The federal government on Monday (May 11) announced a plan to help large and medium-sized businesses affected by COVID-19.
Included in the plan is a Large Employer Emergency Financing Facility (LEEFF) to provide bridge financing to large for-profit businesses – except those in the finance sector – and some not-for-profit companies, including airports, with annual revenues hitting $300 million or higher.
Federal officials also announced an expansion to the Business Credit Availability Program (BCAP) to medium-sized businesses, which will include loans of up to $60 million per company and guarantees of $80 million.
“Our purpose is to keep Canadian companies on their feet,” Prime Minister Justin Trudeau said during his near-daily address at Rideau Cottage Monday.
The programs will place “strict limits” on dividends, share buy-backs and executive pay.
“If a company wants to access this public financing… the money has to go to support employees and not high-paid executives,” Trudeau said, but did not provide details about how Ottawa would guarantee that.
The prime minister said Ottawa was a “lender of last resort” meant to prevent “longterm damage to the Canadian economy.”
Any companies convicted of tax evasion won’t be eligible for the money, which will be open to all sectors of the economy. Companies engaging in tax avoidance will be expected to restructure their finances to pay a fair amount, Trudeau said. Oil and gas companies are not restricted from applying, he noted, but will be expected to show how they are supporting environmental sustainability and national climate goals.
The prime minister noted the low-cost lending isn’t for companies who don’t need it, nor is it to rescue those that were facing insolvency before the crisis.
The program does not exclude those businesses that have applied for the wage subsidy, which provides companies with 75 per cent of its employees’ salaries, up to $847 per employee each week.
In a press conference following the announcement, Conservative Party Leader Andrew Scheer said the funding was devoid of necessary details and that it did not provide enough money to the oil ad gas sector.