BDC ready to roll with loans for mid-sized companies hit hard by COVID-19

BDC ready to roll with loans for mid-sized companies hit hard by COVID-19

OTTAWA — Mid-sized Canadian businesses that are strapped for cash because of COVID-19 can now apply through their own banks to get loans of up to $60 million from the federal government.

The loans, to be administered by the Business Development Bank of Canada, are part of a package of federal credit programs Finance Minister Bill Morneau promised in late March.

The federal government had initially planned programs specific to oil and gas, which were facing particularly tough times as global demand for oil plummeted during the pandemic-induced economic slowdown at the same time as Russia and Saudi Arabia faced off in a production war that sent oil prices into a tailspin.

However, the Business Development Bank of Canada has now merged the oil and gas program with one for other companies, to create a single mid-sized business loan program for any company, in any sector, that meets the qualifying terms.

That includes companies with revenues between $100 million and $500 million that were financially viable before the pandemic, but saw their operations negatively affected by the economic shutdown or falling oil and gas prices.

Loan amounts will fall between $12.5 million and $60 million, with the Business Development Bank of Canada covering 90 per cent and a company’s own financial institution the rest. The BDC advises companies interested in the program to reach out directly to their main financial lender, and work with them to determine if the program is a good fit and how to proceed.

Applications will be open until the end of September.

Ben Brunnen, the vice-president of fiscal and economic policy for the Canadian Association of Petroleum Producers, said this week the loan programs had the potential to help struggling companies but that there was frustration and anxiety in the oil sector at how long it was taking to begin.

Oil prices fell to never-before-seen lows in April, briefly trading in negative territory, meaning oil producers were paying others to take their oil away.

Natural Resources Minister Seamus O’Regan said in an interview with The Canadian Press this week that the day that happened, he thought there was a technical glitch on the app he uses on his phone to monitor the markets.

“A lot of us will never forget where we were when the barrel hit negative,” he said. “It was something that you never thought you’d see.”

Prices have rebounded a lot as the production war between Saudi Arabia and Russia appears to have eased, and global demand is slowly rising as countries reopen their economies. Western Canadian Select is back above $34 a barrel now, but a year ago, it was trading for nearly $60.

Brunnen said there remains a ton of uncertainty for the industry because nobody knows what might happen if a second wave of the novel coronavirus arrives. Even in a best-case scenario, he doesn’t anticipate more normal production until well into next year, and many companies do not have the reserves to keep going for that long without help.

O’Regan said the government’s “eyes are wide open” to that fact so the loan programs are being designed to help.

A separate program for big companies with revenues over $300 million, is being administered by the Canada Development Investment Corporation. But the terms of those loans are so strict there has been no uptake so far.

Brunnen said that program, the Large Employer Emergency Financing Facility, or LEEFF, will be the route of last resort for the big oil producers, because the terms are so strict. They include government officials observing on the board, limits on executive pay, dividends and shareholder withdrawals.

There are some similar conditions being placed on the loans for mid-sized companies as well, including not allowing shareholder withdrawals, no increases to salaries or other benefits for management, and no increase to dividends.

This report by The Canadian Press was first published June 18, 2020.

Mia Rabson, The Canadian Press

Business

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Executive Director of Agape Kate Halas (left) receives $1000 from Sgt. Eric Christensen (right) on behalf of Agape. Photo/ Shaela Dansereau.
Former Wetaskiwin Peace Officer wins provincial award; gives back to Wetaskiwin community

Eric Christensen has won the Alberta Association of Community Peace Officers Award of Excellence.

The influenza vaccine will be available at no cost starting Monday in Alberta. “The more that we can avoid influenza-related tests, emergency visits and hospitalizations, the stronger our system will be to support those with COVID-19 and all other health needs," says Dr. Deena Hinshaw, the province's chief medical officer of health. (AP Photo/Ted S. Warren)
Hinshaw urges Albertans to get flu shot as COVID cases jump by 332

Alberta’s central zone now has 132 active COVID-19 cases

file photo
Maskwacis RCMP engage Major Crimes Unit to investigate suspicious death

Unidentified human remains were found in the burnt residence.

Security footage of the unknown male- Wetaskiwin RMCP seeking public assistance to identify him. Photo provided/ Alberta RCMP.
Wetaskiwin RCMP seek assistance to identify male in armed robbery

Mickey N’ Minnie’s Liquor store in Millet, Alta., robbed at gun point Oct.13, 2020

Across the province, there are 2,738 active cases of COVID-19, with 18,417 recovered cases. There have been 288 deaths from the virus in Alberta since the beginning of the pandemic. (File photo)
Alberta reports 244 additional COVID-19 cases Thursday

2,738 active cases of COVID-19 in the province

In this photo provided by Shannon Kiss, smoke from the CalWood Fire billows, Sunday, Oct. 18, 2020, as seen from Gunbarrel, Colo. (Shannon Kiss via AP)
‘First guys out:’ western Canadian air tanker fleet busy despite drop in wildfires

CEO believes wildfires have become more dangerous in recent years as people live closer to where they start

Employee Sophia Lovink shows off a bag of merchandise in Toronto on Thursday, June 11, 2020. (THE CANADIAN PRESS/Nathan Denette)
Canada gets C-average grade on 2nd year of cannabis legalization

Cannabis Council of Canada releases report card on federal government and legalization

Canadian and American flags fly near the Ambassador Bridge at the Canada-USA border crossing in Windsor, Ont. on Saturday, March 21, 2020. Restrictions on non-essential travel between Canada and the United States are being extended until at least Nov. 21. THE CANADIAN PRESS/Rob Gurdebeke
Non-essential travel restrictions at Canada-U.S. border extended to at least Nov. 21

The restrictions do not apply to those providing essential services in either country

(The Canadian Perss)
Banff wolves have lower survival rate due to hunting, trapping outside park boundary

Researchers looked at 72 radio-collared wolves in the national park from 1987 to August 2019

Democratic presidential candidate and former Vice President Joe Biden speaks at Miramar Regional Park in Miramar, Fla., Tuesday, Oct. 13, 2020. Alberta Premier Jason Kenney is still hopeful about the Keystone pipeline if there’s a change in government in the U.S. next month, saying Alberta has been engaging with American officials from both sides of the aisle. THE CANADIAN PRESS/AP-Carolyn Kaster
Alberta premier says he’s still hopeful about Keystone, even if Biden elected

The Alberta government has agreed to invest about US$1.1 billion as equity in the project

Chief Public Health Officer Dr. Theresa Tam takes part during a press conference during the COVID pandemic in Ottawa on Friday, Oct. 16, 2020. As parts of Canada face a new round of COVID-19-related restrictions, Canada’s chief public health officer is urging Canadians to continue making a “collective effort” to tackle the pandemic.THE CANADIAN PRESS/Sean Kilpatrick
Chief public health officer calls for continued ‘collective effort’ against COVID-19

Canada continues to climb toward the 200,000 mark for COVID-19 cases

This undated electron microscope image made available by the U.S. National Institutes of Health in February 2020 shows the Novel Coronavirus SARS-CoV-2, yellow, emerging from the surface of cells, blue/pink, cultured in the lab. Also known as 2019-nCoV, the virus causes COVID-19. THE CANADIAN PRESS/AP, NIAID-RML
Officer with Prince Albert Police tests positive for COVID-19, force says

Police co-operating with the provincial health authority’s efforts to trace the officer’s contacts

Smoke haze from forest fires burning in Alberta and British Columbia hangs over Banff, Alta., in Banff National Park, Friday, July 21, 2017. Visitors to Banff National Park in Alberta will soon have to reserve a spot for a shuttle bus to Lake Louise and Moraine Lake. THE CANADIAN PRESS/Jeff McIntosh
Banff wolves have lower survival rate due to hunting, trapping outside park boundary

Study shows grey wolves in Banff National Park don’t live much longer than those elsewhere in Alberta

Black Press file photo
Fire destroys lobster pound in Nova Scotia, police say man in hospital with injuries

RCMP say a man is in hospital with life threatening injuries

Most Read