The federal government says it will provide loans and financing to the country’s largest employers to help them weather the Covid-19 economic crisis.
The Liberals are promising bridge financing to companies whose financial needs aren’t being met by conventional credit so they can stay open and keep employees on payroll.
Another goal of the Large Employer Emergency Financing Facility (LEEFF), which is aimed at companies with $300 million or more in revenues, is to avoid bankruptcies of otherwise viable firms wherever possible.
“This 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,” Prime Minister Justin Trudeau said in a statement.
Companies seeking support will have to demonstrate how they plan to maintain employment and investment activities.
“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,” a government release said.
Rules on access to the money will place limits on dividends, share buy-backs and executive pay, and companies will have to protect pensions and respect collective bargaining agreements.
Companies will be assessed on their employment, tax and economic activity in Canada, the release said, as well as financing arrangements and their international organizational structure.
Any companies convicted of tax evasion won’t be eligible for the money.
The program will be delivered by the Canada Development Investment Corporation in co-operation with government departments. It will be open to large for-profit businesses — except those in the financial sector.
Certain not-for-profit businesses, such as airports, will also be eligible.
Companies that receive financing will be required to publish annual climate-related disclosure reports consistent with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. These reports must include details on how the company’s future operations will support environmental sustainability and national climate goals.
In addition to the new program, the government said it would expand the Business Credit Availability Program (BCAP) to mid-sized companies through the Business Development Bank of Canada (BDC).
The new Mid-Market Financing Program will provide commercial loans of between $12.5 million to $60 million to medium-sized companies whose credit needs are greater than what’s available through the BCAP.
Qualifying companies will have annual revenues of more than $100 million, a release said, and must have been financially stable before the pandemic. BDC said it would provide more details in the coming weeks.
Federal figures posted Monday showed more than 7.8 million people have applied for the Canada Emergency Response Benefit, which has paid out almost $30.5 billion in benefits. The program is budgeted at $35 billion to help workers who have seen steep drops in income.
Last week, Statistics Canada reported that some three million people were out of work since public health restrictions came into effect in March, with 2.5 million more with their hours slashed.