Three large tourism operators in Nova Scotia are receiving loan guarantees via standby letters of credit (L/Cs) totalling 35 million Canadian dollars (C$35 million - US$28 million) from the government of the Canadian province.

The loan guarantees follow an announcement six months ago when the government said it would offer as much as C$50 million to up to 11 companies whose revenues have suffered due to the coronavirus pandemic.

Standby L/Cs

The provincial government is providing standby L/Cs that can be used to secure loans for the three companies.

The standby L/Cs guarantee the borrowing amount up to 95 per cent and the interest rate cannot exceed the prime lending rate plus 1.5 per cent.

Lobbying concerns

The Cabot Links golf resort in Inverness can access up to C$14.25 million via the programme, which has proved controversial because it appeared to be introduced by the government after intense industry lobbying.

Ambassatours Gray Line, including one of its Murphy branded restaurants, can access up to C$11 million and Coach Atlantic up to C$9.5 million.

Programme eligibility

Eligible firms in the Tourism Sector Financing Assistance Programme include resorts, tour operators and sightseeing transportation services with at least 100 full-time or seasonal employees.

The companies must have annual revenue of at least C$10 million and demonstrate revenue decline of at least 50 per cent between the beginning of April and the end of July 2020 compared with the same four-month period in the previous year.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.