In the SEED Policy, Equity refers to an applicant’s contribution to a project. The equity required of a client is based on:

1. Community
2. Type of Equity
3. Program
4. Budgets and Evaluations

 1.  Communities and Community Levels

The SEED Policy recognizes that different communities in the Northwest Territories have different economic and business circumstances (see Section 9, Page 16 under Equity Requirements):

For a project to be considered, applicants must normally contribute the following minimum Equity that may include Sweat Equity:

(a) 30 percent in Level 1 Communities, and

(b) 20 percent in Level 2 Communities.

Community Levels are defined earlier in SEED Policy (see Section 5, Page 3):

Level 1 Communities

The most developed Communities within the NWT.  These Communities have well-developed Community business infrastructure and air/road transportation links.  These Communities are Fort Smith, Hay River, Inuvik and Yellowknife.

Level 2 Communities

These Communities have less-developed business infrastructure and air/road transportation links.  Level 2 Communities include all Communities other than those listed as Level 1.

This is in line with the goals of the SEED Policy (see Section 2, Page 1) to:

Diversify the NWT economy and promote equitable distribution of benefits among NWT Communities.

2.  Type of Equity

The default consideration of Equity, for the SEED Policy, is some form of cash equity. For the purposes of the SEED Policy (see Section 5, Page 3), Equity is defined as:

Cash, land or any asset with unencumbered residual value contributed to the venture by the owner(s) or shareholder(s).

Sweat Equity (see Section 5, Page 4) is defined as:

The documented value of labour that the applicant contributes to the project, calculated based on the prevailing labour rate where the project is located.

Sweat Equity then is distinctly not cash-based, labour can be considered as part of the applicant’s equity; Sweat Equity is specifically mentioned in the Micro-Business program of the SEED Policy.

3.  Program

An Equity requirement is universal to all SEED Policy programs thpugh some programs treat the Equity requirement differently.

Entrepreneur Support

The Operational Support category (see Section 8, Page 9) of the Entrepreneur Support program speaks to helping NWT businesses under distress and requiring support specific to that type of distress.

(iv) Operational Support

Assistance may be provided to increase business skills and capacity or to:

1. Identify and address problems faced by the business;
2. Develop a recovery or restructuring plan;
3. Provide emergency relief to effect business recovery; or
4. Assist with the cost of "winding down" a business that has a minimal net worth and cannot meet its financial obligations and which could hurt other businesses and employment opportunities if allowed to fail in a disorderly manner.

A general condition of the Entrepreneur Support program then states that:

All business applicants will be required to demonstrate need and financial sustainability. Equity requirements may be waived in the case of business relief.

So the Entrepreneur Support program does allow, in very specific cases, the waiver of the Equity requirement of the SEED Policy.

Micro-Business

The Micro-Business program (see Section 8, Page 11) under the SEED Policy is open to:

All (NWT) Residents engaged in traditional harvesting activities or arts and crafts production for commercial purposes, prospecting or other self-employment activities are eligible for assistance under the Micro-Business category.

An allowable Exception (see Page 12) under Micro-Business allows for the use of Sweat Equity:

(ii) Equity may be in the form of Sweat Equity where the client does not have sufficient cash Equity and income.

There is a SEED Policy Guideline for Sweat Equity under Micro-Business:

General guideline(s):

Should be appropriate to activity; specific examples used comprise that of a harvester building a cabin on their line or a craftsperson tanning their own moosehide – the materials to build/make it would require contribution dollars while the effort to build/make it would require ‘sweat’.

For arts and craft producers, cash equity should be requested (as with other applications); where cash equity is not available sweat equity may be considered.  Sweat equity in this case could be based on the applicant’s past production to the extent that, in the opinion of the Regional Superintendent, the applicant has the skills, ability and past record to make use of raw materials to produce finished products for sale.

 Business Intelligence and Networking

The Business Intelligence and Networking program (see Section 8, Page 13) is the only program under the SEED Policy that the Equity requirement written directly into it:

(i) Amount:

a. Assistance may be provided to a maximum of $4,000 per Resident per trip. A NWT Business may submit an application for as many as two Residents.

b. The maximum funding available to any Resident or NWT Business in the Business Intelligence and Networking category is $8,000 per year.

c. For travel within the NWT trip costs must exceed $1,500 per individual.  Applicants must contribute $500 of equity per individual for eligible costs of travel within the NWT.

d. For travel outside the NWT trip costs must exceed $1,500 per individual. Applicants must contribute $1,000 of equity per individual for eligible costs of travel outside the NWT.

4.  Projects, Budgets, and Evaluations

Contributed Equity is often tied to the size of project – large projects often have more Equity than the 20-30% required in policy.

As well, Regional Superintendents are responsible for the operation of the SEED Policy in their regions, a core part of that is managing their budgets. In the course of managing their budgets, a Regional Superintendent has to make hard decisions regarding what projects they will fund and to what extent they will fund a project. It is not uncommon for a Regional Superintendent to approve funding less than the ask of a project proposal.