The Federal Government is working with financial institutions to support Canadian businesses impacted by COVID-19 through the Highly Affected Sectors Credit Availability Program (HASCAP). The program opens on February 1, 2021, at some participating financial institutions, and other participating financial institutions will deploy the program over the days that follow. Businesses have until June 30 to apply through their financial institution.
What is the program?
HASCAP is a government-backed loan program for Canadian businesses that have been heavily impacted by COVID-19. HASCAP offers eligible businesses loans starting at $25,000 up to $1,000,000 depending on the size of the business’ operations. Businesses with multiple locations could be eligible for up to $6,250,000, like hotels or restaurant chains.
Who is eligible to apply?
Canadian businesses must be able to prove they were financially stable and viable prior to the impact of COVID-19. The business must be able to show at least a 50% reduction in gross revenues in at least three months within the eight-month period prior to the date of application to HASCAP. These three months of revenue decline do not have to be consecutive. In addition, the business must have received payments from either the Canada Emergency Wage Subsidy (CEWS) or the Canada Emergency Rent Subsidy (CERS) prior to applying for HASCAP. A business may still apply for HASCAP even if it does not qualify for CEWS or CERS, but it will be required to provide financial statements demonstrating the revenue decline described above.
What are the details of the loan?
The loan is fully repayable with no forgivable portion mentioned by the government at this time. The loan will have a fixed interest rate of 4%, with repayment terms up to 10 years. Businesses may also be able to defer principal repayments for the first 12 months of the repayment period, making only interest payments during this period.
What can the loan be used for?
Businesses can use the proceeds from the loan to continue or resume operations. The proceeds cannot be used to refinance or pay down existing business debt.
How can a business apply?
Businesses need to apply through a financial institution, similar to the application process of the Canada Emergency Business Account (CEBA). Reach out to your businesses’ financial institution in order to start the application process.
When can a business apply?
Applications open on February 1, 2021, at some participating financial institutions, and other participating financial institutions will deploy the program over the days that follow. The deadline to apply for HASCAP is June 30, 2021.