OTTAWA — Prime Minister Justin Trudeau has announced new measures, under the Government of Canada’s COVID-19 Economic Response Plan, to support large and medium-sized businesses during the COVID-19 pandemic.
“Employers, large and small, are facing challenges due to the COVID-19 global pandemic. Our government has their backs,” says Bill Morneau, Minister of Finance. “We know many businesses of all sizes need our help in order to keep their many employees on the payroll and their suppliers paid until the economy recovers. That is why today’s measures will help both large and mid-sized employers to get access to the financing they need to make it through this extraordinarily challenging time.”
The new measures include establishing a Large Employer Emergency Financing Facility (LEEFF) to provide bridge financing to Canada’s largest employers, whose needs during the pandemic are not being met through conventional financing. The aim of the LEEFF is to help protect Canadian jobs, help Canadian businesses weather the current economic downturn and avoid bankruptcies of otherwise viable firms where possible.
The Business Credit Availability Program (BCAP) will also be expanded to mid-sized companies with larger financing needs. This support will include loans of up to $60-million per company and guarantees of up to $80 million. Through the BCAP, Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) will work with private-sector lenders to support access to capital for Canadian businesses in all sectors and regions.
The announcement also includes continued financing to businesses through Farm Credit Canada, the BDC and EDC, including through the Canada Account. This will ensure the government is able to respond to a wide range of financing needs, including for some large employers facing higher risks, with stricter terms in order to adequately protect taxpayers.
The support provided under LEEFF will not be used to resolve insolvencies or restructure firms, nor will it provide financing to companies that otherwise have the capacity to manage through the crisis. The additional liquidity provided through the program will allow Canada’s largest businesses and their suppliers to remain active and position them for a rapid economic recovery.
Companies seeking support must demonstrate how they intend to preserve employment and maintain investment activities. Recipients will need to commit to respect collective bargaining agreements and protect workers’ pensions. The LEEFF program will also require strict limits to dividends, share buy-backs and executive pay.
Employment, tax, and economic activity in Canada, as well as its international organizational structure and financing arrangements may be assessed in considering a company’s eligibility. In addition, recipient companies would be required to commit to publish annual climate-related disclosure reports consistent with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, including how their future operations will support environmental sustainability and national climate goals.
The government’s support for large companies through LEEFF will be delivered by the Canada Development Investment Corporation (CDEV), in cooperation with Innovation, Science and Economic Development Canada (ISED) and the Department of Finance. The LEEFF program will be open to large for-profit businesses — with the exception of those in the financial sector — as well as certain not-for-profit businesses, such as airports, with annual revenues generally in the order of $300 million or higher. To qualify for LEEFF support, eligible businesses must be seeking financing of about $60 million or more, have significant operations or workforce in Canada and not be involved in active insolvency proceedings.
The government is in the final stages of establishing the program and further information about the application process is expected soon.