As the COVID-19 pandemic continues to take a toll on the Canadian economy, many continue to need additional financial relief to help them survive the negative impact of the pandemic on their business and their corresponding cash flow. By now we are familiar with the financial support and lending programs that have been introduced by the federal government over the course of 2020, including: the Canada Emergency Business Account Program, the BDC Co-Lending Program, the EDC Loan Guarantee Program, and BDC Working Capital Loan Program.
In response to the continuing need of Canadian businesses for further financial relief, the federal government has announced the implementation of the Highly Affected Sectors Credit Availability Program (HASCAP). As of February 1, 2021, HASCAP will be available to provide additional support to highly affected businesses that were otherwise financially viable and stable prior to the pandemic and have subsequently experienced a 50% or greater decline in revenue.
Under HASCAP, Business Development Bank of Canada (BDC) will provide a guarantee of up to $1 million, with the restriction that the loan funds will be used solely for a Canadian business and for such business to continue or resume Canadian business operations. As with the other federal financial relief programs, Canadian businesses will be required to meet certain eligibility criteria in order to qualify for the HASCAP. Such eligibility requirements include that the business must be Canadian-based, must have been financially stable and viable prior to COVID-19, and must meet one of the following criteria:
- received payments from either the Canada Emergency Wage Subsidy (CEWS) or the Canada Emergency Rent Subsidy (CERS) by demonstrating at least a 50% decline in revenue for at least three months, consecutively or non-consecutively, within the eight months preceding the HASCAP application;
- if the business qualifies for one or both of the CEWS or CERS programs, but has not received any benefit, the business must apply for the CEWS or CERS program prior to applying for HASCAP; or
- if the business does not qualify for CEWS or CERS, it must provide financial statements that prove that the business has suffered a year-over-year revenue decrease of at least 50% monthly for at least three months, consecutively or non-consecutively, within the eight months preceding the HASCAP application.
The calculation of the drop in revenue for the first two criteria will be the same as the calculation used for the CEWS and CERS program, which can be found at the Government of Canada website. We note that there is still some uncertainty as to how the revenue drop in the third criteria will be calculated to meet this eligibility requirement.
To apply, a business must contact its primary financial institution and a business cannot apply at more than one financial institution. The HASCAP program is currently expected to be available until June 30, 2021.
For further information on the HASCAP program and the eligibility criteria, visit the BDC website or contact our office to see if the HASCAP program or another federal financial lending program could support your business.
Sources:
Government of Canada: Decisive and Dynamic Support for Canadians
Government of Canada: Minister Ng announces launch of Highly Affected Sectors Credit Availability Program
BDC: Highly Affected Sectors Credit Availability Program (HASCAP) Guarantee
Office of the Superintendent of Financial Institutions: OSFI determines capital treatment of federal program supporting highly affected sectors
Retail Council of Canada: Highly Affected Sectors Credit Availability Program (HASCAP) announced
