Types of Credit

Nunavut Business Credit Corporation, under its enabling legislation, can provide four types of credit facilities. The majority of Nunavut Business Credit Corporation’s clients access business loans.

Nunavut Business Credit Corporation provides the following types of business loans:

Term loan
Line of credit 
Interim construction financing 
Irrevocable standby letter of credit

A term loan has a fixed interest rate, with monthly principal and interest payments, generally amortized over the economic life of the asset being financed.

The maximum term provided by Nunavut Business Credit Corporation is 5 years, with the maximum amortization period being 25 years.

 A line of credit provides working capital for a business to “smooth” cashflow requirements during an annual business cycle. A line of credit is expected to “revolve”. This type of credit facility is used for real estate development projects and is done either on a project completion basis or a percentage of completion basis. An irrevocable standby letter of credit is a documentary credit facility that represents an obligation on the part of Nunavut Business Credit Corporation to a beneficiary to make payment on account of any default on the part of a client in the performance of an obligation and cannot be revoked by Nunavut Business Credit Corporation.

* A beneficiary is the person to whom payment is made to if a client does not fulfill its obligation to perform.

There are two types:

  1.  for specific contracts, which are typically used for construction contracts and are similar to a bid bond; and
  2.  for suppliers and/or trade credit.

In addition, Nunavut Business Credit Corporation can provide the following types of credit facilities:

  1. Guarantee loans made by financial institutions.
  2. Provide bonds.
  3. Indemnify bonds provided by bonding companies.