New Lending Tool has Successful Year

Nova Scotia's newest lending tool for small business gets top marks according to its first annual evaluation. With about $5 million in loans to 66 small businesses, the Credit Union Financing/Loan Guarantee Program helped to create more than 280 jobs since its inception in June 2003.

"Getting a top grade from participants is a real bonus for both the province and the credit union system," said Economic Development Minister Ernest Fage. "The evaluation shows the program is doing what was intended and participants are also producing remarkable results."

The three-year pilot program, which is guaranteed by the province, is a partnership between Nova Scotia Economic Development, the Nova Scotia Credit Union system and the Nova Scotia Co-operative Council.

"The supportive partnership of the credit unions, the province and the co-op council makes this program stand out from other available financial lending programs," said Bernie O'Neil, president and CEO of Credit Union Central of Nova Scotia. "To date there have been no defaults or arrears, and that's a good indication that wise decisions are being made by local lending committees across the province."

The province has committed $6 million in loan guarantees over three years to help meet the financing needs of small business. The credit unions are assuming the risk on the remaining balance of $2 million in order to make $8 million available for lending. The program is administered by the Nova Scotia Co-operative Council and loans are approved by regional lending committees, ensuring the decision-making stays local. Once approved, the local credit union issues the loan and monitors compliance.

"The credit unions, which make up Nova Scotia's largest financial co-operative, reflect the commitment of the co-operative sector as a whole to Nova Scotia's small business community," said Dianne Kelderman, chief executive officer of the Nova Scotia Co- operatives Council. "By administering this program, the credit unions are also demonstrating commitment to the province's strategy to grow the economy through greater access to capital."

The evaluation shows that the program has exceeded expectations and should be continued. It also shows that the program should work toward increasing the participation of disadvantaged groups originally targeted by the program, including youth and entrepreneurs with disabilities. With the end of its first year, and an official evaluation completed, the program will be developing a more focused approach to these groups.

Loans up to $150,000 are available through the program. The province guarantees up to 75 per cent of the loan and credit unions are responsible for the remaining 25 per cent. The province is also providing $50,000 annually to cover the program's operating costs.

Small business owners are encouraged to approach their local credit union to get more information on the program.