Sandbox Blog

Cash Flow During COVID-19: Loan and Grant Programs for Business

Posted by Mackenzie Fennell on Apr 29, 2020 3:18:55 PM

As the COVID-19 pandemic caught the world off-guard, many organizations that have been able to traditionally sustain themselves are now looking for new ways to access cash. Navigating cash flow options during these uncertain times can be quite a challenge, which is why Mentor Works has put together a list of Canadian government funding programs that includes COVID-19-related support and ongoing government loan/grant programs.

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Business Credit Availability Program (BCAP)

The federal government has allocated over $65 billion in business stimulus for Canadian companies seeking access to cash. The funding from this initiative will be provided by the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). Both BDC and EDC are working with private sectors to find credit solutions that will work for individual businesses, including the air transportation, tourism, and oil and gas industries.

BCAP includes the following programs:

EDC Loan Guarantee for Small and Medium-Sized Enterprises

The Export Development Canada Business Credit Availability Program (EDC BCAP) loan guarantee is offering qualified businesses up to $6.25 million in credit through their financial institution to cover rent, payroll, and other operating costs caused by the current crisis. This program has an 80% guarantee and is required to be repaid within one year.

BDC Co-Lending Program for Small and Medium Enterprises

Business Development Bank of Canada is working with financial institutions to co-lend term loans to Canadian SMEs for their operational cash flow requirements. Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program. The co-lending program will have a commercial interest rate, 10-year repayment period, and will be available through your primary financial institution.

Canada Emergency Business Account (CEBA)

The Canadian federal government has allocated $25 billion to the Canada Emergency Business Account (CEBA), letting small businesses and not-for-profits apply for interest-free loans of up to $40,000 to help cover their operating costs during a period where their revenues have been temporarily reduced. Canadian small businesses and not-for-profits can contact their financial institution to apply for the CEBA loan.

  • Amount: Applicants may receive a repayable contribution (no-interest loan) of up to $40,000 with a loan forgiveness of 25% (up to $10,000) if the balance of the loan has been repaid on or before December 31, 2022.
  • Eligibility: Must demonstrate between $20,000 and $1.5M in total payroll paid in 2019.

COVID-19 Recovery: Leverage Government Funding Programs

Community Economic Development and Diversification (CEDD)

The CEDD program, made available through FedDev Ontario, supports businesses undertaking projects that will improve their productivity, capacity, and competitiveness, resulting in increased employment and growth opportunities.

  • Amount: Incorporated, for-profit businesses may receive a no-interest, repayable contribution from $250,000 up to $5M per project.
  • Eligibility: Legally incorporated businesses, including Indigenous-owned businesses, with operations in rural areas of eastern and western Ontario.
  • Project Examples: Adoption of new equipment; market development, diversification, and expansion; and facility improvement or expansion to support greater economic diversification.

Business Scale-up and Productivity (BSP) Program

The FedDev Ontario Business Scale-up and Productivity (BSP) program offsets upfront project costs and helps southern Ontario businesses grow more quickly.

  • Amount: Applicants may receive a repayable contribution (no-interest loan) of up to 35% of eligible project expenses to a maximum of $500,000 to $10M.
  • Eligibility: Must maintain profitable operations in southern Ontario for 2+ years, have more than 5 employees, and be an incorporated business or Indigenous organization.
  • Project Examples: Commercializing/producing new innovative products, processes, or services; acquiring, adopting, or adapting innovative technologies; and late-stage technology development to support new markets and/or industrial applications.

CanExport SMEs Program

Available to most established businesses looking to export, CanExport provides support for marketing and expansion activities involving new international markets. The program helps exporters improve their sales and brand exposure in international markets through marketing activities, market research, packaging modifications, and other initiatives.

  • Amount: Canadian businesses may access up to 75% of costs associated with export marketing projects to a maximum $75,000 per application.
  • Eligibility: 1-500 FTEs on payroll, $100,000-$100M in annual revenue, 1+ years incorporated with taxes filed, and project expenses must be at least $20,000. The applicant’s sales must be under $100,000 (or less than 10% of total sales) in the target export market over the previous 24 months.
  • Project Examples: The CanExport SMEs program is not currently approving travel or event-related project costs due to the COVID-19 crisis. Many other categories of market development activities remain eligible, including marketing tools creation, IP protection, and market research.

Support for Agri-businesses Via Farm Credit Canada (FCC)

Farm Credit Canada has received $5B from the federal government to extend their lending capacity to agri-businesses facing financial hardships due to COVID-19.

Farm Credit Canada is contributing the following for agri-businesses, producers, and food processors:

  • Deferral of principal payments up to 12 months; or
  • Deferral of principal and interest payments up to six months for existing loans; and
  • Access to an additional 24-month credit line up to $500,000 at a rate of Prime +1% and no fees, secured by general security agreements.

FCC is asking existing customers to contact their FCC relationship manager.

Apply for COVID-19 Loan and Grant Programs

Take the next step and find out if your business is applicable for Canadian government loan and grant programs related to COVID-19. The team at Mentor Works will match your business with available government funding programs and assist you throughout the application process.

View the latest COVID-19 funding program updates on Mentor Works support page or register for a free Canadian business funding webinar to learn about the latest funding updates.

Wanting more COVID-19 resources and supports? Check out the SBX resource page here fore more!

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ABOUT THE CONTRIBUTOR

Mentor Works is a business support organization specializing in Canadian government funding. The Ontario-based business has helped hundreds of businesses build and execute their funding strategy through a mix of federal and provincial government grants, loans, and tax credits. Mentor Works offers free online resources, funding webinars, and news via their website at www.mentorworks.ca.

Mentor Works Ltd.
28 Bett Court, Unit B
Guelph ON, N1C 0A5
888-599-3111
contact@mentorworks.ca
www.mentorworks.ca

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