Government measures in key jurisdictions 2nd edition final pages - Flipbook - Page 20
Canada
Contributor: Cassels
1
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.
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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