A few years ago, during one of her regular visits to the Centre for Addiction and Mental Health in Toronto, Sandra Rotman had an idea.

At the time, the high-profile philanthropist was being treated for anxiety. The experience made her stronger, she says, but also led her to mull over she could help others with mental-health issues. She knew difficult it can be for someone with mental illness to find and hold steady employment, but also the importance of a job to their recovery and well-being.

“I would go in and see people who were out of work, yet they would benefit so much from being able to work. I thought, ‘Why not have the business school mentor people with mental health or addiction challenges who are able and want to start their own businesses?’” she says.

The University of Toronto’s Rotman School of Management was keen to help. (It is named after her husband, merchant banker and philanthropist Joseph Rotman.) The Centre for Addiction and Mental Health, or CAMH, a teaching hospital affiliated with the university, was also eager to take part. Financing would be an issue for the would-be entrepreneurs, so Mrs. Rotman donated $1-million to establish Rise Asset Development, a partnership between the school and the hospital that provides small start-up loans to successful applicants with a history of mental illness or addiction.

Since 2009, the fledgling social enterprise has loaned money to 22 individuals, says executive director Narinder Dhami. Each of them has been matched with a business-school mentor, often an alumnus, who offers practical advice on to start or build the business.

The organization is based in Toronto but is branching out and working with partners in Ottawa and other communities. Rise Asset Development has started a new youth small-business program. With the help of Citi Foundation, it has also launched a pilot group-lending program that will work with transitional homes and mental-health organizations.

So far, the loans are all being repaid. The successful applicants have used the money to build everything from a general contracting company to an Internet-based business.