WHAT YOU CAN EXPECT FROM ENL
ENL is not a bank. Our primary aim is economic development. We help people by providing
access to information and funding, whether the funding be from us or from other sources. If
you cannot access conventional funding, or if the funding you are offered is inadequate, we
may act as a funding agency to your project.
When you come to ENL with a business idea we will examine your idea from a number of viewpoints. Is it viable, will it create employment, has it already been done in your area and, if so, what will be its competitive impact on the local market?
For example, if you wish to enter a market which is already adequately served and there is no room for new entries without taking competitors' market share, we will not become financially involved. On the other hand, we may help you redesign your idea to find a new, unserviced market niche. However, if you live in a remote area where basic services are lacking, we may become involved. Check with your local ENL office.
There are businesses in which we generally do not become involved because they are usually adequately served by commercial lenders. For example, hairdressing salons, day-care centres, convenience stores, general contracting companies and other businesses of which there are already many in the province can usually obtain financing from banks.
Remember, one of our criteria for funding is that conventional sources are unable to fund your project. If commercial lenders cannot help you, we can help you explore other avenues including helping you approach other agencies, or work with you to refine your plan so that it may qualify for a conventional loan.
THE NEED FOR A BUSINESS PLAN
Today most lending institutions require you to provide them with a business plan. ENL is no
exception. We cannot write your plan for you, but we can guide you as you write your own.
To obtain an ENL loan you will have to prepare a business plan that describes your business, the market that it serves, and how you intend to make a profit. Your business plan will also contain financial statements or projections. You must bear the cost of your business plan preparation.
Experienced business people may hire a consultant to prepare a plan for them, or have somebody on the staff of their company prepare a plan. If this is your first time in business, we suggest you prepare your own plan. This may appear a daunting prospect, and it will certainly require work on your part, but the results will be useful and rewarding. It will also be cheaper than paying somebody to do the work for you.
A business plan is more than a collection of papers to satisfy a loans officer. It is a step-by-step description of how you intend to turn your idea into a success and can be an enormously valuable road map as your business grows. On the other hand, if you discover while writing your business plan that there are insurmountable problems_the market is too small, costs are too high, or the time to profitability is too long_you may decide to abandon that business idea. In this case your plan will have saved you money.
Depending on your experience and the amount of research you must conduct, writing a business plan can take from a month to a year. ENL's Business Resource Centre can loan you books on writing business plans, we have detailed work sheets to help you, and our staff can provide guidance along the way.
TYPES OF BUSINESSES
As we mentioned above, there are certain types of businesses that ENL is unlikely to fund.
There are also businesses we are more likely to fund. In particular: manufacturing, innovative
technology, information industries, export services, environmental industries, energy efficient
and alternative energy industries, aquaculture, adventure tourism, cultural industries and crafts.
These 10 industries have been identified by government as likely growth industries for
Newfoundland. For a brief description of them consult the publication "New Opportunities For
Growth" published by the Economic Recovery Commission (738-0199). We also have copies
of the document in our Business Resource Centre.
The objective of promoting these particular industries is to diversify Newfoundland and Labrador's economy. These 10 industries have been identified as growth industries world-wide and their development here could help reduce Newfoundland's dependency on traditional, cyclical resource-based industries such as fishing, mining and logging.
By way of example, manufacturing for export adds value to raw resources and earns new money for the province. (As distinct from recycling money already in the province). If you have an idea for manufacturing and exporting, we would like to talk with you.
You don't necessarily have to come up with a new product. You might wish to manufacture an item for sale locally which is at present being manufactured outside the province. This is called import substitution. Again, we would be happy to talk to you.
These are just suggestions. We are willing to discuss any business idea you might have, but we point out that many traditional business sectors are filling up and we have to be mindful of existing businesses before providing funding to potential competitors.
HOW LONG WILL IT TAKE?
If your application for funding is accepted by ENL, you will work with one of our regional
consultants. He or she will take your presentation to an authorizing committee that usually
meets weekly in your region. Decisions on projects over $100,000 are made in St. John's
From the time all the relevant information necessary to complete your presentation is received
from you, it generally takes a minimum of four weeks to receive funding from ENL, although
on occasion this time is shorter.
Other steps are taken in the evaluation of your project and require time. We will investigate your project's impact on local employment, the economic benefits it may bring to a community, and its impact on existing competition. In addition, the process may be slowed if your application requires approvals from other government agencies. .
WHO MAY APPLY: Proprietors, corporations, co-operatives, partnerships and associations involved in small- or medium-sized businesses operating in Newfoundland and Labrador may apply for term loans. This funding may be for business start-up, expansion, modernization, or stabilization.
You should be prepared to demonstrate the viability of the business, its potential for growth, its ability to create employment and its ability to bring net economic benefit to the region. Also be prepared to detail the enterprise's inability to obtain sufficient funds from conventional sources, and show why funding is necessary for its success.
TERMS: The maximum funding available in any one year is $1 million. Larger sums are possible with Cabinet approval. The interest is normally fixed for the life of the loan. The amount of your investment depends on the nature of your project, but you will be expected to have a reasonable equity in the business. We will also require security such as a mortgage against the company's assets, possibly supplemented by personal guarantees. The maximum repayment period is 15 years and is based on the life of the financed assets, the company's ability to repay and the cash flow of the business.
HOW TO APPLY: Visit your local ENL office. A regional consultant will determine your eligibility and guide you through the loan process.
PURPOSE: To assist companies with business potential to develop a stronger capital base and lever other sources of funding.
WHO MAY APPLY: Companies, co-operatives, and limited partnerships registered and operating in Newfoundland and Labrador may apply for direct equity funding for business start-up, expansion, modernization, or stabilization. Be prepared to demonstrate the business's potential for viability and growth, ability to create employment and net economic benefit to the region. Also be prepared to detail the enterprise's inability to obtain funds from conventional sources, its need for funding for business success, and how the equity will allow the company to lever additional funds.
TERMS: Direct equity of up to $1 million per year is available and is generally provided on a matching basis for flexible time periods. (Larger amounts are possible but require Cabinet approval.)
Funding is based on, but not limited to, the needs of your enterprise, its prospects and its capabilities. Funding may take the form, but is not limited to, share purchase, limited partnership units, or shareholder's loans. Management assistance and training may be a prerequisite if you qualify for equity.
HOW TO APPLY: Talk to your local ENL regional consultant and ask to complete an equity application. The regional consultant can assist you in determining your eligibility and in completing the application form. If your application meets the criteria, the Corporation may make an equity investment in the same manner as other shareholders. The equity funding will be provided with rights and conditions as detailed in your business plan and set forth in the shareholder's or partnership agreement.
PURPOSE: To encourage private capital investment in provincial businesses and the transfer of management expertise to those companies. Registered Venture Capital Companies (VCCs) may apply for venture capital loans up to a maximum of $500,000 dollars per investee (business in which the VCC invests). Venture capital may be repaid in whole or in part at any time during the seven-year interest-free period, or afterwards.
WHO MAY APPLY: You or your group may apply for a Venture Capital Loan by forming an eligible company and registering with ENL as a Venture Capital Company (VCC).
HOW TO REGISTER AS A VENTURE CAPITAL COMPANY: Your VCC may apply for registration with ENL when it has a minimum of $25,000 to invest immediately and can demonstrate an ability to raise $100,000 within two years of registration. One shareholder must own at least 20% interest in your VCC and no non-Canadian shareholder may possess more than a 75% interest in the company.
HOW TO APPLY: Once your VCC is registered you may apply to ENL for a venture capital loan on the forms provided by ENL. If approved, the seven-year interest-free loan is disbursed when you finalize the terms of investment with the investee company. The VCC loan is interest free until the seventh anniversary date of the loan.
By the end of the first year your VCC must have a minimum invested capital of $50,000. By the end of the second year your VCC must have a minimum invested capital of $100,000. We require that your VCC shall invest no more than 50% of its capital in one company. Investee companies must pay 75% of their wages and salaries to provincial residents. The investees must show managerial and financial strength and a potential to provide a net economic benefit to the province.
WHO MAY APPLY: If you represent a company in Newfoundland and Labrador which can demonstrate growth potential and has evidence of an external market share, or the potential to create a market share, then you are eligible to apply.
TERMS: If your company is selected for company development services, ENL may provide up to 75% of the cost of a business analysis and implementation of the results as non-repayable contributions on a one- or two-year basis. Total allowable cost for the analysis is $50,000. Total allowable cost for the implementation is $75,000. Each company is expected to contribute cash and/or services to help complete the project.
HOW TO APPLY: Talk to your local ENL regional consultant and ask about our company development service. The regional consultant can assist you in determining your eligibility and in completing the application.
WHO MAY APPLY: The service is available to mills producing more than 75,000 fbm of lumber per year.
TERMS: The maximum loan period is from November 1st to October 1st of the following year. No applications will be accepted after March 1st. The loan is repayable in five payments beginning June 1st and ending October 1st.
HOW TO APPLY: Visit your local ENL office.
WHO MAY APPLY: Newfoundland-based video and film makers. The service is not available to licensed broadcasters and in the case of co-productions with outside producers, the Newfoundland-based producer must have the majority interest.
Productions eligible for assistance include feature films, made-for-television films, mini-series, TV specials, TV documentaries, TV variety shows and TV pilots, children's films and non-theatrical films, provided a market exists for them. Excluded are sponsored films, sporting events, and commercials.
TERMS: ENL may make an equity investment based on your demonstrated need up to a maximum of 20% of the overall cost of the project. There is no set interest rate, however, return on ENL's investment will be based on production revenues and will continue until ENL's investment is recovered. Beyond this ENL will receive a share in production revenues at a rate of half its original pro rata share percentage. Each investment will be judged on its merits and the terms and conditions will be set down in a memorandum of understanding. Your investment in the project will depend on the project. You will also have to demonstrate appropriate experience including management, technical, and financial experience to see the project through. As noted above, all projects must have prior approval and financial support of Telefilm Canada.
HOW TO APPLY: Call your local ENL office.