New Small and Medium-sized Enterprise Loan and Guarantee program to help ease access to credit for entrepreneurs impacted by COVID-19
MONTREAL, March 27, 2020—As announced earlier today by Prime Minister Justin Trudeau, BDC, Canada’s bank for entrepreneurs, and Export Development Canada (EDC), Canada’s export credit agency, have launched the new Small and Medium-sized Enterprise Loan and Guarantee program that will enable up to $40 billion in additional lending. The new program is part of a series of measures announced by the Government of Canada to support small and medium-sized businesses dealing with the economic impact of the COVID-19 pandemic.
The program will help Canada’s financial institutions provide credit and liquidity options, backed by BDC and EDC, that a range of Canadian businesses need. To access these loans, business owners must contact their primary financial institution which will assess their situation and deploy the financing as appropriate.
“The current economic conditions have severely impacted Canada’s small and medium-size entrepreneurs,” stated Michael Denham, President & CEO of BDC. “Providing loans that are backed by BDC and EDC available through private-sector financial institutions is intended to make credit more readily available for small and medium sized companies that require greater help to meet their operational cash flow requirements. Since most businesses already have a relationship with a financial institution, the process will be simpler and will leverage their existing workforce to deploy funds.”
“Small businesses are the backbone of our communities, and our government will be there for them every step of the way,” said the Honourable Mary Ng, Minister of Small Business, Export Promotion and International Trade. “In partnership with BDC and EDC, this new loan and guarantee program will help business owners across the country obtain the cash they need to pay their bills and get through this extraordinary time.”
The new Small and Medium-sized Enterprise Loan and Guarantee program will operate as follows:
- Small and medium-sized businesses can get support through a new Co-Lending Program that will bring the BDC together with financial institutions to co-lend term loans to these businesses for their operational cash flow requirements. Eligible businesses may obtain incremental credit amounts up to $6.25 million, 80 per cent of which would be provided by BDC, with the remaining 20% by a financial institution.
- EDC will also provide funding to financial institutions so that they can issue new operating credit and cash flow term loans of up to $6.25 million to small and medium-sized businesses, as a result of a new domestic mandate enhancing EDC’s role in supporting Canadian businesses through COVID-19 crisis. These loans will be 80 per cent guaranteed by EDC, to be repaid within one year.
- Eligible companies could obtain up to $12.5 million through these two lending streams.
In order to be eligible, businesses must have been impacted directly or indirectly by recent events and have been financially viable prior to the impact from COVID-19.
Today’s announcement comes on top of measures already included in the Business Credit Availability Program (BCAP) as well as other measures previously announced by BDC, including working capital loans and flexible repayment terms such as principal postponements to help bridge entrepreneurs to a more stable time.
For more information on BDC's initiatives, visit bdc.ca/coronavirus. The Bank will be updating the page regularly with tools, financial solutions and additional measures to help entrepreneurs through the situation.
BDC is the bank for Canadian entrepreneurs. It provides access to financing, as well as advisory services to help Canadian businesses grow and succeed. Its investment arm, BDC Capital, offers a wide range of risk capital solutions. For more than 75 years, BDC’s only purpose has been to support entrepreneurs in all industries and at all stages of growth. For more information and to consult more than 1,000 free tools, articles and entrepreneurs’ stories, visit bdc.ca.