The federal government has unveiled details of its latest program to help businesses affected by the pandemic
A new program has been launched by the Canadian government to provide extra support for businesses impacted by the pandemic.
The Highly Affected Sectors Credit Availability Program, or HASCAP, was mentioned in the economic statement last fall and provides 100% guaranteed loans for up to $1 million with flexible and competitive terms. For those with multiple locations under one entity, up to $6.26 million is available.
The support is available for small and medium-sized businesses that have lost at least 50% of their revenues in three months as a result of COVID-19 but despite its name, there are no limitations on the sectors from which businesses can apply, although retail and hospitality are likely to see a large number of applicants.
“HASCAP gives those in highly affected sectors—like tourism, hospitality, arts and culture—new support so they can weather this storm and be ready for a robust recovery that will create jobs and strengthen the middle class," commented trade minister and deputy prime minister Chrystia Freeland.
Applicants must have accessed either the Canada Emergency Wage Subsidy or Canada Emergency Rent Subsidy and the program is also open to sole proprietors and those that pay themselves through dividends.
Good but not perfect
Recent data from the Canadian Federation of Independent Business (CFIB) shows that one in six businesses is currently considering permanent closure after months of restrictions and low revenues.
That could mean that a quarter of Canada’s small businesses could be gone by the time the pandemic ends.
The CFIB has welcomes the launch of HASCAP but is calling on the government to make some changes.
“Most small firms are just not able to manage more debt at this time and will need a percentage of the loan forgiven for the program to be helpful,” said president, Dan Kelly. “CFIB recommends the federal government borrow from the model of the Canada Emergency Business Account (CEBA) and forgives a percentage of each HASCAP loan.
Driving future growth
The HASCAP loans will be offered through financial institutions with decisions based on Business Development Bank of Canada (BDC) criteria.
"Canada's banks and the federal government are here to support our hardest-hit businesses, bridge them through the crisis and help pave the way to a stronger future," said Neil Parmenter, president and CEO, Canadian Bankers Association. "The sectors targeted through HASCAP are important to Canada's economy and will help drive future growth. Just as they have through existing relief programs, banks are standing by Canadian businesses and households to position them for a strong, sustainable recovery."
