This is a summary of the financial support available to small and medium-sized businesses through different Canadian federal government programs developed in response to the impact of COVID-19.


Business Credit Availability Program (BCAP)

In response to COVID-19, the Federal Government has made BCAP available to all legal businesses to help them deal with the issues of social distance.

The Export Development Corporation (EDC) and the Business Development Bank of Canada (BDC) provide funding via an organization’s principal lender with whom it already has a connection.

BCAP is not designed to replace private credit and is only accessible when an organization’s borrowing requirements exceed the support that its financial institution is prepared to give. To qualify for assistance under this program, the organization’s access to conventional sources of finance must be restricted, it must be creditworthy, and it must have a sustainable business.


On what basis is a small and medium-sized company defined?

Under BCAP, a small or medium-sized business is one with less than 500 employees.


Subsequently, the Federal Government of Canada announced the extension of BCAP to grant loans of up to $60 million and guarantees of up to $80 million to eligible medium-sized enterprises. For example, Mid-Market Financing and Guarantee Program.

The last available date to submit the application is June 30th, 2021.

To be eligible for the SME Loan and Guarantee Program under EDC and BDC, a company must be a small or medium-sized business that meets the following criteria:

  • Prior to the COVID-19 epidemic, it was financially viable and revenue-generating.
  • Has been affected by events related to the Covid-19 epidemic, either directly or indirectly.


BDC Co-Lending Program

Traditionally, BDC has focused on providing funding to SMEs. The Co-Lending Initiative is a $20 billion program in which BDC and partner financial institutions would co-lend to small and medium-sized enterprises (SMEs). 

Term loans in the following sums will be made available to qualifying organizations to assist operating cash flow (including repaying current debt):

  • up to $312,500 for businesses with annual revenues under $1 million;
  • up to $3.125 million for businesses with annual revenues between $1 million and $50 million; and
  • up to $6.25 million for businesses with annual revenues over $50 million.

The BDC will fund 80% of the loan and the financial institution will fund the remaining 20% under this arrangement. Loans are documented by the borrower’s banking institution, with BDC participating in the loan and acquiring a piece of it. For the first 12 months, payments will be interest-only, with blended principle and interest payments based on a 20-year amortization. The loan will have a maximum term of 10 years and applications will be available until June 2021.


EDC Loan Guarantee

To make it easier for EDC to take on a role under BCAP, the mission of EDC has been enlarged to cover domestic concerns until December 31, 2021. EDC would guarantee 80% of new short-term operating credit facilities and cash flow term loans offered to firms affected by Covid-19 by a financial institution in the amount of up to $6.25 million under this program.

Existing loans cannot be backed up by the EDC guarantee. The length of both the loans and the guarantee will be up to five years, depending on the lender’s discretion. 

EDC will impose a guarantee fee of 1.8 percent of the permitted loan amount every year, with payment delayed for up to six months on lesser loans.

The profits of these guaranteed loans must be used for operational expenditures (such as wages and rent) rather than refinancing current debt, bonuses, stock buybacks, CEO salary hikes, dividends, bonuses, or shareholder loans. The program has been broadened to allow the profits of these loans to be used to make regularly scheduled principal and interest payments on existing debt.

Due to the fact that these loans are offered by each participating financial institution, application procedures, documentation, covenants, pricing, and whether collateral is required differ from lender to lender and may be unique to each borrower’s financial position.


Mid-Market Financing and Guarantee Program

The federal government of Canada announced on May 11, 2020, that BCAP will be expanded to provide loans of up to $60 million and guarantees of up to $80 million to eligible medium-sized enterprises.


Mid-Market Financing Program

The goal of BDC’s program is to offer liquidity to medium-sized businesses that have been harmed by COVID-19 and have financial demands that are greater than what BCAP can give.

According to the BDC press release, this initiative will be offered to businesses with revenues of more than $100 million (but less than $500 million). Junior loans in the range of $12.5 million to $60 million will be issued jointly by the business’s principal lender and the BDC. These loans are likely to be subordinated to current debt. It is reported that the Mid-Market Financing Program will be accessible until or before June 2021. 

The first 12 months’ interest is capitalized and due at maturity, with the principal returned at the conclusion of the four-year period.


Mid-Market Guarantee Program

EDC’s initiative is designed to help businesses with sales ranging from $50 million to $300 million. EDC will guarantee 75 percent of loans between $16.75 million and $80 million under the scheme. Exporters, overseas investors, and enterprises that offer their products or services within Canada will be eligible for these assurances, according to the EDC news release.



The program originally allowed for revolving loans of up to $40,000 to support operating costs, payroll, and other non-deferrable costs that are necessary to keep a firm running. The Government of Canada is completely funding the loan.

Later, it was stated that companies and non-profits qualifying for CEBA loans that are still being severely impacted by the epidemic will be able to receive an additional $20,000 interest-free loan in addition to the original loan of $40,000. If returned by December 3, 2022, half of this additional sum is forgiven. The deadline for applications has been extended until June 30, 2021.



An organization must be a Canadian operational business (i.e., not a holding corporation) or a not-for-profit organization that was in operation on or before March 1, 2020, and either:

  • Have paid total payroll of $20,000 to $1.5 million in the 2019 calendar year (increased from $50,000 to $1.0 million on April 16, 2020); or
  • Have paid total payroll of less than $20,000 in the 2019 calendar year and:
    • have a participating banking institution’s company operating account
    • have a business number from the Canada Revenue Agency and have filed a 2018 or 2019 tax return; and
    • have non-deferrable costs in the range of $40,000 to $1,500,000 in 2020. Rent, property taxes, utilities, and insurance are examples of non-deferrable costs that are eligible.


Loan, Interest, and Repayment

A CEBA loan will be a revolving credit facility of up to $60,000 with drawings and revolvement at first. Any outstanding debt after December 31, 2020, will be considered as a five-year term loan with a maturity date of December 31, 2025. The following interest and repayment terms will apply to CEBA loans:

  • Until December 31, 2022, there is no interest. Interest will be paid monthly beginning January 1, 2023, at a rate of 5% per annum
  • There will be no principal payments until December 31, 2022.
  • CEBA loans expire on December 31, 2025, and must be repaid in full.
  • If the amount is returned before December 31, 2022, 25% of the original loan (up to $10,000) is forgiven, as is half of the extra financing (another $10,000).



A CEBA loan is not available to the following categories of organizations:

  • Organizations or bodies controlled by the government, or entities controlled by a government agency or body.
  • Political officeholders own businesses.
  • Entities that have a holding company structure.
  • Unions, philanthropic, religious, or fraternal organizations, or an entity controlled by one of these organizations, or a registered T2 or T3010 company that earns a percentage of its revenue from the sale of goods or services if it is one of these organizations.
  • Entities that encourage hate, advocate violence, or discriminate on the basis of sex, gender, sexual orientation, race, ethnicity, religion, culture, area, education, age, or mental or physical disability.

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