Canada Emergency Business Account

The Federal Department of Finance announced Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses on March 18, 2020.  Three business loan programs were included in the plan, all of which are expected to become available in mid-April 2020:

Canada Emergency Business Account

A new Canada Emergency Business Account will be implemented by eligible financial institutions in cooperation with Export Development Canada (EDC).  Participating financial institutions are expected to begin rolling out this program during the week of April 6, 2020.

This $25 billion program will allow financial institutions to provide interest-free loans of up to $40,000 to small businesses and not-for-profits to help cover their operating costs during a period where their revenues have been temporarily reduced due to the economic effects of COVID-19.

Small businesses and not-for-profits should contact their financial institution to apply for these loans.

To qualify, an organization will need to demonstrate it paid between $50,000 to $1 million in total payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).

New Loan Guarantee for Small and Medium Enterprises

EDC will guarantee new operating credit and cash flow term loans that financial institutions extend to small and medium-sized enterprises (SMEs) up to $6.25 million.

The program cap for this new loan program is $20 billion.

New Co-Lending Program for Small and Medium Enterprises

A new Co-Lending Program will bring the Business Development Bank of Canada (BDC) together with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.

Eligible businesses may obtain incremental credit amounts up to $6.25 million. BDC’s portion of this program is up to $5 million maximum per loan. Eligible financial institutions will conduct the underwriting and manage the interface with their customers. The potential for lending for this program is $20 billion.