On Monday, May 11, 2020, Prime Minister Justin Trudeau announced that the federal government will make bridge loans available to larger employers who cannot access credit through conventional financing mechanisms. The Large Employer Emergency Financing Facility (“LEEFF”) will provide support to businesses with annual revenues of over $300 million. The program aims to protect jobs and help businesses avoid bankruptcy.
LEEFF recipients will be required to respect union contracts and keep workers on the payroll, and disclose climate action plans and sustainability goals in order to qualify. Recipients will also face strict limits on dividends, share buybacks and “excessive” executive pay. In order to qualify, businesses will be required to share their complete financial structure and will be evaluated based on their employment, tax and economic activity in Canada. Businesses convicted of tax evasion will not be eligible for the program.
The program will be accessible to commercial businesses in all sectors of the economy except for the financial sector, and will also be available to certain not-for-profit businesses. Prime Minister Trudeau emphasized that this program provides bridge loans, rather than “bailouts”. Additional details on the bridge loans and application process are expected to be announced soon.
Expanded Business Credit Availability Program
On Monday, the Prime Minister also announced that the Business Credit Availability Program (BCAP), initially put in place to keep small businesses solvent, will be expanded to medium sized businesses. Businesses can access the BCAP through financial institutions and credit unions.
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