Written By Kelly R. Ford, James Beeby, Jesslyn Maurier, Stephen Burns, Venetia Whiting, Robyn Enslen, Jai Lakhani, Ryan Moore
The COVID-19 pandemic has had an unprecedented impact on the Canadian economy since the first Canadian case was announced on January 15, 2020. In an effort to support Canadian businesses and to provide financial resources needed to develop solutions related to COVID-19, the federal government and certain provincial and territorial governments have announced a number of funding initiatives. Many of these initiatives have only been announced recently and in most cases details, including eligibility criteria and application processes, are pending. These nascent programs are likely to evolve over the coming days and weeks as the full extent of the ongoing pandemic unfolds. We will provide updates regarding the status of COVID-19 related business funding in Canada as further details and programs are announced. For ease of reference, a summary table showing information related to each of the programs noted here has been included at the end of this article.
Please note that this blog does not address tax deferrals or employment subsidies. For more information on those programs, please see the Bennett Jones COVID-19 Resource Centre.
Business Credit Availability Program (BCAP)
The BCAP was announced on March 13th to help businesses obtain financing, with access to funding through Export Development Canada (EDC) and Business Development Bank of Canada (BDC). The BCAP will provide up to $65 billion in direct lending to credit-worthy enterprises through three programs: (1) the Canada Emergency Business Account; (2) the New Loan Guarantee for Small and Medium Enterprises; and (3) the New Co-Lending Program for Small and Medium Enterprises.
1. Canada Emergency Business Account
The Canada Emergency Business Account will provide interest-free revolving lines of credit of up to $40,000 to small businesses and not-for-profits. This program is designed to aid in covering operating costs for businesses with revenues that have been temporarily reduced as a result of the impact of COVID-19 and will be implemented through participating financial institutions.
On December 31, 2020, the line of credit converts into a five-year term loan. The term loan is interest-free with no minimum monthly principal payments until December 31, 2022. On January 1, 2023, the interest rate on the balance of the term loan changes to 5% per annum. If 75% of the balance of the term loan on January 1, 2021, is paid off by December 31, 2022, the remainder of the term loan will be forgiven up to $10,000.
Businesses and not-for-profits in Canada are eligible to apply for a loan if they had an annual payroll expense of between $50,000 and $1 million in 2019. Applicants must have an active business account opened before March 1, 2020, with a participating financial institution. Applications open the week of April 6, 2020.
2. New Loan Guarantee for Small and Medium Enterprises
EDC will provide funding to various Canadian financial institutions to allow them to offer operating credit and cash flow term loans of up to $6.25 million to small- and medium-sized enterprises. EDC will guarantee 80% of the loan amount. This program has not yet been fully determined, but is expected to be available through a number of approved financial institutions. Details regarding eligibility and terms are anticipated to be made available in the coming days and weeks.
3. New Co-Lending Program for Small and Medium Enterprises
BDC will also provide loans of up to $6.25 million directly to businesses as co-lender in conjunction with loans by eligible financial institutions. BDC will advance 80% of the amount of the loans and the co-lender the other 20%. This program is designed to provide funding to businesses for operational cash flow requirements. The financial institutions will conduct the underwriting and manage the relationship with eligible businesses.
Loans established through this program have a 10-year repayment period, and will be available at the prevailing commercial interest rate.
Tourism operators and small- or medium-sized businesses that have been affected by COVID-19 and that have previously received Regional Development Agencies funding may be eligible for further funding. This program is regionally-tailored and is managed on a case-by-case basis, which requires direct contact by the business with the relevant local Regional Development Agencies office.
Boosted Support from Farm Credit Canada
As a response to the COVID-19 pandemic, Farm Credit Canada has introduced the option for current clients to defer interest payments on existing loans for six months, and to defer principal payments for up to 12 months. In addition, Farm Credit Canada is introducing two-year lines of credit of up to $500,000 at an interest rate of Prime +1%. This debt facility must be secured, is subject to normal lending due diligence and will be made available by Farm Credit Canada on a case-by-case basis.
For more details on agribusiness-specific programs, please see Top 5 Considerations for Agribusiness, Food and Beverage Companies Navigating the COVID-19 Pandemic in Canada.
Canada's Innovation Superclusters Initiative pairs public money with private, industry-led investments. The supercluster initiative was established in 2017 to invest up to $950 million in companies with potential to become engines of growth in the Canadian economy. Superclusters foster connections between government and private industry, with the goal of incentivizing job creation and fostering growth through a domestic equivalent to Silicon Valley. Additional funding in response to the ongoing pandemic has been made available to individual existing superclusters to address Canada's needs. Two superclusters currently have funding available specifically to address COVID-19 issues: the Digital Technology Supercluster and the Next Generation Manufacturing Canada Supercluster, as further discussed below. Existing members in these superclusters may apply to access the funds. The federal government has indicated that the remaining three superclusters will dedicate funding in the near future to address COVID-19 matters.
1. Digital Technology Supercluster
As a part of its COVID-19 Program, the Digital Technology Supercluster will invest up to $60 million in businesses that address any one of six areas of need: health system, community health, safe living, diagnostics and therapeutics, emergency response and other technology solutions that can address the effects of COVID-19. The goals of this Supercluster include addressing Canada's overall health and safety concerns as well as generally building expertise and capacity to address other issues in the future. Funding through the program is available to current members and associates of the Supercluster. Registration to become an associate is available at https://www.digitalsupercluster.ca/joinus/.
2. Next Generation Manufacturing Canada Supercluster
The Next Generation Manufacturing Canada Supercluster will invest up to $50 million to support COVID-19-related technology, equipment and medical supply manufacturing businesses. This funding is geared towards the rapid launch of medical and research products that are currently in short supply. Short-term funding (i.e., funding for projects that will have an impact before June 30, 2020) will be funded at up to 100%, while longer term funding may be considered for funding at a 50% level, in each case, with an anticipated maximum grant of $5 million. Members of the supercluster may submit an application for project funding or apply to be considered as a partner or co-investor in supercluster projects. Registration for the Next Generation Manufacturing Canada Supercluster is currently open at https://www.ngen.ca/join.
This program is aimed at small- and medium-sized businesses with fewer than 500 full time employees. Unlike most other programs discussed here, the Industrial Research Assistance Program does not provide general funding; rather, it will post "challenges" (essentially, requests for proposals) and awards funding to firms to develop solutions to those challenges. Funding varies on a per-challenge basis. The program is aimed specifically at providing funding in support of technology development projects that deal with COVID-19-related challenges. Three challenges have been posted to date, relating to diagnostic kits, sensor systems for patient monitoring and alternative filtration materials for manufacture of N95 respirators.
The COVID-19 Development Stimulus Fund will provide funding in individual grants of up to $25,000 to Indigenous tourism businesses affected by the pandemic. To be eligible, at least 51% of the ownership of the business must be through Indigenous entrepreneurs, communities, or economic development corporations. Funding must go to helping the businesses recover from COVID-19, with a specific focus on maintaining jobs, diversifying revenue streams and strengthening business offerings. The deadline to apply is April 30, 2020.
Provincial and Territorial Funding
Provincial and territorial governments have begun to provide funding to businesses affected by the COVID-19 pandemic. These programs are separate and apart from federal funding and generally support small- and medium-sized enterprises, but certain provinces do offer funding for larger businesses.
None of Alberta, Saskatchewan, Manitoba, Newfoundland and Labrador or Yukon have as of the date of this blog announced business-specific funding programs related to COVID-19. We will provide updates regarding the status of any funding programs in these jurisdictions should any such funding programs be announced.
Emergency Relief Funds Program
Indigenous Tourism BC has made a $5,000 grant available to market-ready tourism businesses with at least 51% Indigenous ownership. Funding can go towards supplementing wages or salary for employees or owners who do not otherwise qualify for governmental relief; adjusting or creating a new business model or revenue stream in response to COVID-19; supporting business expenses; or training staff. Funding is assessed on an individual basis. Applications close on April 16, 2020.
Ontario Together Fund
The $50 million Ontario Together Fund is directing funds to companies to retool, build capacity, or adopt technological changes necessary to produce equipment or supplies for health care providers and other critical public services. The program makes individualized funding available to businesses based on the strengths of the business and the needs of the government, with a focus on quickly and efficiently providing a benefit to the public. Proposals must be made directly to the Ontario Together Fund. Current areas of focus include those concerning medical supplies and remote learning for students. The Ontario government is expected to update areas of focus as the circumstances demand; new areas of need may be identified and posted on the Ontario Together online portal.
Exceptional Support Measures for Small Businesses
The Société d’aide au développement des collectivités (SADC) de Papineau-Collines introduced funding for small- and medium-sized businesses based in the Outaouais, Papineau RMC, and Basse-Lièvre regions of Québec that have experienced financial losses as a result of the pandemic. It provides two options: (i) a support loan of up to $25,000 repayable over a four-year period; or (ii) a flexible loan of up to $300,000 that is tailored to specific business needs.
Concerted Temporary Action Program for Businesses
The Concerted Temporary Action Program for Businesses is available to eligible businesses operating in Québec, including cooperatives and social economy enterprises with commercial activities, but excluding businesses operating in certain industries, including weapons manufacturing and distribution, tobacco and non-pharmaceutical drug production and sale, games of chance and gambling, combat sports and racing, and drinking establishments, among others. To be eligible, businesses must show that financial issues arose as a result of COVID-19 and that their cash flow issues are temporary. The cash flow issues must either stem from the difficulty of obtaining raw materials and goods or from a substantially reduced ability to deliver services. Applications will be reviewed on a case-by-case basis, with a minimum loan guarantee of $50,000 preferred. Investissement Québec may also make loans over $50,000 to eligible businesses.
Emergency Aid for Small and Medium-Sized Business
This Québec government program provides limited-time support to businesses experiencing pandemic-related challenges. Eligible businesses are those which (i) have been in business for at least one year; (ii) are closed or are likely to close; (iii) require cash to maintain, consolidate, or revive activities; and (iv) are experiencing financial hardship as a direct consequence of COVID-19. These companies may receive a loan or loan guarantee of up to $50,000.
Small Business Impact Grant
On April 1, 2020, the province of Nova Scotia announced the Small Business Impact Grant, a $20 million program for small businesses with operations substantially impacted by COVID-19. Aimed at small businesses and social enterprises, the province will make a one-time grant of up to 15% of the recipient's monthly gross revenues, up to a maximum of $5,000. There are no limits on the use of the grant—businesses may deploy the capital where they see fit. As this initiative was only recently announced, further details on eligibility and how to apply are expected in due course.
Small Business Emergency Working Capital Program
The New Brunswick government is funding loans to small businesses with up to 49 employees through the Small Business Emergency Working Capital Program. The program provides funding of up to $100,000, administered through the Community Business Development Corporation. Eligible businesses must have had sales of less than $10 million in their most recent fiscal year.
COVID-19 Working Capital Loans
For companies in need of greater funds, Opportunities New Brunswick will provide working capital loans of between $100,000 and $1 million with a 4% interest rate. Businesses may apply directly through Opportunities New Brunswick. To be eligible, the business must: (i) have been in business for at least 24 months; (ii) have statements in support of their pre-COVID-19 financial viability; (iii) be privately held; and (iv) have at least one employee. There is a maximum five-year term to repay a loan through this program.
Businesses are not limited to either the Small Business Emergency Working Capital Program or the COVID-19 Working Capital Loans program; there are eligibility overlaps that may allow businesses to take advantage of both.
Prince Edward Island
Emergency Working Capital Financing
PEI has implemented its Emergency Working Capital Financing program and is offering loans of up to $100,000 at a fixed interest rate of 4% to assist businesses in maintaining normal business operations during the pandemic. Repayment of the loan is deferred for 12 months, with the term extending for a further five years after the expiration of the deferral for a total term of six years. To be eligible, applicants must: (i) be an existing small business registered, located, operating and generating revenue on PEI, and (ii) have a satisfactory credit rating without any defaulted debt obligations.
Business Development and Investment Corporation – Working Capital Loans
NWT businesses that experience financial need stemming from the COVID-19 pandemic may apply for a low-interest loan through the existing Working Capital Loan program. Eligible applicants must demonstrate financial need for a 30 day period due to cash flow issues resulting from the pandemic and must have no more than 50 employees, with preference given to those businesses with fewer than 20 employees. The maximum loan amount is $25,000, but exceptions will be made in cases of exceptional need. The Working Capital Loan must be repaid within five years, has a three-month deferral period and has an interest rate of 1.75%.
Small Business Support Program
Nunavut will provide grants of up to $5,000 to small businesses through its Small Business Support Program. Eligible businesses include: (i) those that gross less than $500,000 a year or that employ fewer than 10 people; (ii) individual artists or craftspeople who make all or part of their income through the sale of products they produce; (iii) renewable resource harvesters who derive all or part of their income from the sale of harvested renewable resources; and (iv) individuals or businesses in a joint-venture or partnership with a corporation. Eligible businesses must have at least 51% ownership by Nunavut residents and undertake the majority of their day-to-day operations within the territory.
We will continue to provide updates as further programs are made available and additional details are released. If your business or organization has questions in respect of COVID-19 funding-related matters, please contact the authors of this blog. In addition, please visit our COVID-19 Resource Centre for other COVID-19 related resources.
|Size of Business (if applicable)
|Canada Emergency Business Account
|Export Development Canada New Loan Guarantee for Small and Medium Enterprises
|Part of exports industry
|Business Development Bank of Canada New Co-Lending Program for Small and Medium Enterprises
|Regional Development Agencies Funding
|Part of tourism industry
|Boosted Support from Farm Credit Canada
|Line of Credit
|Part of agri-business industry
|Digital Technology Supercluster COVID-19 Program
|Member of Digital Technology Supercluster
|Next Generation Manufacturing Canada Supercluster
|Member of Next Generation Manufacturing Supercluster
|National Research Council of Canada's Industrial Research Assistance Program
|COVID-19 Development Stimulus Fund
|51% Indigenous ownership and part of tourism industry
|Emergency Relief Funds Program
|51% Indigenous ownership and part of tourism industry
|Ontario Together Fund
|Exceptional Support Measures for Small Businesses
|Based in the Papineau-Collines region
|Concerted Temporary Action Program for Businesses
|Emergency Aid for Small- and Medium-Sized Business
|Small Business Impact Grant
|Small Business Emergency Working Capital Program
|COVID-19 Working Capital Loans
|Prince Edward Island
|Emergency Working Capital Financing
|Business Development and Investment Corporation - Working Capital Loans
|Small Business Support Program
*Unless otherwise indicated, provincial and territorial programs are only available to businesses located in and operating in the applicable province or territory.
Please note that this publication presents an overview of notable legal trends and related updates. It is intended for informational purposes and not as a replacement for detailed legal advice. If you need guidance tailored to your specific circumstances, please contact one of the authors to explore how we can help you navigate your legal needs.
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