Applications open for government loans to aid big businesses taking financial hit from COVID-19

Applications opened today on a program that will deliver bridge loans for big Canadian businesses struggling to keep employees on the payroll through the pandemic.

The large employer emergency financing facility (LEEFF) will provide support to employers with annual revenues of more than $300 million whose credit needs aren’t being met through conventional financing. The program is open to large commercial businesses in all sectors (except those in the financial sector) and certain not-for-profit businesses, like airports.

The program comes with conditions attached — including a requirement that companies receiving the loans disclose their environmental plans.

Finance Minister Bill Morneau is providing more details during a news conference at 9:30 a.m. ET and is carrying it live.

To qualify, businesses must be looking for financing of $60 million or more and have significant operations or large numbers of employees in Canada, and must not be involved in any ongoing insolvency proceedings. 

Morneau has said the program is meant to help companies that have a “significant footprint” in Canada bridge to better days. It is not intended to be a low-cost loan program for companies that don’t need it, or to bail out companies that were already in financial trouble before the pandemic.

No ‘excessive’ executive pay

Applicant companies must disclose their climate action plans and sustainability goals in order to qualify. They must meet other conditions as well — including not paying their executives “excessive” salaries. 

Companies that have been found guilty of tax evasion are disqualified from the program.

Prime Minister Justin Trudeau announced the program May 11, stressing that it’s meant to serve as bridge financing, not a “bailout,” and that the government is “a lender of last resort.”

“Ideally, private-sector lenders are adequate for the needs of large businesses. But in an extraordinary situation when that isn’t always enough, we must act to prevent massive harm to Canadian workers and families and the Canadian economy,” he said at the time.

“We will not allow millions of people to lose their livelihoods because of unprecedented events that were beyond their control.”

Conservative Leader Andrew Scheer has said the program falls short of what’s needed to support Canada’s hard-hit oil and gas sector, and called for a specific package for that industry.