The new loans, from the Highly Affected Sectors Credit Availability Program (HASCAP), will open for applications on Monday and is on top of existing loan programs targeting small businesses.
Loans will start at between $25,000 and $1 million for a single business depending on the size of the operation, and run up to $6.25 million for companies with multiple locations like a chain of hotels or restaurants.
Details made public Tuesday say rates will be set at 4% across the board, terms will be up to 10 years, with up to a 12-month postponement of principal payments at the start of the loan.
But to get the money, companies will have show a year-over-year revenue drop of 50% or more over three months, not necessarily consecutive, in the eight months before filing an application.
Companies will also have to show that they at least applied for either the federal wage or rent subsidies.
The federally backed loan can be used for rent, utilities and help with payroll, among other costs, to keep operations running through public health restrictions, but can’t be used to pay or refinance existing loans.
Small Business Minister Mary Ng says the funding isn’t targeted to any one sector, but available to any business that meets the eligibility criteria.
“So whether it is your favourite neighbourhood restaurant, that bed and breakfast, a local movie theatre, or even a franchise restaurant or hotel, businesses that have been hardest hit by Covid-19 will now have the support that they need to keep moving forward,” Ng said by video during a midday press conference.
The head of the Canadian Federation of Independent Business is welcoming the launch of the new program to provide fresh financing to troubled companies.
But Dan Kelly also says in a tweet that the government must consider making part of the loan forgivable, like an existing aid program, because “more loans are not the answer to the mountain of debt small firms are facing.”