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CBDC NORTIP: Equity Financing



Personal Statement of Financial Affairs

Business Plan Guidelines

CBDC NORTIP offers financial assistance in the form of fully repayable small business loans to commercial entities wanting to start or expand a small business. CBDC NORTIP's equity loans have a maximum limit of up to $100,000 or 10% of the cost of the project, which ever is less. The share will be redeemed over a maximum repayment term of 15 years. Funding from the CORPORATION can be used to expand a business into a new area of production that will create and maintain permanent employment. CBDC NORTIP's loans can also be used to purchase, refinance, expand or modernize an existing business. Existing businesses that are in a position to expand, but are constrained by their inability to lever the necessary funds or where a period of two or more years is required to develop the necessary market or supply base, the Corporation will consider offering Equity Financing. Applications for equity investments will be evaluated in a similar manner as term loans.

Equity applications must meet the following additional criteria:

  • Emphasis will be placed on growth sectors such as, but not limited to, agrifoods, aqua-culture, information communications and learning technology, small scale manufacturing (secondary processing) and neutraceuticals.
  • The applicant must be incorporated.
  • The applicant must have share capital issued and outstanding.
  • The applicant must be willing to accept an equity partner in return for an equity position in the company.
  • Assistance will be limited to 10% of the project up to $100,000 and the equity has to be matched by the applicant.
  • There must be an equal increase in the amount of share capital of the enterprise and owners must subordinate their interests to that of our equity participation.
  • Investment will occur in the form of cumulative preferred shares and common shares. The percentage of share ownership that the Corporation may hold in an incorporated company in determined through negotiations with the company's direcotrs and will be a minority shareholder position, generally, not to exceed 39%.
  • The assistance will be subject to a unanimous shareholders agreement, which will include an indemnification clause to limit the Corporation's liability.
  • The Corporation must have the expertise to assist the client to further develop. The client must demonstrate that it has the appropriate financial structure, professional and technical staff, management, production and marketing ability to carry-out the proposed project.
  • The Corporation will not become active in the management of the company, however, it will monitor the business's progress through regular visits and meetings with the principals/company owners.
  • The business must be willing to follow NORTIP's direction to ensure proper planning, management and administration of the business.
  • The client must provide the shareholders with monthly financial statements and any other financial information that may be requested.
  • Assistance in the form of equity participation must be the subject of a formal shareholder agreement. Such agreements will provide for the repurchase of NORTIP's equity position. This would enable the Corporation to realize a return at least equal to the rate of interest that would be earned on the funds invested by the Corporation in term loans and the sale of shares by the Corporation to a third party. The shareholders agreement will also identify, but not be limited to, the redemption schedule, price per share, debt conversion terms, dividend rate and payment of dividends.