The federal government is implementing a new multi-million dollar loan program to provide access to finance for large employers affected by COVID-19 and the economic downturn it has caused.
“These are bridge loans, not bailouts,” said Prime Minister Justin Trudeau during his speech to the Canadians at Rideau Cottage.
Called the Large Employer Emergency Financing Facility (LEEFF), the plan will allow large companies to access additional cash to continue their operations, keep employees on their payroll and avoid bankruptcy.
The federal government provides businesses in most sectors – including the airline industry – with “greater financing needs” with access to loans of up to $ 60 million per company and guarantees of up to 80 millions of dollars. The new program comes with a series of terms and conditions.
“Ideally, private sector lenders are tailored to the needs of large companies. But in an extraordinary situation where it is not always enough, we must act to avoid massive damage to Canadian workers and families, and to the Canadian economy, “said Trudeau.
“We will not allow millions of people to lose their livelihoods due to unprecedented events beyond their control,” said the Prime Minister.
Trudeau said the goal of the assistance is to avoid bankruptcy and keep Canadian businesses in place. He said the government will make sure aid is available to all sectors of the country, hoping that businesses will be held accountable, including asking them to share their full financial structure when they apply.
“Different sectors will need funds for different reasons. In the retail sector, rent clearly represents a very large part of their operating costs and we can expect that to support this challenge. While … in the airline or hospitality industry, it could be for different costs they have to bear to get through this crisis, “said Finance Minister Bill Morneau when the new program was unveiled.
Eligible businesses have annual revenues of $ 300 million or more and are seeking financing of $ 60 million or more. Financial sector companies are not eligible, nor are any companies convicted of tax evasion in the past.
LEEFF applicants must also have “significant operations or personnel in Canada”. Their international organizational structure and funding arrangements will be taken into account, and each company will need to demonstrate some environmental commitment and commit to reporting annually on its climate and sustainability initiatives.
For companies that benefit from this access to financing, the federal government says it intends to put strict limits on executive compensation and share buybacks, and will expect these companies respect all collective agreements and pensions.
The aid will not be available to businesses that do not need financing, nor can it be used to resolve insolvency or restructure a business.
In this context, the government is extending the business credit program, set up to maintain the solvency of small businesses, to medium-sized businesses, and Export Development Canada and the Business Development Bank of Canada will work with private sector lenders to free up access to tens of millions of dollars in capital, said Trudeau.
Industry Minister Navdeep Bains joined Morneau in making the new aid announcement before Trudeau’s speech. Bains said that in addition to helping these companies access financing, the government is studying the various pressures and impacts that specific sectors face, to inform new aid policies and measures.
Morneau described it as an effort to protect millions of middle class jobs by providing bridge finance companies the means to stay afloat during the pandemic and the economic storm it caused.
“The COVID-19 crisis affected workers in all sectors and businesses of all sizes,” said Morneau, referring to the latest national employment figures which show that three million Canadians have lost their jobs. since the shutdown of large swathes of society in an effort to slow the spread of the deadly respiratory disease.
This new access to funding is in addition to the 75% wage subsidy program, which Trudeau announced Friday will be extended last June with the promise of more details this week.
The extension came as questions arose as to whether Canadians and businesses would manage on their own as provinces and territories gradually begin to reopen in a way that will not see many Canadians going back to work for a while. time.
Speaking about the slow recovery of some aspects of the economy, Trudeau continued to encourage Canadians to “let caution and medical advice be your guide.”
“We are all excited to see life return to something more like normal, but we are not out of the woods yet. And we cannot waste the sacrifices that we have made in the past two months, “he said.
By the time the Prime Minister started his speech, there were 69,157 confirmed cases of COVID-19 in Canada, and 4,907 people had died.