A new financing facility is open to Canada’s largest employers – but under stricter rules
Canada’s largest employers who are struggling to stay afloat amid the COVID-19 crisis can apply for another lifeline offered by the federal government.
A new program – dubbed the Large Employer Emergency Financing Facility (LEEFF) – will provide bridge financing options to big businesses that continue to employ millions despite the economic downturn sparked by the coronavirus pandemic.
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“These are bridge loans, not bailouts,” Prime Minister Justin Trudeau said in a news conference Monday. The measures will help “save middle class jobs, safeguard workers’ benefits, and protect our economy,” he said.
The federal government will offer loans of up to $60m per company and guarantees of up to $80m through the expanded Business Credit Availability Program. Private-sector lenders will be tapped to give employers across industries and regions increased access to capital.
But the program follows a stricter system of regulation. “Companies seeking support must demonstrate how they intend to preserve employment and maintain investment activities. Recipients will need to commit to respect collective bargaining agreements and protect workers’ pensions,” the federal government said.
While LEEFF gives employers additional liquidity to keep workers on the payroll, avoid bankruptcies and survive the financial impact of the global health crisis, the lifeline cannot be used to restructure companies or resolve insolvencies.
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“In considering a company’s eligibility to assistance under the LEEFF program, an assessment may be made of its employment, tax, and economic activity in Canada, as well as its international organizational structure and financing arrangements,” the government said.
The financing facility was unveiled just days after the federal government finalised an agreement with provinces and territories to raise the minimum wage of essential workers.
“Employers, large and small, are facing challenges due to the COVID-19 global pandemic. Our government has their backs,” Finance Minister Bill Morneau said.
“We know that many businesses of all sizes need our help in order to keep their many employees on the payroll and their suppliers paid until the economy recovers,” he said.