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Canadian Federal Government Support: Highly Affected Sectors Credit Availability Program (HASCAP) Guarantee
Practical Law Canada Legal Update w-029-4970 (Approx. 4 pages)
Canadian Federal Government Support: Highly Affected Sectors Credit Availability Program (HASCAP) Guarantee
by Practical Law Canada Corporate and Securities
| Published on 03 Feb 2021 • Ontario |
On January 26, 2021, Canada's Minister of Small Business, Export Promotion and International Trade announced the Highly Affected Sectors Credit Availability Program (HASCAP) Guarantee which is directed to businesses highly impacted by the 2019 novel coronavirus disease (COVID-19). Under the Program, eligible businesses can access guaranteed, low interest loans of $25,000 to $1,000,000 to continue or resume operations. Businesses have until December 31, 2021 to apply.
Highly Affected Sectors Credit Availability Program (HASCAP) Program
On January 26, 2021, Canada's Minister of Small Business, Export Promotion and International Trade announced the Highly Affected Sectors Credit Availability Program (HASCAP) Guarantee which is directed to business owners highly impacted by 2019 novel coronavirus disease (COVID-19). Under the Program, eligible businesses can access guaranteed, low interest loans of $25,000 to $1,000,000 to continue or resume operations.
Applications opened on February 1, 2021 through a limited number of financial institutions and will be expanded to additional financial institutions by February 15, 2021.
Businesses have until December 31, 2021 to apply.
Under the program, the Business Development Bank of Canada (BDC), will provide loan guarantees to the business' primary financial institution of a new term loan. Interest is payable at 4% with repayment terms of up to 10 years. There is a postponement of principal payments for up to 12 months.
To apply for HASCAP businesses must contact their primary financial institution.
Eligibility
To be eligible:
- The business must be Canadian based.
- The business must have been financially stable and viable prior to the current economic situation.
- The business must have received payments from either the Canada Emergency Wage Subsidy (CEWS) or the Canada Emergency Rent Subsidy (CERS) by having demonstrated a minimum of 50% revenue decline for at least three months within the eight-month period prior to the date of the HASCAP application or be able to demonstrate the revenue decline in another manner. For more information on CEWS, see Practice Note COVID-19: Government of Canada Initiatives for Avoiding Layoffs & Retaining the Workforce: Canada Emergency Wage Subsidy and for more information on CERS, see Legal Update COVID-19: Government Announces Canada Emergency Rent Subsidy (CERS): Replacement to Canada Emergency Commercial Rent Assistance Program (CECRA).
- The loan must be used to continue or resume operations and cannot be used to pay or refinancing existing loans.
Some commentators and business affiliations have suggested that HASCAP is directed to hospitality and tourism, hotels and arts and entertainment and others have included businesses that rely on in-person service. The BDC website does not contain any limitations on the business sectors or businesses which may access HASCAP.
Information about the program is available at BDC's website at Highly Affected Sectors Credit Availability Program (HASCAP) Guarantee. The website for the Canadian Federation of Independent Business contains information not available on the BDC website, including thresholds for calculating the loan amount.
This Legal Update will be updated as additional details are provided by the Federal Government.
For information on other Government support for small and medium-sized businesses, see Checklist, COVID-19: Canadian Federal Government Financial Support for Small and Medium-Sized Businesses and Legal Updates COVID-19: Government Announces Canada Emergency Rent Subsidy (CERS): Replacement to Canada Emergency Commercial Rent Assistance Program (CECRA) and Ontario Small Business Support Grant.