Jobs Linked to Stepped-up Lending Program

Nova Scotia is expanding a successful small-business lending program expected to create nearly 2,000 jobs and maintain thousands more across the province over the next 10 years.

Economic Development Minister Ernest Fage announced today, July 21, that Nova Scotia will transform the 2003 credit union small business loan guarantee pilot program into a $25-million, 10-year lending program in conjunction with the credit unions of Nova Scotia and the Nova Scotia Co-operative Council.

"Thanks to strong commercial demand and diligent management by the co-operative sector, we expect the expanded program to be able to finance more than $90 million in small-business loans in the next decade," said Mr. Fage. "In only two short years it has created or maintained nearly 900 jobs through loans to 132 businesses. The updated program is expected to be able to double or even triple that job total at more than 1,000 businesses, many of which face a long-standing need for more access to capital in order to grow."

Businesses participating in the program to date cross many sectors, from agriculture and forestry to manufacturing and technology, and are spread out from Cape Breton Island to the Annapolis Valley.

The program is administered by the Nova Scotia Co-operative Council, with loans approved by regional lending committees to ensure decision-making stays local. The province's credit unions will continue to issue the loans and monitor compliance.

"With the increased lending capacity this program has helped us develop, the co-operative sector is continuing its history and commitment to building Nova Scotia communities," said co-operative council president Marinus Van de Sande.

"Increased lending capacity is good for the credit unions and good for local companies looking for money to grow their operations at home," said Dave MacLean, chair of the board for Credit Union Central of Nova Scotia. "The expanded scope of the program is more good news that will help small businesses overcome one of their toughest obstacles -- access to capital."

"For our business, the loan program has meant access to financing to build a new facility to accommodate our growth and expansion," said Ted Taggart, co-owner of Taggart Quality Hardwood Inc. in Debert, one of the 132 companies to receive a loan guarantee to date. "With the withdrawal of other finance institutions from rural Nova Scotia, credit unions and their services are becoming critically important for companies that want to take advantage of local opportunities."

Loans up to $150,000 are available to small businesses under the program. The province guarantees up to 75 per cent of the loan, with the credit unions responsible for the remaining 25 per cent.

The province guaranteed a total of $6 million over the three-year life of the pilot program, with the credit unions assuming the risk on an additional $2 million.

The existing agreement terminates once the $6 million in loan guarantees has been issued, and with one year left in the program, demand has already exceeded expectations. Credit unions have issued the $6-million provincial limit, which has leveraged a total of $9.4 million in loans for small business under the program.

Under the expanded program, as loans are repaid the credit unions will be able to issue new loans up to the maximum approved guarantee, similar to a line of credit. At any given time $33 million will be available for lending with the credit union assuming the risk on an additional $8 million, or its 25 per cent share.