The Government of Newfoundland and Labrador today announced an investment by the Innovation and Business Investment Corporation (IBIC) of $15 million for a new Harvester Enterprise Loan Program. This program is an enhancement of the Fisheries Loan Guarantee Program and will expand supports for independent fish harvesters positioning the sector for future success.
The Honourable Elvis Loveless, Minister of Fisheries, Forestry, and Agriculture, and Greg Pretty, President of the FFAW, will be available to the media to discuss the new program today (Friday, May 24) at 10:00 a.m. outside of the House of Assembly.
The program has been enhanced to increase maximum guarantee thresholds. New components have been added to allow for downpayment loans and interest payment rebates to harvesters to support eligible activities. $10 million is available to support the downpayment requirements of accessing a loan from a financial institution to support eligible activities, as well as $5 million for interest payment requirements.
The enhanced program will be open to applications in early July 2024. At that time, the Provincial Government will release updated program guidelines and application instructions and will arrange information sessions with stakeholders.
Under the program, loan guarantees and the new supports are available to assist harvesters in the province in obtaining financing for:
- vessel related items such as construction, purchase and/or refit.
- combining of enterprises and license acquisitions.
- refinancing of loans owed to fish processors for fixed assets and/or license acquisitions.
- refinancing of loans previously obtained from chartered banks for vessel related purposes and fish license acquisitions (concurrent with combining of enterprises).
The establishment of the Harvester Enterprise Loan Program is the latest initiative that the Provincial Government has undertaken to position the province’s fishing industry for future success. It has also permitted outside buyers to apply for fish buyer licences for seafood products harvested in this province, increased processing capacity for the crab fishery based on an increased Total Allowable Catch for 2024, and have agreed to undertake a comprehensive review of the provincial fishing sector. These measures are in addition to ongoing advocacy to the Federal Government on management decisions and funding of projects through the federal-provincial Atlantic Fisheries Fund.
Quotes
“I am delighted to announce the establishment of the new Harvester Enterprise Loan Program for Newfoundland and Labrador. We have listened to harvesters and their union and recognize access to financing is a serious impediment impacting the ability of many harvesters to operate effectively. I am confident this new program will provide the necessary support that will enable many fish harvesters to maintain their livelihoods, build enterprises, attract new generations to the fishing profession, and ensure the long-term sustainability of our province’s seafood industry.”
Honourable Elvis Loveless
Minister of Fisheries, Forestry and Agriculture
“Today’s announcement of the establishment of the new Harvester Enterprise Loan Program for Newfoundland and Labrador is a well-received demonstration of the Provincial Government’s support of the harvesting sector, and a solid first step for enhancing the independent inshore fishery in our province. Our Union is very pleased that the provincial government has heard our recommendation for enhancements to financing programs for harvesters that will serve to restore stability and provide a funding avenue that allows enterprise owners to maintain the integrity of their business. Further, the provincial government’s agreement to cover the downpayment for successful applicants to the Program is a strong support for succession planning of the industry by enabling new entrants to have greater risk tolerance.”
Greg Pretty
President, FFAW
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Media contacts
Craig Renouf
Fisheries, Forestry and Agriculture
709-637-2923, 709-640-6922
craigrenouf@gov.nl.ca
Lesley Clarke
Industry, Energy and Technology
709-729-5777, 709-699-2910
lesleyclarke@gov.nl.ca
Courtney Langille
Fish, Food, and Allied Workers Union (FFAW-Unifor)
709-576-7276, 709-693-8454
clangille@ffaw.ca
BACKGROUNDER
Harvester Enterprise Loan Program
The Harvester Enterprise Loan Program is an enhancement of the Fisheries Loan Guarantee Program and will expand supports for independent fish harvesters positioning the sector for future success.
Under the program, a government guarantee is provided for loans through eligible financial institutions and is available to assist harvesters in the province in obtaining financing for:
- vessel related items such as construction, purchase and/or refit.
- combining of enterprises and license acquisitions.
- refinancing of loans owed to fish processors for fixed assets and/or license acquisitions.
- refinancing of loans previously obtained from chartered banks for vessel related purposes and fish license acquisitions (concurrent with combining of enterprises).
Amount of Loan Guarantee
The Provincial Government’s guarantee can provide up to 100 per cent of an outstanding loan.
The new program will provide an increase in the maximum loan guarantee thresholds as compared to the current program. The total maximum guarantee amounts are increased to accommodate: loan guarantees of up to $3 million (previously $2 million for vessel-only related items; $4 million (previously $3 million) for combining of enterprises; and up to $2 million (previously $1.5 million) for license acquisition only.
Down Payment Loans
Borrowers typically must provide down payments of a minimum of 10 per cent of overall costs for vessel acquisition and construction, and a minimum of 15 per cent for all other purposes.
The updated program will make $10 million available to support loans for the purpose of meeting the down payment requirements of accessing a loan from a financial institution for eligible activities. The current program does not offer support for down payments.
The support will be in the form of a secured loan of up to 15 per cent, to a maximum of $450,000, with a maximum term of 20 years, to support down payment requirements. No interest accrual or payments will be required for the first five years. Repayment and interest accrual begins in year six; interest will be charged at the Bank of Canada’s policy rate, which is currently five per cent.
Interest Rebates
Finance charges on guaranteed loans offered by financial institutions are negotiated between the borrower and the institution. The program places a ceiling on finance charges by allowing institutions to charge interest on guaranteed loans at the bank prime rate (currently 7.2 per cent) plus a maximum of 2.0 per cent or 2.5 cent depending on the nature of the loan.
The updated program will allocate $5 million to support rebates related to interest payment requirements of accessing a loan from a financial institution for eligible activities. The current program does not offer support for financing costs associated with loans from financial institutions.
Rebates will cover interest paid in excess of the bank prime rate, up to the maximum financing charge amounts established by the program. Rebates will be provided directly to borrowers on the basis of the eligible portion of interest paid for up to five years.
Interest Rates
A harvester may choose a fixed or floating interest rate and a floating rate may be converted to a fixed rate at any time.
Repayment Terms
The terms of the loan and repayment options are to be determined as negotiated between the harvester and the lender, based on the following:
- 20-year term – a maximum of 20 years is provided for vessels, depending on life expectancy, for construction, purchase and upgrades. Maximum of 20 years is also offered for the combined purchase of vessels, equipment and licenses.
- 15-year term – a maximum of 15 years is provided for license acquisition only.
Flexible loan repayment options are available, including annual principal payments, assignment of catch and/or a percentage of gross revenue.