Fisheries and Aquaculture
May 18, 2012
Fish Harvesters to Benefit from Enhanced Program
Continuing with its commitment to strengthen and grow the province’s billion dollar fishing industry and address challenges experienced by fish harvesters, the Provincial Government today introduced further enhancements to the highly-successful Fisheries Loan Guarantee Program. The enhancements stem from industry input provided during the development of the Fishing Industry Memorandum of Understanding.
The announcement was made today (Friday, May 18) by the Honourable Keith Hutchings, Minister of Innovation, Business and Rural Development, and the Honourable Darin King, Minister of Fisheries and Aquaculture, at the Fermeuse Marine Centre.
“As reflected by today’s announcement, the Provincial Government is delivering on its commitment to provide fish harvesters with options and flexibility in pursuing their business activities,” said Minister Hutchings. “The bolstered program will improve access to capital for fish harvesters seeking to combine their licences and enterprises in order to improve the viability of their businesses. These enhancements will invite positive outcomes and benefit fish harvesters, as well as the communities in which they live and work.”
Key elements of the expanded Fisheries Loan Guarantee Program include:
- Flexible down payment features;
- Eligibility of combined enterprises (two or more quotas per vessel);
- Eligibility of licence and quota acquisitions;
- Greater flexibility in choosing fixed or floating interest rates;
- Added flexibility and extended repayment terms; and/or,
- Refinancing of loans currently held by financial institutions or processors.
A complete list of all program enhancements are included in the backgrounder.
“Enhancements to the Fisheries Loan Guarantee Program are the next step in our government’s plan to strengthen the fishery, to ensure it remains sustainable and provides long-term benefits to the people of Newfoundland and Labrador,” said Minister King. “A transition is undoubtedly taking place in this industry, being driven by global markets and the need for enterprises to be more competitive. To that end, enabling harvesters to access financing on reasonable terms demonstrates our government’s commitment and once again shows our confidence as a government that the fishery will play an integral role in our province’s economic success in the future, as it has in the past.”
Through the Fisheries Loan Guarantee Program, the Provincial Government helps fish harvesters secure the necessary financing to purchase, construct or upgrade vessels, and acquire new equipment. Since the program’s inception in 1980, the Provincial Government has guaranteed financial support totalling $182 million for fish harvesters. The program has been highly successful with a default rate of only 1.1 per cent.
The Provincial Government’s guarantee is to the financial lender and in the event of a default the Fisheries Loan Guarantee Program does not guarantee the fish harvester’s payments to the financial lender.
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Media contacts:
| Scott Barfoot Director of Communications Department of Innovation, Business and Rural Development 709-729-4570, 690-6290 scottbarfoot@gov.nl.ca |
Bradley Power Director of Communications Department of Fisheries and Aquaculture 709-729-3733, 699-5707 bradleypower@gov.nl.ca |
BACKGROUNDER
Enhancements to the Fisheries Loan Guarantee Program
- Combined fishing enterprises (two or more quotas per vessel), are now eligible under the loan guarantee program. Maximum loan repayment is 20 years for combined purchase of vessel and equipment.
- Licence and quota acquisitions can be included as part of the loan with a maximum of 15 years for repayment.
- Minimum cash down payment requirements for combining of fishing enterprises and license/quota acquisitions will be 15 per cent of total project costs. The down payment may be waived, in whole or in part, as determined by the Provincial Government and the financial institution in consultation with the fish harvester, subject to the equity position of the fishing enterprise.
- The maximum deficiency guarantee amount is increased from $2 million to $3 million to accommodate combining of enterprises and fishing licence/quota acquisitions, with a maximum of $1.5 million attributable to the financing of licences.
- Loans obtained by fish harvesters from fish processors for fish licence acquisitions are eligible for refinancing through bank loans. The amount of the guarantee will be a maximum of 85 per cent of the market value of the assets.
- Concurrent with the combining of fishing enterprises, loans previously obtained by fish harvesters from chartered banks for vessel and equipment purchases, vessel upgrades and fish licence purchases will be eligible for refinancing through loans by financial institutions.
- Set the floating interest rate to a maximum of prime plus two per cent to 2.5 per cent for interim loans and term loans depending on repayment terms, and an option to convert interest rates from floating to a fixed interest rate at any time.
- Provision of more flexible repayment options including payments from an
assignment of catch and/or on a percentage of gross revenue at year end.
- Financial institutions, excluding Crown corporations and agencies, are eligible to participate in the program.
- Deficiency loan guarantees may be provided at 100 per cent of the outstanding balance plus interest and realization costs on all term loans issued to each financial institution effective immediately.
2012 05 18 10:30 a.m.