Understanding COVID-19 support loans

The government of Canada has launched the Highly Affected Sectors Credit Availability Program (HASCAP) to provide pandemic support loans for all Canadian businesses, largely for highly affected sectors.

HASCAP government funding supports all businesses that have experienced a substantial decrease in revenues (at least 50 per cent) caused by COVID-19.

Qualified small to medium-sized Canadian businesses can receive $25,000 to $1 million in HASCAP support loans, and larger organizations with multiple locations can receive up to $6.25 million in government funding.

Administered through the Business Development Bank of Canada (BDC), HASCAP offers financial assistance to Canadian businesses that have been hit hard by the COVID-19 pandemic.

Applicant Eligibility

Based on the following eligibility criteria established by the government of Canada, a primary financial institution will determine whether a business qualifies for HASCAP loans.

An eligible business must be based in Canada and have been financially stable and viable prior to the current economic situation. It also must have received payments either from the Canada Emergency Wage Subsidy (CEWS) or the Canada Emergency Rent Subsidy (CERS) by having demonstrated a minimum 50 per cent revenue decline for at least three months (not necessarily consecutive) within an eight-month period prior to the date of the HASCAP guarantee application.

If an eligible business does not qualify for CEWS and CERS, but otherwise meets all HASCAP eligibility criteria, they must provide financial statements that reflect at least three months where their revenue decreased by a minimum 50 per cent within the eight-month period prior to the date of the HASCAP guarantee application.

Available Funding

An eligible business can apply for a HASCAP loan for each legal entity they own, up to a maximum combined amount of $6.25 million (all legal entities combined). Loans of $25,000 to $1 million can be issued to a single, small to medium-sized business. Up to $6.25 million in loans for large organizations with multiple business locations.

Eligible Expenses

HASCAP loans cannot be used to pay or refinance existing debts. The loan is used exclusively to continue or resume operations by relief of payments relating to:

• Rent payments.
• Employee payroll.
• Utilities.
• Any additional costs deemed eligible to sustain business operations.

The loan has interest rates from 4 per cent and a repayment term of up to 10 years. Up to a 12-month postponement of principal payments at the start of the loan is available.

The HASCAP guarantee is available until June 30, 2021.

Alena Barreca is marketing coordinator for Mentor Works, 28 Bett Court, Unit B, Guelph, Ont. N1C 0A5, 888-599-3111, www.mentorworks.ca.