Businesses in all industries and of all sizes have been impacted by the COVID-19 pandemic, resulting in unexpected liquidity challenges. In addition to private funding sources, the Government of Canada has introduced a number of funding programs for businesses. The programs are generally targeted to small- and medium-sized businesses – what qualifies as a "small or medium-sized business" is subject to determination by the lender. The following is a high-level summary of the programs being provided by the Government of Canada to businesses and industry sectors.
Business Credit Availability Program
Loan guarantees for small- and medium-sized enterprises
Program lead: Export Development Canada (EDC)
Description: New operating credit and cash flow term loans to be used for payroll and operational costs.
Amount: Up to $6.25 million (80% guaranteed by EDC)
Eligibility:
- Must be an existing client of EDC
- Small- and medium-sized enterprises
- Must have been otherwise financially viable and revenue generating prior to the pandemic
Restrictions:
- The money cannot be used for dividend payouts, shareholder loans, bonuses, stock buyback, option issuance, increases to executive compensation or repayment/refinancing of other debt
- The loan must be repaid within one year
Co-lending program for small- and medium-sized enterprises
Program lead: Business Development Bank of Canada (BDC)
Description: Co-lend term loans to SMEs for their operational cash flow requirements
Amount: Up to $6.25 million (80% of financed amount provided by BDC)
- Up to $312,500 to businesses with revenues of less than $1 million
- Up to $3.125 million for businesses with revenues between $1 million and $50 million
- Up to $6.25 million for businesses with revenues in excess of $50 million
Eligibility:
- Small- and medium-sized enterprises
- Must have been otherwise financially viable and revenue generating prior to the pandemic
Restrictions:
- Loans would be interest-only for the first 12 months, with a 10-year repayment period
- Expires September 30, 2020
Working capital loans
Program lead: BDC
Description: BDC is providing loans for working capital
Amount: Up to $2 million with flexible terms and payment postponements for up to six months
Eligibility: Flexible repayment terms are restricted to existing BDC clients with total BDC loan commitment of $1 million or less
Oil and gas sector financing
Program lead: BDC
Description: Funds to be used for operational cashflow and business continuity purposes. The funds will be offered at commercial rates and repayable within four years
Amount: Up to $60 million
Eligibility:
- Canadian-based oil and gas producers, oilfield service companies and midstream providers
- Must have been otherwise financially viable and revenue generating prior to the pandemic
Canada Emergency Business Account
Entity: Government of Canada
Description: Credit for small businesses to pay for immediate operating costs such as payroll, rent, utilities, insurance, property tax or debt service. 100% funded by the Government of Canada
Amount: Up to a $40,000 interest-free credit facility at 0% interest until December 31, 2022
Eligibility: Canadian employers with $20,000 to $1.5 million in total payroll in 2019 and operating as of March 1, 2020. This includes smaller (e.g., micro) businesses and other eligible employers such as not-for-profits
Restrictions:
- If the loan is repaid by December 31, 2022, 25% (up to $10,000) will be forgiven
- If the loan is not repaid by December 31, 2022, the remaining balance will be converted to a three-year term loan at 5% interest
Assisting innovative and early-stage companies
Program lead: Industrial Research Assistance Program
Description: Investing $250 million to assist innovative, early-stage companies
Eligibility: Unable to access other COVID-19 business supports through the Industrial Research Assistance Program
Government-funded support for sectors
Air transportation
Program lead: Government of Canada
Description: Waiving ground lease rents until December 2020 for airport authorities that pay rent to the federal government
Eligibility: 21 airport authorities and PortsToronto
Energy
Program lead: Government of Canada
Description: Up to $1.72 billion (and up to $750 million to create a new Emissions Reduction Fund)
Eligibility: Governments of Alberta, Saskatchewan and British Columbia, and to the Alberta Orphan Well Association.
Agriculture, agri-food, aquaculture and fisheries
Program lead: Government of Canada
Description: Lending to producers, agribusinesses and food processors, which will offer increased flexibility to farmers who face cashflow issues and to processors
Amount: Up to $5 billion
Eligibility: Must be impacted by lost sales
Originally published May 11, 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.