The Provincial Government is now accepting applications for its new Harvester Enterprise Loan Program. This initiative is an enhancement of the Fisheries Loan Guarantee Program and will expand support for independent fish harvesters and position the sector for future success.
The Harvester Enterprise Loan Program supports the development of the province’s independent fish harvesting industry through loan guarantees, down payment loans and interest rebates to fish harvesters.
Qualified harvesters applying for a loan with an eligible financial institution that will be guaranteed by the Provincial Government may be eligible to receive a down payment loan through the Department of Industry, Energy and Technology, as well an interest rebate to reduce financing costs associated with the loan from the financial institution.
Harvesters interested in applying for the program should complete an application form available on the Harvester Enterprise Loan Program website and contact their local financial institution to inquire about obtaining a loan to be guaranteed by the provincial government. The financial institution will subsequently coordinate the application with the Department of Industry, Energy and Technology regarding the loan guarantee, and the department will coordinate with the harvester directly regarding the down payment loan and interest rebate.
The program represents an investment of up to $10 million towards the down payment loans and up to $5 million for the interest rebates. Approvals will be based on budget availability and applications will be reviewed on a first-come, first-served basis.
The program offers increased loan guarantees of up to $2 million for license acquisition, $3 million for vessel-only related items, and $4 million for combining of enterprises. Guaranteed loans are negotiated between the harvester and their financial institution.
The Harvester Enterprise Loan Program is the latest initiative the Provincial Government has undertaken to position the province’s fishing industry for future success. Other initiatives include:
- Permitting outside buyers to apply for fish buyer licences for seafood products harvested in this province.
- Increasing processing capacity for the crab fishery based on an increased Total Allowable Catch for 2024.
- Agreeing 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
“The fishery is a vital contributor to our economy and communities, and we deeply respect and value fish harvesters and their significant role in our province. We have been working closely with the FFAW to support the industry’s competitiveness and long-term-sustainability. The Harvester Enterprise Loan Program will help bring new energy to rural and coastal communities, stimulate local business and employment opportunities, and position our fishing sector for future success.”
Honourable Dr. Andrew Furey
Premier of Newfoundland and Labrador
“We have listened to harvesters and their union and recognize access to financing is a serious impediment to many harvesters’ ability to operate effectively. I am confident this new program is the beginning of a collaborative approach to finding new ways to support harvesters while encouraging young and new harvesters to play a role in Newfoundland and Labrador’s fishing industry.”
Honourable Elvis Loveless
Minister of Fisheries, Forestry and Agriculture
“FFAW-Unifor is very pleased that Premier Furey and Minister Loveless have taken this significant step towards improving the financial stability for owner-operator harvesters here in Newfoundland and Labrador. Providing those in controlling agreements with financial independence is essential for the long-term sustainability of the owner-operator fishery, as is assisting new entrants who currently face multiple barriers accessing the industry. We look forward to seeing the results of this program on the fishing industry going forward.”
Greg Pretty
President, Fish, Food, and Allied Workers Union (FFAW-Unifor)
“It is great to see the Provincial Government move forward with an important first step in providing the financial support that is needed for owner-operators in Newfoundland and Labrador. As an enterprise owner, I know first-hand of the unique financial barriers that place a great deal of pressure on small businesses in the fishery. Although the program is not a full financial solution, particularly for new entrants to the industry, I hope that it will help to identify other areas of need that our provincial government can build on to continue to maximize opportunities and value for harvesters and their communities.”
Ivan Lear
Young Harvester Representative, FFAW-Unifor Inshore Council
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Harvesters Enterprise Loan Program
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BACKGROUNDER
Harvester Enterprise Loan Program
The Harvester Enterprise Loan Program will replace 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 4.75 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 6.95 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.