TORONTO - Canadian processors are expected to spend as much as $1.6 billion for capital equipment this year, and one lender from the United States aggressively is trying to win a share of the financing business. First National Bank of New England, which specializes in lending to small, privately owned manufacturing companies, is wooing Canadian customers by arranging unsecured term loans through the Export-Import Bank of the United States, an agency established to lend money to foreign buyers of U.S.-manufactured goods.
The program traditionally has been used to finance big-ticket items, such as commercial jumbo jets. But through efforts of First National Bank of New England and others, the agency has become more receptive to loans ranging from $150,000 to $10 million.
Paul Pirrotta, senior vice president for international financing at First National, told a seminar at Plast-Ex '95, held May 1-4 in Toronto, that all U.S.-made plastics equipment is eligible for the loans. His bank, which is working through equipment manufacturers to reach Canadian buyers, handles all transactions with the U.S. government and lending institutions.
To qualify, Canadian buyers need a 15 percent cash down payment, three years' worth of financial statements showing creditworthiness, no losses during the past three years and cash flow adequate to repay the loan. Loan rates are tied to the six-month London Interbank Offered Rate.
``The federal government has this money available, and we want to lend it,'' Pirrotta said.
First National is based in Hartford, Conn.
Plastics is part of the ``knowledge-based economy'' the major bank wants to invest in.
``The keys to success we are looking for are good management, ability to attract equity financing, good marketing and credible plans for growth and exporting,'' Anne L.B. Sutherland, vice president of small and medium enterprise lending for Royal Bank of Canada, said at the show. ``Financials are at the bottom of the list.''
She said Royal Bank has lenders assigned to the plastics industry and wants to increase its business in that segment. Innovative financing plans also are being offered, she said.
The Bank of Nova Scotia, which also exhibited at the show, is touting leasing programs to processors.
``We are banging on doors trying to generate business,'' said Steve Czegel, marketing manager. ``Plastics processors are spending at high levels because of increased research and development and added manufacturing capacity. As the technology of the industry advances, it will keep this spending level high,'' he said.