Coronavirus - Government measures in key jurisdictions - Flipbook - Page 18
Canada
Contributor: Cassels
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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 has 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 will
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.
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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
will be able to provide loans of up to $40,000 to small businesses and non-profits,
which will be guaranteed by the federal government and interest free for the first
year. 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
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