Federal government announces financing opportunities for larger companies affected by COVID-19
At a May 11 press conference, Prime Minister Justin Trudeau announced that the federal government will be offering bridge financing to bigger businesses that need more capital amid the COVID-19 pandemic.
The financing, designed to help companies retain workers over the course of the crisis, comes with a number of caveats. During the press conference, Trudeau emphasized that any help provided will come in the form of a loan—not a bailout or a "blank check."
Trudeau said the Large Employer Emergency Financing Facility (LEEFF) will provide bridge financing to Canada's largest employers. The money will be available to companies who cannot retain their workforce through conventional financing.
The program will be open to large for- and not-for-profit businesses (such as airports, for example) with annual revenues of about $300 million or higher. To qualify for the program, eligible businesses must be seeking financing of about $60 million or more.
At the press conference, Trudeau said the support is meant to help companies weather the storm and avoid bankruptcies. He was clear that the money cannot be used to resolve insolvencies or restructure firms. Trudeau also said the financing will be not provided to businesses that have the capacity to manage the pandemic without financial assistance.
Trudeau said that companies seeking support must demonstrate how they intend to preserve employment and maintain investment activities. He also said that companies must abide by a number of conditions and commit to respecting collective bargaining agreements and protecting workers' pensions. The program also requires strict limits to dividends, share buy-backs, and executive pay. Trudeau also said companies interested in the program will be evaluated for their employment, tax and economic activity in Canada.
The program will not be available to companies that have been convicted of tax evasion.
Trudeau also said that companies must make specific commitments with respect to the environment.
The program will be available to companies in each and every sector across Canada.
Trudeau also said the government plans to expand the Business Credit Availability Program (BCAP) to mid-size companies with larger financing needs. Support for mid-market businesses will include loans of up to $60 million per company, and guarantees of up to $80 million.
Trudeau said that through the BCAP, Export Development Canada and the Business Development Bank of Canada will work with private-sector lenders to support access to capital for Canadian businesses in all sectors.
Cover photo courtesy of The Canadian Press
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