HASCAP: What You’ll Need to Apply
April 29, 2021
|
Covid 19 Financial Relief Programs,
Addressing Covid 19
- Keywords:
- hascap
April 29, 2021
|
Covid 19 Financial Relief Programs,
Addressing Covid 19
There’s a new federal government loan program to help small and medium-size businesses impacted by the COVID-19 pandemic. The Highly Affected Sectors Credit Availability Program, or HASCAP, offers loans between $25,000 and $1 million to qualifying businesses. The program is available through December 31, 2021, and loans are 100% guaranteed by the Business Development Bank of Canada, or BDC.
What it is
HASCAP is designed to help small and medium-size businesses that were viable and financially stable before the crisis. Although the government has stated the loans are geared toward such hard-hit sectors such as hospitality, tourism and the arts, the program is available to all Canadian businesses regardless of industry.
Loans must be used to continue or resume operations and cannot be used to pay or refinance existing debts. You can apply for a loan under the HASCAP Guarantee for each legal entity you own, up to a maximum of $6.25 million for all legal entities combined.
Loan amounts are divided into three segments. Depending on the amount you’re seeking to borrow, you may need to meet minimum revenue requirements based on financial statements prior to March 1, 2020. Those seeking the highest amounts will need to meet minimum debt service coverage ratio requirements—that is, the cash flow available to pay current debt obligations. All borrowers must meet minimum risk rating requirements.
The loans, which can be interest-only for up to 12 months, can be paid back over 10 years.
What you’ll need
Eligible businesses must have received payments either from the Canada Emergency Wage Subsidy—CEWS—or the Canada Emergency Rent Subsidy—CERS—by demonstrating three distinct months of more than a 50% decline in year-over-year revenue over the eight months preceding the application (the three months do not need to be consecutive).
If your business does not qualify for either CEWS or CERS, you must provide financial statements that reflect the revenue decline criteria.
You must apply for a HASCAP loan through your financial institution. If you’re a BMO Commercial Bank client, work with your relationship manager to help you through the process.
Preparing to apply
While HASCAP’s eligibility requirements are more straightforward than other relief programs, there are certain considerations in the application process that you may want to take into account.
Your revenue calculations, for example, must include any government relief funds already received and continue to show that the business reported a 50% revenue decline despite the aid.
Also, while there’s hope that the economic landscape will soon improve—potentially enabling a business to pay off a loan early—the past couple of months have demonstrated that there’s still plenty uncertainty regarding when people will be ready to participate fully in activities such as travel or attending large public events. That’s why it’s important to determine the appropriate term for a HASCAP loan.
We’re all hoping for conditions will improve sooner rather than later. Nonetheless, it’s best to take a realistic (even if that means pessimistic) look at what you’ll need to stay afloat. After all, the only thing that’s clear is just how unclear the near-term outlook is for many businesses.
Read more
There’s a new federal government loan program to help small and medium-size businesses impacted by the COVID-19 pandemic. The Highly Affected Sectors Credit Availability Program, or HASCAP, offers loans between $25,000 and $1 million to qualifying businesses. The program is available through December 31, 2021, and loans are 100% guaranteed by the Business Development Bank of Canada, or BDC.
What it is
HASCAP is designed to help small and medium-size businesses that were viable and financially stable before the crisis. Although the government has stated the loans are geared toward such hard-hit sectors such as hospitality, tourism and the arts, the program is available to all Canadian businesses regardless of industry.
Loans must be used to continue or resume operations and cannot be used to pay or refinance existing debts. You can apply for a loan under the HASCAP Guarantee for each legal entity you own, up to a maximum of $6.25 million for all legal entities combined.
Loan amounts are divided into three segments. Depending on the amount you’re seeking to borrow, you may need to meet minimum revenue requirements based on financial statements prior to March 1, 2020. Those seeking the highest amounts will need to meet minimum debt service coverage ratio requirements—that is, the cash flow available to pay current debt obligations. All borrowers must meet minimum risk rating requirements.
The loans, which can be interest-only for up to 12 months, can be paid back over 10 years.
What you’ll need
Eligible businesses must have received payments either from the Canada Emergency Wage Subsidy—CEWS—or the Canada Emergency Rent Subsidy—CERS—by demonstrating three distinct months of more than a 50% decline in year-over-year revenue over the eight months preceding the application (the three months do not need to be consecutive).
If your business does not qualify for either CEWS or CERS, you must provide financial statements that reflect the revenue decline criteria.
You must apply for a HASCAP loan through your financial institution. If you’re a BMO Commercial Bank client, work with your relationship manager to help you through the process.
Preparing to apply
While HASCAP’s eligibility requirements are more straightforward than other relief programs, there are certain considerations in the application process that you may want to take into account.
Your revenue calculations, for example, must include any government relief funds already received and continue to show that the business reported a 50% revenue decline despite the aid.
Also, while there’s hope that the economic landscape will soon improve—potentially enabling a business to pay off a loan early—the past couple of months have demonstrated that there’s still plenty uncertainty regarding when people will be ready to participate fully in activities such as travel or attending large public events. That’s why it’s important to determine the appropriate term for a HASCAP loan.
We’re all hoping for conditions will improve sooner rather than later. Nonetheless, it’s best to take a realistic (even if that means pessimistic) look at what you’ll need to stay afloat. After all, the only thing that’s clear is just how unclear the near-term outlook is for many businesses.
What to Read Next.
BMO and EDC Launch Trade Expansion Lending Program to Help Canadian Businesses Grow and Compete Globally
April 02, 2021 Doing Business Internationally, Finance Growth
To help Canadian businesses compete on a global scale, BMO clients can now take advantage of the Trade Expansion Lending Program, or TELP. The progra…
Continue Reading>
Tell us three simple things to
customize your experience
