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How does the application process work?
- The Bank completes a one-page Application for MARG Coverage form that should be faxed to EDC at (613) 598-3825.
- The same application is used for the annual renewals of MARG lines and amendments to the MARG amounts of financing required.
- The Bank will obtain, a signed Declaration and Consent from the customer at the time of application attesting that the foreign accounts receivable have at least 40% Canadian content and attesting that the exporter has and will not engage in the corruption of foreign officials. The Bank will also obtain a signed consent from the customer allowing EDC to contact the customer and review all material relating to the operating line of credit (both declarations to be sent to EDC, if requested).
- EDC has two business days to approve a MARG application once it is received. If it is not accepted within that time, it is deemed to be rejected.
How are fees calculated?
- The MARG fee is payable (in the currency of the line) annually at the time of application for renewal within 15 business days of EDC's approval; after 15 business days the approval lapses. Payment of the fee (not the EDC approval) activates the guarantee from EDC.
- Fees for MARG will be calculated as a percentage of the total amount of the operating line of credit requested based on the Bank's risk rating. EDC's risk ratings corresponding to each individual Bank's ratings are: Good, Medium and Poor.
- The fees are: 55 cents per $100 (your risk rating 98, 95,90); $1.10 per $100 (your risk rating 87, 85, 83, 80) and $1.65 per $100 (your risk rating 77 and 75) of financing approved.
- An already approved MARG line that the Bank subsequently rates as below the agreed upon risk ratings will be classified as Unsatisfactory and a fee of $2.50 per $100 (your risk rating 73, 70, 65) will be payable.
- A MARG line cancelled, reduced or transferred to another Bank will have the annual fee reimbursed to the Bank on a pro rata basis up to six months after approval.
What reporting is required?
There is no ongoing reporting to EDC on the status of a MARG operating line. The Bank is expected to regularly obtain and keep an up-to-date listing of the aged foreign receivables of the Exporter with addresses and phone numbers according to its usual practices for monitoring receivables securing operating lines. What about filing claims?
- Trigger: The final demand letter for payment under the MARG line from the Bank to the Exporter must have expired. At the time the Bank makes its final demand to the Exporter, the aging of accounts receivable is frozen (thus any foreign receivables overdue do not become timed-out). To be in the position to claim under MARG, the Bank must also be able to collect under the customer's foreign accounts receivable security. Furthermore, the Bank must submit its claim to EDC within 20 business days of being in the position to collect under such security.
- Request: In addition to the one-page claim application, the Bank must deliver to EDC a copy of i) the letter of demand from the Bank to the customer and ii) the list of the most recent aged foreign accounts receivable including addresses, phone numbers and/or faxcom numbers.
- The Bank must also request on behalf of EDC, documentation on the accounts receivables such as invoices, purchase orders and shipping documentation.
- Claims will be paid within five days of receipt of all documentation, in the currency of the operating line.
What about collections and recoveries?
- EDC will be responsible for all collections on the foreign accounts receivable.
- Any recoveries will be divided first to EDC up to the claim amount paid, and then to the Bank.
- The Bank will be responsible for collecting any recoveries on additional security and recoveries will be divided first to the Bank up to its loss amount, then EDC.
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