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Loan program for large corporations now open for applications: feds

Last Updated May 20, 2020 at 7:28 am PDT

A worker walks on a construction site in Hamilton, Ont., on November 14, 2013. THE CANADIAN PRESS/Aaron Lynett
Summary

Large Employer Emergency Financing Facility now open for applications

LEEFF will help large corporations struggling amid the COVID-19 crisis, but there are a lot of strings attached

OTTAWA – The federal government is beefing up efforts to persuade businesses to rehire workers now that Canada’s economy is starting to emerge from the coronavirus lockdown.

Finance Minister Bill Morneau announced Wednesday that the Large Employer Emergency Financing Facility (LEEFF) program is now open for applications.

The federal government is also expected to announce later in the day rent relief for small- and mid-sized businesses.

Wednesday’s focus follows last week’s extension of the 75 per cent wage subsidy for three months, to the end of August, and Tuesday’s announcement that the government is expanding the eligibility criteria for its small business loan program.

The latter program provides interest-free loans of $40,000 for eligible small businesses to cover costs like rent and utilities, with the possibility of forgiving one-quarter of the amount if it is paid off by the end of 2022.

Tuesday’s fix extended the program to companies that don’t have traditional payrolls, such as family-run businesses that pay themselves in dividends and companies that employ only contractors.

“This is about getting people back to work and giving businesses the confidence to reopen, rehire and even grow because the way our economy will recover and the way our country will remain resilient and successful is by getting Canadians back to work,” Prime Minister Justin Trudeau said Tuesday.

Wednesday’s focus on rent relief and the large corporation loans program is aimed at conveying the same message.

The LEEFF program was announced last week, aimed at providing short-term bridge financing to companies with $300-million or more in annual revenues looking for loans worth at least $60 million but unable to secure them from banks or other private lenders.

It is to come with strict conditions. Generally, the conditions are to include limits on a company’s dividends, share buybacks and executive pay, as well as a requirement that each company account for how they intend to contribute to Canada’s targets for reducing carbon emissions.

Trudeau has also said applicants whose financial records show signs of “aggressive tax avoidance” will be prohibited, as will companies convicted of tax evasion in the past.

While the LEEFF program was generally well received last week, many companies said they had to wait for the details before knowing whether it would be of use to them.

The government had hoped it would be used by airlines to stay afloat during the pandemic, which has brought air travel to a virtual standstill. But late last week Air Canada announced plans to lay off about 20,000 employees.

Under the commercial rent relief program, landlords are to apply for a 50 per cent subsidy paid for by federal and provincial governments, with tenants paying another 25 per cent. But critics have said many landlords, who would have to accept a 25 per cent reduction in the rent they receive, have refused to participate.