The Liberals promise bridge funding to businesses with at least $ 300 million in revenue so they can stay open, keep employees on their payroll and avoid bankruptcies of otherwise viable businesses, if possible.
The loans would start at $ 60 million, be on commercial terms, and require businesses to have already gone to banks or the market and been unable to meet their financial needs.
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In announcing the program on Monday, the government said that taxpayers’ money would not be used to save businesses that faced insolvency before the crisis.
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“These are bridge loans, not bailouts,” said Prime Minister Justin Trudeau.
The commentary suggests that the Liberals drew a line around acquiring equity in big companies as well as the big automakers during the economic crisis a decade ago, said Don Drummond, a former senior official at the Department of Finance.
Trudeau’s line also addresses concerns south of the border, where a small business loan program has provided money to large, normally profitable companies, he said.
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“It’s a bridge to something, but it’s very political,” said Drummond, adjunct professor of politics at Queen’s University.
“They may have had significant income, and yes, they may still have reserves, but they suffered a horrible loss of income without any fault on their part. “
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Speaking in Toronto, Finance Minister Bill Morneau said the new funding program could help domestic airlines cover rental payments and non-essential retailers who “face extreme challenges because they are literally closed ”.
Goldy Hyder, President of the Business Council of Canada, called the program an important step for large and medium-sized businesses because “there is no doubt about the need.” He said companies are looking for more details on how to apply.
Morneau said the rules will limit companies’ ability to restructure, pay dividends, buy back shares, and use money for excessive executive compensation.
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The government is also promising rules to protect pensions and collective bargaining.
“Aid must go to workers, not CEOs,” NDP leader Jagmeet Singh said in a statement. “And any business that misleads the public by not paying its fair share of taxes, should not get help from the public. “
Candidates will need to reveal how they are structured at home and abroad with officials looking for aggressive tax avoidance, said Trudeau. No company found guilty of tax evasion will be eligible for assistance.
Toby Sanger, executive director of Canadians for Tax Fairness, said his group was pleased to see measures to deny “federal funds for tax evasion corporations”, as other jurisdictions have already done. .
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“However, the federal government should do much more,” he said in a statement, calling for more details on how far the Liberals will go “to prevent big business from taking advantage of this pandemic.”
Businesses that ask for help will also have to show how they are helping to reduce greenhouse gas emissions in the coming years by tying the money to Liberal environmental promises. This will include oil and gas companies that are also facing a drop in the global drop in oil prices.
“My question for Mr. Morneau is: is this the package he promised to the oil and gas sector? Because if it is, it is certainly not what was promised or expected, “said Conservative Leader Andrew Scheer on Monday.
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Scheer called on the Liberal government to relax the requirements for funding programs for small and medium-sized businesses to facilitate their access to help, including independent or family-owned businesses that receive dividends, seasonal businesses and those that do not. ‘do not receive any. have a significant payroll.
The Liberals also promise to extend the $ 73 billion wage subsidy program, which saw 127,000 businesses seek help to cover some two million workers.
The legislation that created the program allows the government to extend the qualification periods until the end of September.
Federal officials are doing a detailed economic weakness analysis to see what additional measures may be needed for businesses.
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“We want to make sure that companies are competitive, but at the end of the day, we want to make sure that these companies operate, operate and employ millions of Canadians,” said Minister of Industry Navdeep Bains.
Federal figures released on Monday showed that more than 7.8 million people claimed the Canadian emergency response benefit, which paid out nearly $ 30.5 billion in benefits. The program has a budget of $ 35 billion to help workers who have experienced sharp income cuts.
Statistics Canada announced last week that about three million people have been unemployed since the public health restrictions came into effect in March, and an additional 2.5 million have had their hours reduced.
The figures came out on Friday after the global job loss figure for April leaked, which sparked an internal investigation into the highly unusual breach.
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“We will not leave anything behind,” said Morneau of the federal survey and Statistics Canada. “We need to make sure that important information like this, which can move the market, remains confidential until it is published. “
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