The Government of Canada today announced the establishment of the Large Employer Emergency Financing Facility (LEEFF) along with expanding the Business Credit Availability Program to better help mid-sized companies as well as larger businesses.
Help for Mid-Sized Companies: The Federal Government announced the expansion of the Business Credit Availability Program (BCAP) to mid-sized companies with larger financing needs. Support for mid-market businesses will include loans of up to $60 million per company and guarantees of up to $80 million. Through the BCAP, Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) will work with private sector lenders to support access to capital for Canadian businesses in all sectors and regions.
Help for Large Companies: Also announced were new measures to support large businesses, including the establishment of the Large Employer Emergency Financing Facility (LEEFF) program to provide bridge financing to large employers whose needs during the pandemic are not being met through conventional financing. The government said the objective of the LEEFF is to help Canadian businesses weather the current economic downturn and avoid bankruptcies of otherwise viable firms where possible. This support will not be used to resolve insolvencies or restructure firms, nor will it provide financing to companies that otherwise have the capacity to manage through the crisis. The additional liquidity provided through LEEFF will allow Canada’s largest businesses and their suppliers to remain active during this difficult time and position them for a rapid economic recovery.
The government has also said the following are the key guiding principles in providing support through the LEEFF:
- Protection of taxpayers and workers: Companies seeking support must demonstrate how they intend to preserve employment and maintain investment activities. Recipients will need to commit to respect 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 to 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 would must commit to publish 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.
- Fairness: To ensure support across the Canadian economy, the financing is intended to be applicable to all eligible sectors in a consistent manner.
- Timeliness: To ensure timely support, the LEEFF program will apply a standard set of economic terms and conditions.
More information on these announcements can be found here: