THUNDER BAY – BUSINESS – Are you looking to reach further with your business? Small to Medium Enterprises (SMEs), in fact more than 630 SMEs used Export Development Canada’s (EDC) Export Guarantee Program (EGP) in 2015, a 15 per cent over 2014.
The increase was driven, in part, by an evolution in the EGP’s level of coverage. Beginning in late 2014, EDC began guaranteeing up to 100 per cent of a bank’s loan to a Canadian SME, up from the previous limit of 75 per cent. As a result, the program surpassed CAD 1 B in annual volume for the first time in 2015.
“The EGP is a difference maker because it makes it much easier for banks to say ‘yes’ to the financing requests of Canadian SMEs,” said Bruce Dunlop, Vice President, Commercial Markets and Small Business, EDC. “Regular access to financing is critical for SMEs to grow their business through trade, but global economic conditions continue to challenge domestic lenders when they consider providing trade financing. The EGP addresses the needs of the SMEs and their banks, so everybody wins.”
The EGP is a risk-sharing guarantee that EDC provides to the bank of an exporter. It assures the bank that a percentage of a loan it provides to an exporter will be repaid. With the guarantee in place, banks can feel more comfortable lending larger amounts to Canadian companies, whether they are already exporters or planning to become exporters. This is especially important for SMEs that need financing to grow and meet the demands of new orders.
“The rise in demand from Canada’s SMEs speaks to the versatility and flexibility of the EGP, which can be tailored to meet a small company’s needs,” added Dunlop. “The EGP is designed to meet the unique needs of SMEs when they want to break into new markets or purchase new equipment to take on important orders, or to support their international investments.”
The following examples illustrate how EDC’s EGP has helped grow their businesses:
Carmanah, a Vancouver-based manufacturer of industrial-grade LED lighting, used the EGP to support its acquisition of the Sabik Group of Companies. “For a small Canadian company it would have been quite difficult, or perhaps impossible, to arrange and structure debt on foreign assets without the support of EDC’s EGP program. Their guarantee allowed our small Canadian company to complete a very important acquisition, and helped us become a leading worldwide contender in marine navigational aids and offshore wind marking and safety schemes – two important clean technology industries.” – John Simmons, CEO, Carmanah.
JSS Medical Research, a Montreal-based global contract research organization, used the EGP to get the financing it needed to meet the demands of increasingly larger contracts: “JSS Medical Research was expanding both domestically in Canada and internationally in Latin America, the US and Europe. EDC stepped up by providing guarantees to our financial partners. They became a partner to JSS and now that we continue to grow into the Asia/ Pacific region, this collaboration is key to us in order to achieve continued growth.” – Dr John S. Sampalis, President and CEO, JSS Medical Research, and founder of the company.
Canada Pooch, a Toronto-based manufacturer of outerwear for pets, used the EGP to facilitate a jump in its working capital needs after experiencing rapid growth. “EDC’s EGP helped our bank provide us with a higher level of financing, which was a critical step in allowing us to take our business to the next level. As we move forward, EDC’s EGP program will enable us to take on new projects and opportunities to drive continued growth.” – Jacqueline Prehogan, President and CEO, Canada Pooch.
EDC is Canada’s trade finance agency, providing financing and insurance solutions locally and around the world to help Canadian companies of any size respond to international business opportunities. As a profitable Crown corporation that operates on commercial principles, EDC works together with private- and public-sector financial institutions to create greater capacity for Canadian companies to engage in trade and investment.
For more information about how EDC can help your company, visit www.edc.ca.