skip to main content

145 King Street West, Suite 2200 | Toronto, Ontario | M5H 4G2 | 416 362 3711

News & Events

New Federal Government support for large- and medium-sized business in COVID-19

May 12, 2020

By Minden Gross LLP Commercial Leasing Group

Canadian parliament buildingsOn May 11, the federal government announced new measures to support businesses so they can keep their workers on the payroll and weather the COVID-19 pandemic. The new initiatives intend to support large and medium-sized businesses during these challenging economic times. This bulletin summarizes the new measures.

The Large Employer Emergency Financing Facility (LEEFF)

The LEEFF will provide bridge financing to Canada’s largest employers whose needs during the pandemic are not being met through conventional financing in order to keep their operations going. The objective of the LEEFF is to help protect Canadian jobs, help Canadian businesses weather the current economic downturn, and avoid bankruptcies of otherwise viable businesses where possible. This support is not to be used to resolve insolvencies or restructure businesses, nor is it to provide financing to companies that otherwise have the capacity to manage through the crisis.

The guiding principles of the LEEFF include: protecting taxpayers and workers, fairness, and timeliness. Companies seeking support must demonstrate how they intend to preserve employment and maintain investment activities. Recipients will need to commit to respecting 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 for 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 will be required to commit to publishing 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 financing is intended to apply to all eligible sectors in a consistent manner and will use a standard set of economic terms and conditions, to promote fairness and timeliness.

The LEEFF program will be open to large for-profit businesses as well as some not-for-profits, such as airports, with annual revenues that are generally $300 million or higher. Businesses in the financial sector will not be eligible to apply for the LEEFF.

This program will be delivered by the Canada Development Investment Corporation (CDEV) in cooperation with Innovation, Science and Economic Development Canada and the Department of Finance.

Expansion to the Business Credit Availability Program (BCAP)

In addition to the LEEFF, the BCAP is being expanded to mid-sized companies with larger financing needs. Through the BCAP, the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) will work with private sector lenders to support access to capital for Canadian businesses in all sectors and regions.

BDC’s Mid-Market Financing Program will provide commercial loans ranging between $12.5 million and $60 million to medium-sized businesses whose credit needs exceed what is already available through BCAP. BDC anticipates that qualifying companies will have annual revenues in excess of approximately $100 million.

EDC’s Mid-Market Guarantee and Financing Program will bring liquidity to companies that tend to have revenues of between $50 million to $300 million, to sustain operations during this uncertain period. EDC will continue to work with Canadian financial institutions to guarantee 75 per cent of new operating credit and cash-flow loans – ranging in size from $16.75 million to a maximum of $80 million. These expanded guarantees are available to exporters, international investors, and businesses that sell their products or services within Canada. 

As more information is released on the new measures for large and medium-sized businesses, we will update this bulletin. ​If you have any questions or would like to obtain legal advice on these programs, please contact any lawyer in our Commercial Leasing Group. You can access information on the federal government's website: https://www.canada.ca/en/department-finance/economic-response-plan.html#businesses.  For more information on managing your business during COVID-19, visit our resource page at: https://www.mindengross.com/our-firm/covid-19-response or email covid-19@mindengross.com.

Thank you to Jennifer Katz, Student-at-Law, for her help in creating this post.

Our People

Resources

More +

© 2017 Minden Gross LLP  All rights reserved

Legal Marketing | Cubicle Fugitive