Government measures in key jurisdictions 3rd edition final - Flipbook - Page 26
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Loans and
financial
support
Has the
government put in
place any new
bank funding
schemes?
In Canada, the federal government has introduced the Covid-19 Economic Response Plan (
),
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 (
), 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:
: 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.
: 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.
: 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