Question Period Note: Highly Affected Sectors Credit Availability Program

Why is the Government of Canada providing further support to hard-hit businesses during COVID-19?

• Many businesses across Canada continue to feel the effects of the COVID-19 crisis.

• The Government of Canada’s Fall Economic Statement proposed new measures to support Canadians through the pandemic and drive a robust and resilient recovery.

• The new Highly Affected Sectors Credit Availability program (HASCAP) is providing further support to hard-hit businesses through the COVID-19 pandemic.

• Available February 1, 2021, eligible businesses are able to access government-guaranteed, low-interest loans of up to $1 million at participating financial institutions.

SUPPLEMENTARY MESSAGES

Is it a bad time for Canadian businesses to take on more debt:

• The HASCAP loan guarantee program is designed to provide much-needed help to Canadian businesses so they can continue to pay operating expenses and bridge to the other side of the pandemic.

• The conditions of a HASCAP loan are favourable, at just 4 per cent interest, up to 10 years to repay, and a possible deferral of principal payments for the first 12 months. HASCAP loans are 100 per cent government guaranteed.

• For higher loan amounts, financial institutions will take steps to verify a business’ ability to service the debt.

Will Indigenous-owned businesses be able to apply through Aboriginal Financial Institutions for HASCAP loans:

• Financial institutions participating in the HASCAP program are federally- or provincially-regulated, deposit-taking institutions, where a business would maintain its business operating account. As a result, Aboriginal Financial Institutions (AFIs) are not able to participate in the HASCAP program, as they are not regulated by the Office of the Superintendent of Financial Institutions and are not deposit-taking institutions.

• If a business’ primary financial institution is not participating, then that business may apply at another financial institution that is able to participate.

• While many Indigenous-owned businesses obtain loans from AFIs, most usually also have a relationship with a bank or credit union for their daily business needs. If their primary financial institution is not participating, then that business will be able to apply at another financial institution that is able to participate.

As part of the Highly Affected Sectors Credit Availability Program (HASCAP), the government, through financial institutions, is offering guarantees on low-interest loans of between $25,000 and $1 million to help businesses heavily affected by COVID-19 with their day-to-day business operating costs. Hard-hit businesses with multiple entities under related ownership, like a chain of hotels or restaurants, ownership could be eligible for up to $6.25 million. Qualifying businesses will benefit from repayment terms of up to 10 years, and may postpone principal payments for up to the first 12 months of the loan. The interest rate on these government backed loans is 4 per cent. No personal guarantees will be required.

Eligible companies must have been financially stable and viable prior to the current economic situation and must demonstrate a minimum 50 per cent revenue decline for three separate months within the 240 day period prior to the application date of the loan. Other conditions apply.

Offering the guaranteed loans through financial institutions will allow a broad reach to quickly deploy the program and ensure business owners can access the financing they need.

Participating financial institutions started accepting on February 1, 2021. Interested business owners can apply with their primary financial institution. Additional information on HASCAP is available on the Business Development Bank’s website.

On May 3, 2021, Minister Ng and DPM Freeland announced that the HASCAP is being extended to December 31, 2021.

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