Export financing partnership crosses $10,000,000 milestone

Source: Saskatchewan Agriculture and Food

An exporting tool used extensively by the agricultural sector is celebrating a major milestone.

Export financing service “nextrade finance™” has surpassed the $10 million mark for successful deal financing, and made a huge impact on the provincial economy.

nextrade finance™ provides customized financing solutions for small and medium-sized exporters in Saskatchewan. More than 50 per cent of its clients are in the agricultural commodities or agri-value sectors. That number rises even higher when agricultural manufacturing enterprises are included.

“A lot of our clients are based in rural Saskatchewan, so they don’t have a lot of exposure and trade finance options,” said Glen Millard, nextrade finance™ Executive Director. “They have difficulty working with traditional funders.”

nextrade finance™ gives small companies the ability to grow larger by providing flexible financing to cover the costs of doing business in markets outside Saskatchewan. The entity is an operating division of Saskatchewan Trade and Export Partnership (STEP).

“This is a big milestone for us, for the simple fact that, when we started the program two years ago, we had $1.2 million in the capital pool. The challenge then was proving that there was enough demand in the province to even utilize that first $1.2 million,” said Millard.

“In our first year, we were able to revolve that capital pool three times over. Now, two years into the program, we have revolved it almost 10-fold,” he added.

Millard says that the growing popularity of nextrade™ has exceeded his most optimistic expectations. “This past December was our biggest month. We supported over $800,000 in new export transactions in that month alone. Almost the entire capital pool was dispersed in one month. That was unheard of. To be honest, it’s two full years ahead of what we projected when we created the program.”

STEP President and CEO Dale Botting says the program has had a big impact on the province’s economy.

“The return on that $10 million is pretty obvious. That means 10 million new dollars brought into the province,” he stated.

However, Botting points out that when you start to consider how companies use that $10 million in terms of adding capacity, ramping up production and facilities, adding more employees and producing more products, the multiplier effect can be phenomenal.

“We estimate the actual return on investment is closer to $18.6 million,” he said.

That benefit is more than a statistic. It is being felt in a very real way by the clients who use the nextrade finance™ service.

In a recent client survey, Gary Zaremba, President of Precision Industries, responded, “Without the money from nextrade™, I would not have been able to expand my business as rapidly, due to the fact that the financing provided me with the capital to invest in the additional inventory required to sustain such an expansion.” David Grenier of Crown Valley Organics, another nextrade™ client, noted, “They provide the cash flow we require to satisfy our supply chain.”

Millard says nextrade finance™ is, in some ways, a victim of its own success. He feels the initiative could have an even larger impact if it had access to a larger capital pool. To that end, Botting says the agency is actively pursuing opportunities to increase the size of its capital pool.

“We are focused on expansion of our original $1.2 million capital pool to meet the demand that is clearly out there. We are working very hard with Export Development Canada, financial institutions and other organizations, and we are very confident that nextrade finance™ will further grow to keep pace with the huge demand for Saskatchewan exporters,” said Botting.

That’s good news for the Saskatchewan agricultural sector, which has been getting plenty of good mileage from the service.

For more information, contact:
Glen Millard, Executive Director
nextrade finance™
Phone: (306) 787-7936
Cellular: (306) 529-7252
Website: www.sasktrade.sk.ca