicants, the relief won’t be as great as it once was two years ago. The province’s credit ratings currently have negative outlooks from three of four credit rating agencies.
Moody’s, for example, downgraded the province from aa1 to aa2 in April 2025 and then from aa2 to a1 in March 2026.
“The downgrade reflects a marked deterioration in the province's credit fundamentals. This deterioration is driven by policy-driven spending resulting in structural deficits and rising leverage,” stated Moody’s latest report.
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This article was updated June 17 to include the ministry's response on costs
