BDC, EDC Reps Discuss COVID-19 Financial Relief
May 29, 2020
|
Covid 19 Financial Relief Programs
The COVID-19 pandemic has created unprecedented economic disruption and continuing challenges for businesses of all stripes. In response, the Canadian government has implemented financial relief programs to help businesses make their way through the early stages of this crisis.
The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) have partnered with financial institutions to help Canadian businesses in need of short-term liquidity to sustain operations through the pandemic. As part of the Government of Canada’s Business Credit Availability Program (BCAP), the Crown corporations can help companies get loans or lines of credit to cover their payroll, rent and operating costs.
Through these relief programs, eligible businesses can obtain up to $12.5 million in credit with support from BDC and EDC as each Crown corporation program can support up to $6.25 million. Through the BDC Co-Lending Program
, BDC provides 80% of the financed amount and the remaining 20% is covered by your financial institution. Through the EDC Business Credit Availability Program (BCAP) Guarantee, EDC provides a guarantee of 80% to your financial institution on the funds borrowed in case you can’t repay. The Guarantee can be renewed annually for up to 5 years – a recent announced change from the program’s initial launch and, at the discretion of your financial institution, the loan can be structured as interest only up to 12 months.
The main distinction of the BDC Co-lending Program is the longer-term available, up to 10 years with amortizations up to 20 years based upon the schedule determined by your financial institution.
Your first point of contact should be with your banking relationship manager to help determine which programs are best suited to your needs. “That person will be your key resource to support you through this process,” said Julie Pottier, EDC’s Acting Senior Vice-President, Channels and Marketing.
Addressing an Unprecedented Challenge
The representatives of both programs cited the need to address an unprecedented short-term blow to the economy, which will require time to recover from.
“We don’t think we will reach pre-crisis levels of economic activity for another two years,” said Pierre Dubreuil, the BDC’s Executive Vice President of Financing. “We expect that retail customers in particular will be a lot more prudent and will take time to ramp up expenses. We expect about 25% of the economy will be much slower.”
“We see a decline in economic output in the first half of the year and we’ll have to wait until the last quarter to see a rise that will continue into 2021,” Pottier said. “EDC expects a 9% contraction this year and approximately a 5% gain in 2021.”
These relief programs are fundamentally about preserving Canadian businesses, helping companies acquire the short-term liquidity necessary to get through the next six months. Programs like these demonstrate that the financial system is well-equipped to respond to the current challenge.
Scott Brison, Vice Chair for BMO Capital Markets and former President of the Treasury Board of Canada, noted that the 2008 financial crisis “created a muscle memory” to help the global financial community to prepare for this crisis.
“Today we’re benefitting from that experience as governments, central banks and financial institutions are responding more quickly and more significantly than they did in 2008,” Brison said.
You can listen to the full conversation with Dubreuil and Pottier discussing the BDC and EDC programs in detail here, or read the content above that describes what is in the podcast.
Read more
The COVID-19 pandemic has created unprecedented economic disruption and continuing challenges for businesses of all stripes. In response, the Canadian government has implemented financial relief programs to help businesses make their way through the early stages of this crisis.
The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) have partnered with financial institutions to help Canadian businesses in need of short-term liquidity to sustain operations through the pandemic. As part of the Government of Canada’s Business Credit Availability Program (BCAP), the Crown corporations can help companies get loans or lines of credit to cover their payroll, rent and operating costs.
Through these relief programs, eligible businesses can obtain up to $12.5 million in credit with support from BDC and EDC as each Crown corporation program can support up to $6.25 million. Through the BDC Co-Lending Program, BDC provides 80% of the financed amount and the remaining 20% is covered by your financial institution. Through the EDC Business Credit Availability Program (BCAP) Guarantee, EDC provides a guarantee of 80% to your financial institution on the funds borrowed in case you can’t repay. The Guarantee can be renewed annually for up to 5 years – a recent announced change from the program’s initial launch and, at the discretion of your financial institution, the loan can be structured as interest only up to 12 months.
The main distinction of the BDC Co-lending Program is the longer-term available, up to 10 years with amortizations up to 20 years based upon the schedule determined by your financial institution.
Your first point of contact should be with your banking relationship manager to help determine which programs are best suited to your needs. “That person will be your key resource to support you through this process,” said Julie Pottier, EDC’s Acting Senior Vice-President, Channels and Marketing.
Addressing an Unprecedented Challenge
The representatives of both programs cited the need to address an unprecedented short-term blow to the economy, which will require time to recover from.
“We don’t think we will reach pre-crisis levels of economic activity for another two years,” said Pierre Dubreuil, the BDC’s Executive Vice President of Financing. “We expect that retail customers in particular will be a lot more prudent and will take time to ramp up expenses. We expect about 25% of the economy will be much slower.”
“We see a decline in economic output in the first half of the year and we’ll have to wait until the last quarter to see a rise that will continue into 2021,” Pottier said. “EDC expects a 9% contraction this year and approximately a 5% gain in 2021.”
These relief programs are fundamentally about preserving Canadian businesses, helping companies acquire the short-term liquidity necessary to get through the next six months. Programs like these demonstrate that the financial system is well-equipped to respond to the current challenge.
Scott Brison, Vice Chair for BMO Capital Markets and former President of the Treasury Board of Canada, noted that the 2008 financial crisis “created a muscle memory” to help the global financial community to prepare for this crisis.
“Today we’re benefitting from that experience as governments, central banks and financial institutions are responding more quickly and more significantly than they did in 2008,” Brison said.
You can listen to the full conversation with Dubreuil and Pottier discussing the BDC and EDC programs in detail here, or read the content above that describes what is in the podcast.
Tell us three simple things to
customize your experience
