Canadian Covid-19 Government Updates - May 11, 2020

Canadian Covid-19 Government Updates - May 11, 2020

Federal Government Update

Additional measures announced by the Government:

Large Employer Emergency Financing Facility (LEEFF) - bridge financing to Canada's largest employers.

  • Objective:
    • help protect Canadian jobs;
    • help Canadian businesses weather the current economic downturn;
    • and avoid bankruptcies of otherwise viable firms where possible.
  • Restrictions: This support 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.
  • Key guiding principles:
    • Protection of taxpayers and workers:
      • 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 require strict limits to dividends, share buy-backs, and executive pay.
      • In considering a company's eligibility to assistance under the LEEFF program, an assessment may be made of its employment, tax, and economic activity in Canada, as well as its international organizational structure and financing arrangements.
      • The program will not be available to companies that have been convicted of tax evasion. 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.
    • Fairness: To ensure support across the Canadian economy, the financing is intended to be applicable to all eligible sectors in a consistent manner.
    • Timeliness: To ensure timely support, the LEEFF program will apply a standard set of economic terms and conditions.

Expansion of the Business Credit Availability Program (BCAP)

  • Eligibility: Expand to mid-sized 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.
  • Access: 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.

Additional Financing

  • Continue to provide 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.
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