(Ottawa) June 19, 2008 - Export Development Canada (EDC) has introduced enhancements to its Export Guarantee Program aimed at further encouraging financial institutions to advance loans to small- and medium-size enterprises (SMEs) in Canada. These program changes will help SMEs access financing from their financial institutions in support of Canadian exports and foreign investments.
"We have been working closely with our partners in the Canadian banking sector to revise the Export Guarantee Program to ensure that it continues to meet the evolving needs of both SMEs and the banks," said Eric Siegel, President and CEO of EDC. "These improvements should increase access to trade-related financing for more companies and should be of help to Canada's manufacturers, particularly those in the automotive sector."
A number of changes have been made to facilitate the ease of use of the program by financial institutions. As highlighted in the Government's 2008 federal budget, a key change to the program is the availability of more coverage to financial institutions from EDC for guarantees valued at $500,000 or less. EDC has increased coverage for these transactions from 75 per cent to up to 90 per cent. For guarantees valued between $500,000 and $10 million, EDC has increased the availability of coverage to up to 75 per cent for all transactions, where previously coverage was limited to 50 per cent for certain types of transactions.
Canadian Direct Investment Abroad (CDIA) is important to Canada's capacity to trade, yet presents greater risks. Recognizing this, EDC will now consider providing up to 100 per cent coverage for CDIA-related qualifying facilities as part of a larger package of bank credit provided to a company to support foreign investments.
The enhanced program also has more flexibility to accommodate a broader range of client needs such as: financing support for single and multiple export contracts; financing of work in progress and the purchase of equipment related to exports; margining of foreign-domiciled inventory; margining of receivables created under the federal Scientific Research and Experimental Development (SR&ED) tax program; and, the margining of foreign accounts receivables.
Since 2003, the Export Guarantee Program has quadrupled in size in terms of companies served. In 2007, approximately 200 SME companies were served and guarantee coverage valued at over $230 million was provided in partnership with Canadian financial institutions. More than 30 financial institutions have taken advantage of the program to help meet the needs of their clients.
EDC is Canada's export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business. EDC's knowledge and partnerships are used by nearly 7,000 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining, is a recognized leader in financial reporting and economic analysis, and has been named one of Canada's Top 100 Employers for seven consecutive years.
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Media contact:
Phil Taylor
Export Development Canada
Tel: (613) 598-2904
Blackberry: ptaylor@edc.ca
