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March 22, 1999
(Development and Rural Renewal)


Financing more accessible to inshore fish harvesters

Fish harvesters no longer have to borrow a minimum amount of $50,000 to qualify for a loan guarantee under the Fisheries Loan Guarantee Program, John Efford, Minister of Development and Rural Renewal (Acting), announced today.

He also announced that fish harvesters will also have the option, under certain conditions, of refinancing loans they may have taken out with processors and other third parties.

"As of today, there is no minimum amount that a harvester has to borrow from a commercial lending institution in order to qualify for a loan guarantee under the Fisheries Loan Guarantee Program," he said.

"By removing the minimum loan requirement, we are removing an inequity that exists between small inshore vessels and the larger vessels. This creates a level playing field for those seeking loan guarantees," Mr. Efford said.

Noting that independent small boat harvesters have an important role to play in the recovery and diversification of the fishery, the minister said removing the minimum loan amount "will increase their ability to participate in the new diversified fishery, by giving them enhanced access to government guaranteed loans through the chartered banks."

Mr. Efford emphasized that while this will make capital more accessible to small boat enterprises, "A business-like approach will govern all decisions concerning individual applications for financing. In short, capital will be more accessible to those who have sound financial and business management track records."

Commenting on the second initiative - providing harvesters with an option, under certain conditions, to refinance loans they may have taken out with processors and other third parties � Mr. Efford said this addresses a concern raised by many small boat fishing enterprises. In recent years, many who have had difficulty in obtaining loans for their operations turned to fish processors for assistance, but many of those felt that this compromised their independence. Mr. Efford noted that the same concern was noted in the 1998 Task Force Report on Fish/Crab Price Settlement Mechanisms in the Fishing Industry.

"Government's actions in this budget, in cooperation with the chartered banks, will help address this concern," he said.

The Fisheries Loan Guarantee Program, administered by the Department of Development and Rural Renewal, has had a successful track record since it was established in 1980. Under the program, government provides a partial guarantee for direct financing provided by chartered banks. Until today, the program criteria required a minimum loan amount of $50,000. All applications under the program are assessed in relation to commercial viability and the role of the enterprise in a diversified and revitalized fishery. In excess of $115 million total has been provided to more than 400 clients since 1980, with a default rate of less than three per cent in the close to 20 years the program has been in operation.

Media contact: Josephine Cheeseman, Communications, (709) 729-4570.

1999 03 22


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