Canada: Federal Update: Government Announces Emergency Financing Facility Loan Program for Large Employers and Expansion of Business Credit Availability Program
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Earlier this morning, the government announced two additional measures to support employers during the COVID-19 pandemic. The government press release is available here.
First, the government introduced the Large Employer Emergency Funding Facility (LEEFF) to provide bridge funding to Canada’s largest employers whose needs during the pandemic are not being met by conventional funding. The LEEFF program will be open to large for-profit companies, excluding the financial sector, as well as certain not-for-profit companies, such as airports, whose annual revenues are in the order of $300 million or more annually. To qualify, companies must request support of $60 million or more, have significant operations or workforce in Canada, and not be involved in active insolvency programs.
The support is not intended to resolve insolvencies or restructure businesses, nor will it provide financing to businesses that otherwise have the capacity to weather the crisis. Rather, the support is intended to help viable businesses avoid bankruptcy for reasons related to COVID-19. The program will be delivered through the Canada Development Investment Corporation in collaboration with Innovation, Science and Economic Development Canada and the Department of Finance.
While many details remain to be seen, the government has provided the following parameters that will guide all aspects of the program:
- Protection of taxpayers and workers: companies will be required to demonstrate how they intend to preserve employment and investment; undertake to respect the collective agreement and the obligations in terms of retirement; and requiring strict limits on dividends, share buybacks and executive compensation. To determine eligibility, an assessment can be made of a company’s employment, tax and economic activity (both domestic and international). As a result, companies will be required to disclose their organizational structure and funding arrangements as well as an ongoing obligation to publish annual climate-related disclosure reports while participating in the program. The program will not be available to companies that have been found guilty of tax evasion.
- Justice: Funding is intended to apply to all eligible sectors.
- Opportunity: LEEFF will apply a standard set of economic conditions.
Second, the government is expanding access to the Business Credit Availability Program (BCAP) to medium-sized businesses. This support will include loans of up to $60 million per company and guarantees of up to $80 million.
Additional details are expected to be announced in the coming days.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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