The Government of Canada recently announced the Highly Affected Sectors Credit Availability Program (HASCAP) Guarantee in partnership with the Business Development Bank of Canada (BDC). This program provides loans of between $25,000 and 1 Million to business that have been hardest hit by the pandemic.
Details of loans:
- Eligible businesses can receive loans of between $25,000 and $1 Million in government-backed loans
- Every eligible business can apply for the loan and each group of business with a common owner can receive loans of up to $6.25 Million
- Loans are offered through the primary financial institutions of each business (i.e. their banks) and are guaranteed by BDC
- Loans will have repayment terms up to 10 years
- Up to 12 month postponement of principal payments at the start of the loan (interest payments are still required)
- Interest is charged at a rate of 4%
- The loan must be used to fund operations and cannot be used to repay existing financing
- No part of the loan is forgivable
- Applications are open as of February 1st, 2021 and are open until June 30th, 2021
Businesses which meet the following criteria are eligible for this program:
- The business is Canadian based
- The business must have been financially stable as of March 1st, 2020
- The business must have experienced a year-over-year drop in revenue of at least 50% for 3 out of the most recent 8 month period prior to the application. (Note the 3 months need not be consecutive)
- If the business was eligible for either the Canada Emergency Wage Subsidy (CEWS) or the Canada Emergency Rent Subsidy (CERS) then they must have applied for the programs and received funding through either one or both of those programs.
How to apply:
- Applications must be made through the primary financial institution of each eligible business.
- If a business had previously applied for either CEWS of CERS, the business will need to provide the Canada Revenue Agency attestation forms. For the purpose of HASCAP the attestation must demonstrate a minimum of 50% year-over-year revenue decline for at least 3 months in the 8 month period prior to making the application.
- If a business does not qualify for either CEWS or CERS, financial statements must be provided which demonstrate a minimum of 50% year-over-year revenue decline for at least 3 months in the 8 month period prior to making the application.
Further information can be found here: https://www.bdc.ca/en/special-support/hascap and here: https://www.canada.ca/en/innovation-science-economic-development/news/2021/01/minister-ng-announces-launch-of-highly-affected-sectors-credit-availability-program.html
Disclaimer: The COVID-19 Canadian tax policies in the above article are changing rapidly as the governments introduce new measures. Certain details have yet to be published. We will aim to update them as soon as they are available.