Innovation, Trade and Rural Development
March 9, 2007

Funding Agreement Helps Local Exporters

Innovation, Trade and Rural Development (INTRD) and Export Development Canada (EDC) announced today they have entered into an agreement to provide working capital to small and medium-sized businesses expanding into the global marketplace. The Honourable Trevor Taylor, Minister of Innovation, Trade and Rural Development, and Jim Christie, Vice-President, Channel Management and Strategic Programs for Export Development Canada, made the announcement.

Minister Taylor said many local companies have been successful in accessing export contracts, however, they have not been able to fulfill the contracts because they have been unable to access the required working capital to fill the orders.

"Newfoundland and Labrador�s future depends on our ability to grow and diversify our economy and to export our products and services to the world. We know that small and medium-sized businesses play a critical role in helping us do that," said Minister Taylor. "This fund helps companies to build our economy and to create employment by providing loans to small businesses throughout the province that have export contracts and need assistance to fund the completion of the contract."

The goal of this initiative, the Master Pre-Shipment Financing Guarantee Agreement, is to encourage small and medium-sized businesses to invest in the growth and expansion of their businesses. Under the agreement, INTRD, through its Small and Medium-sized Enterprise (SME) Fund, will provide the necessary financing to businesses that obtain international contracts. The program is available to exporters of any size, operating in the province, in most sectors of the economy including services. EDC will provide a guarantee on funds provided by the Provincial Government for the completion of export contracts. The agreement combines the province�s knowledge of the local industries with EDC�s knowledge of the foreign marketplace.

"Since opening the EDC office in St. John�s in April 2000 we have witnessed the diversity and innovation of the province�s exporters. With the signing of this agreement, we are very pleased to work with the Provincial Government to increase the capacity of their programs to help more Newfoundland and Labrador exporters succeed in an extremely competitive international environment," said Mr. Christie.

"I am very encouraged to see that the province and EDC together recognize the needs of the business community in their endeavors to increase exports from this province. This program will eliminate one of the key barriers to growth of many of the small to medium-sized exporters," said Bill Butler, President of Hi-Point Industries, the 2006 Newfoundland and Labrador Exporter of the Year, and Past President of the Newfoundland and Labrador Environmental Industry Association.

"This federal/provincial agreement will provide easier access to much needed funds for business expansion," said the Honourable John Ottenheimer, Minister of Intergovernmental Affairs. "We value the important relationship the government has with the business community in this province. This agreement is part of our ongoing efforts to enhance the presence of export businesses in Newfoundland and Labrador."

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BACKGROUNDER

Master Pre-Shipment Financing Guarantee Agreement

Purpose

The Pre-Shipment Financing Program is a partnership between the province�s Business Investment Corporation (BIC) and Export Development Canada (EDC) to provide new and expanding small businesses with access to loans for working capital or for the acquisition of fixed assets needed to complete export contracts (ie. contracts to supply goods or services outside of Canada). EDC provides a risk-sharing guarantee to BIC, which in turn provides a pre-shipment loan, with a view to assisting businesses in their efforts to open new markets and thus expand their businesses.

Who Can Apply

Although all small and medium-sized businesses located and operating in Newfoundland and Labrador, including corporations, co-operatives and other similar structures, are eligible to apply, the program will target strategic growth sectors, such as manufacturing, information technology, secondary processing, aquaculture, bio-tech, marine services, knowledge-based industries and agrifoods.

The applicant must clearly demonstrate that it has the appropriate financial structure and the overall management ability and technical expertise required to complete the project. In addition, the applicant must provide written confirmation that it is in possession of an export contract for goods and services, which meets EDC�s environmental and Canadian Benefits Policies, and that it has applied for EDC�s Credit Insurance.

Available Funding

The program may provide assistance up to $250,000 in the form of an interest-bearing loan with all normal security taken for working capital financing including an assignment of the credit insurance. If approved, the loan will not be disbursed until the applicant provides written confirmation of EDC Credit Insurance along with a signed assignment of the insurance to BIC.

How To Apply

Concurrent with an Application for Credit Insurance, which may be obtained by contacting EDC at 1-888-332-3777 or at www.edc.ca, eligible exporters should contact any office of the Department of Innovation, Trade and Rural Development or at www.gov.nl.ca/intrd. For assistance call 1-800-563-2299 or the departmental office closest to you.

Media contact:
Lynn Evans
Director of Communications
Department of Innovation, Trade and Rural Development
709-729-4570, 690-6290
lynnevans@gov.nl.ca   

2007 03 09                                                       11:55 a.m.

 


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