Government measures in key jurisdictions 5th edition - Flipbook - Page 26
Canada
Contributor: Cassels
Loans and
financial
support
Has the
government put
in place any new
bank funding
schemes?
Frank Arnone | farnone@cassels.com | +1 416 860 6895
Shane Hardy | shardy@cassels.com | +1 416 869 5384
Michael Britton | mbritton@cassels.com | +1 416 869 5358
In Canada, the federal government introduced the Covid-19 Economic Response Plan
(CERP), which includes a comprehensive set of economic measures to help combat the
economic effects of the Covid-19 pandemic.
The Business Development Bank of Canada and Export Development Canada is
committed to provide more than $65 billion of support to ensure businesses have credit
through the Business Credit Availability Program (BCAP), largely targeting small and
medium-sized businesses. These entities are also working with private sector lenders to
coordinate solutions for individual businesses. The objective of the BCAP is to improve
access to financing for credit-worthy Canadian businesses with viable business models
whose access to financing would otherwise be restricted.
To access the BCAP, businesses should first contact their financial institutions, which will
contact Business Development Bank of Canada and/or Export Development Canada,
where appropriate. The BCAP includes:
•
Canada Emergency Business Account: Under this program, financial institutions are able
to provide loans of up to $64,000 (previously $40,000) to small businesses and nonprofits, which will be guaranteed by the federal government and interest free for the first
year. Applicants who received the $40,000 loan may apply for the expansion which
provides eligible businesses with up to an additional $20,000 in financing. To qualify for
these loans, small businesses and non-profits need to have paid between $20,000 and
$1.5 million in total payroll in 2019 and need to have been operating as of March 1, 2020.
Businesses will be forgiven for up to 25% of the loan, up to $10,000, if the balance of the
loan is repaid on or before December 31, 2022. If the loan is not repaid by December 21,
2022, the remaining balance will be converted to a three-year term loan at 5% interest. The
funds from this loan can only be used to pay non-deferrable operating expenses, including
payroll, rent, utilities, insurance, property tax and regularly scheduled debt service. This
program is now available at various financial institutions and credit unions.
•
Loan Guarantee to Small and Medium-Sized Enterprises (SMEs): Export Development
Canada is working with financial institutions to help them issue new operating credit and
cash flow term loans up to $6.25 million to existing SME clients, with 80% guaranteed by
Export Development Canada. Export Development Canada is also supporting certain
businesses by offering banks a guarantee on loans up to US$10 million, per business, to
ensure these businesses can access cash immediately.
•
Co-Lending Program for SMEs: The Business Development Bank of Canada is working
with financial institutions to co-lend term loans to SMEs to help meet their operational cash
flow requirements. The loans available under this program are as follows: (i) loans of up to
$312,500 for businesses with under $1 million in revenue; (ii) loans of up to $3.125 million
for businesses with revenues between $1 million and $50 million; and (iii) loans of up to
$6.25 million for businesses with revenues exceeding $50 million. The loans under this
program are interest-only for the first 12 months, with a 10-year repayment period.
Further discussion on the government funds available for businesses can be found here.
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Government measures in key jurisdictions
