Applications for the large employer emergency financing facility (LEEFF) program opened today. The financing program helps big business in Canada secure bridge loans during the COVID-19 pandemic.
When originally announced, Prime Minister Justin Trudeau made it clear these were bridge loans “not bailouts.” Trudeau said that the government is “a lender of last resort.”
Conservative Leader Andrew Scheer has been calling for support for Canada’s hard-hit oil and gas sector, saying the LEEFF program “falls short.”
‘Strict measures’ around executive pay
It’s eligible for companies with annual revenues over $300 million and who are looking for financing of $60 million or more. There is also a mandatory disclosure of environmental plans.
Furthermore, Finance Minister Bill Morneau says companies will need to make certain commitments around executive pay.
“We’ll be introducing measures to protect workers, their pensions and collective agreements.”
The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) are working with private sector lenders to increase access to capital with strict limits on dividends, share buybacks and executive compensation.
“LEEFF will help protect jobs, safeguard workers’ benefits, and protect our economy. It will help businesses keep workers on the payroll, and put more Canadians in a position to recover quickly once we make it through these uncertain times,” wrote Morneau.
The Federal government announced an expansion to the eligibility criteria for the Canada Emergency Business Account (CEBA) on Tuesday. It now includes many owner-operated small businesses.
“By expanding the CEBA, we will be giving more businesses access to the support they need, so they can help protect workers and the jobs they rely on. Today we are helping to keep more businesses open and more Canadians working, so we are better prepared for the recovery to come,” said Trudeau.
Trudeau says some 600,000 businesses have received a $40,000 loan through the CEBA already.
He says the program will now be available to a greater number of businesses that are sole proprietors receiving income directly from their businesses, businesses that rely on contractors, and family-owned corporations that pay employees through dividends rather than payroll.
To qualify under the expanded eligibility criteria, applicants with payroll lower than $20,000 would need:
- a business operating account at a participating financial institution
- a Canada Revenue Agency business number, and to have filed a 2018 or 2019 tax return.
- eligible non-deferrable expenses between $40,000 and $1.5 million. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance.
Expenses will be subject to verification and audit by the Government of Canada. More details, including the launch date for applications under the new criteria, will follow in the days to come.