Equicapita Update – ATB Financial to return personal guarantees for small businesses

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According to a recent article in the Edmonton Journal: "Most Canadian lending institutions require small business owners to put up a 100-per-cent guarantee of the outstanding balance of their loans, …

According to a recent article in the Edmonton Journal: "Most Canadian lending institutions require small business owners to put up a 100-per-cent guarantee of the outstanding balance of their loans, often in the form of promissory notes, but also involving personal residences and assets. The guarantees allow the lender to claim those personal assets if a customer is unable to repay the loan."

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  • 1. Equicapita Update –ATB Financial to return personal guarantees for small businesses FOR IMMEDIATE RELEASE, ATTENTION INVESTMENT EDITORS – April 16th, 2014 - Calgary According to a recent article in the Edmonton Journal: Most Canadian lending institutions require small business owners to put up a 100-per-cent guarantee of the outstanding balance of their loans, often in the form of promissory notes, but also involving personal residences and assets. The guarantees allow the lender to claim those personal assets if a customer is unable to repay the loan. ATB Financial is about to shake up that fusty old idea.“I can’t guarantee it, but I’ve been in the banking industry for 20 years and I have never seen another institution do this,” said Wellington Holbrook, ATB Financial’s vice-president of business and agriculture. “Over the course of the next few months we’re going to give back literally thousands of guarantees. If it started a trend, I’d be ecstatic.” ATB said it will review the portfolios of customers with loans over $250,000 and either return or reduce their guarantees. ATB also said that most new business clients won’t be asked to provide a 100-per-cent guarantee. Greg Tooth, a partner at private equity buy-out firm Equicapita reports, "We are big believers in the small business sector (“SME”) as a wealth creator in Canada. We created Equicapita to be RRSP eligible to allow qualified investors access to SME investments that are difficult to reach through traditional channels. Because of the compelling mismatch between the amount of business owners seeking exits in relation to the amount of dedicated SME private equity capital we believe this space could provide superior returns over the next decade while the imbalance is rectified and the demographic pressures begin to ease. It pleases us to see a banking institution such as ATB be sufficiently forward looking to recognize the cash and wealth generating capabilities of businesses in this size range by reducing the need for personal recourse to the founders. We are all in favor of anything that increases the funding options of SME business owners.” Equicapita is a Calgary-based buy-out fund focusing on acquiring Canadian private businesses that can generate strong, sustainable cash flow from their operations in defensible markets.
  • 2. This news release may contain certain information that is forward looking and, by its nature, such forward-looking information is subject to important risks and uncertainties. The words "anticipate," "expect," "may," "should" "estimate," "project," "outlook," "forecast" or other similar words are used to identify such forward looking information. Those forward-looking statements herein made by Equicapita, if any, reflect Equicapita's beliefs and assumptions based on information available at the time the statements were made. Actual results or events may differ from those anticipated or predicted in these forward-looking statements, and the differences may be material. Factors which could cause actual results or events to differ materially from current expectations include, among other things: risks associated with the ownership and operation of businesses, including fluctuations in interest rates; general economic conditions; supply and demand for businesses; competition for available businesses; changes in legislation and the regulatory environment; and international trade and global political conditions. Readers are cautioned not to place undue reliance on any forward-looking information contained in this news release (if any), which is given as of the date it is expressed herein. Equicapita undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.