Relief for Businesses during COVID-19

By Tamara Korassa, Partner and Jenna Chamberlain, Student-At-Law

The Government of Canada is creating programs to help businesses survive and continue to operate during the COVID-19 crises.

Business Credit Availability Program

One of these programs is the Business Credit Availability Program. This program was implemented in partnership with Export Development Canada and Business Development Canada. The loans are administered through financial institutions.

There are three different options available under the Business Credit Availability Program:

1. Canadian Emergency Business Account (CEBA)

Eligible small businesses and not-for-profit organizations can apply for an interest-free loan of up to $40,000. The loan must be used for the operating costs of the business.

To qualify, the borrower’s total employment income paid in 2019 must be between $20,000 and $1,500,000. There are other eligibility requirements and exclusions. Each business must contact its primary financial institution to apply.

CEBA includes a repayment incentive. Repayment of the balance of the loan by December 31, 2022 will result in forgiveness of 25% of the loan (maximum of $10,000).

2. Export Development Canada Loan Guarantee

Eligible small and medium businesses can apply for up to $6,250,000 in operating credit or loans from financial institutions. Export Development Canada will guarantee 80% of the loan. The loan must be used for the operating costs of the business.

The program is available for all Canadian businesses that were otherwise financially viable and revenue generating prior to COVID-19. There are eligibility requirements and exclusions. Each business must contact its primary financial institution to apply.

Any Export Development Canada fees related to the guarantee will be deferred for the first six months.

3. Business Development Canada Co-Lending Program

Eligible small and medium businesses can apply for a loan to cover both operating costs and liquidity needs. Business Development Canada will provide 80% of the loan and the remaining 20% will be provided by the financial institution.

There are three options available depending on the business applying for the loan:

  1. Businesses with revenues of less than $1,000,000 per year can apply for a loan of up to $312,500;
  2. Businesses with revenues between $1,000,000 and $50,000,000 per year can apply for a loan of up to $3,125,000;
  3. Businesses with revenues in excess of $50,000,000 per year can apply for a loan of up to $6,250,000.

The program is available for all Canadian businesses that were otherwise financially viable and revenue generating prior to COVID-19. There are eligibility requirements and exclusions. Each business must contact its primary financial institution to apply.

For the first 12 months, the borrower will only be required to pay the interest. The loans have a 10-year repayment period.

Working Capital Loan

Business Development Canada and Export Development Canada are also administering a Working Capital Loan. These loans are provided directly to businesses, without the involvement of a financial institution.

Eligible businesses can receive 36-month subordinated working capital loans of $100,000, up to $2,000,000.

The program is available for all Canadian businesses that were otherwise financially viable and revenue generating prior to COVID-19. The borrower must provide a General Security Agreement and the owners of the business must provide a Personal Guarantee. There are eligibility requirements and exclusions. Each business must contact its primary financial institution to apply.

Qualifying businesses and existing Business Development Canada clients will only be required to pay interest for the first 12 months. During the remaining 24 month period, 40% of the loan must be repaid. The final 60% of the loan must be paid as a balloon payment in the 36th month of the loan period. The interest rate is the Business Development Canada, reduced by 1.75%. Currently, the interest rate is 3.3%.


This post is meant to provide information only and is not intended to provide legal advice. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this post to be outdated.