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Institutional investors offering financial support to Québec businesses amid COVID-19

Author(s): Chloe Cavaliere, Samuel Cantin

Apr 6, 2020

Last updated: April 20, 2020

For further information on the changes below, please contact one of the authors above or any member of our Venture Capital team.

On March 30th, the Caisse de dépôt et placement du Québec (CDPQ) announced a $4 billion financial assistance program to support Québec businesses temporarily impacted by the COVID-19 crisis. The announcement is the latest in a series of measures adopted by other institutional investors aimed at providing financial relief to businesses across Canada, including Québec. The table below summarizes those initiatives as of April 20, 2020.

This list is not exhaustive. You should consult the institution sponsoring the initiative directly for specific information or contact us for assistance.

New Loan Programs

Institution

Financial Program

How to Apply

  • Available for all Québec businesses, whether or not they are in CDPQ’s portfolio. 
  • To be considered for financing, companies must meet the following criteria:

- have been profitable before the start of the COVID-19 crisis;

- have a promising growth outlook in their sector; and

- seek financing of $5 million or more.

  • As it does with its existing portfolio companies, CDPQ will deploy the financial and operational expertise of its teams to help selected companies in structuring and developing innovative financial solutions.

Companies that wish to request financing are invited to fill out the form at www.cdpq.com/en/form-covid-19.

After CDPQ receives the form, companies will quickly be contacted by telephone to obtain further information and assess the request.

https://www.cdpq.com/en/news/pressreleases/cdpq-joins-the-collective-effort-during-the-covid-19-crisis

 

Concerted temporary action program for businesses

Eligible Businesses

  • Targeted at companies whose liquidity is impacted by the pandemic.
  • Available for businesses operating in Québec, including cooperatives and other social economy enterprises with commercial activities.
  • Eligible businesses are those that find themselves in a precarious situation and temporary difficulty as a result of the pandemic. They must show that their financial structure offers realistic prospects for profitability.
  • Businesses must show that their cash flow issues are temporary and that the liquidity shortage stems from:

- a problem involving the supply of raw materials or products (goods or services); or

- an inability, or a substantially decreased ability, to deliver goods, products or services.

 

Details of the financial assistance

  • A loan guarantee is the preferred form of assistance, however it can also take the form of a loan from IQ.
  • IQ aims to work in close cooperation with financial institutions and federal authorities in order to share risks.
  • Minimum funding amount is $50,000 and refinancing is prohibited.
  • This measure is designed to increase working capital.

 

All industries are eligible, except for the following:

  • weapons manufacturing or distribution;
  • games of chance and gambling, combat sports, racing and other similar activities;
  • production and sale of tobacco and drugs along with services related to their use, except for projects involving pharmaceutical-grade products approved by Health Canada and having a DIN, or their ingredients, as well as R&D projects licensed by Health Canada;
  • any activity whose main purpose is protected by the Canadian Charter of Rights and Freedoms (religion, politics, human rights advocacy, etc.); and
  • any other activity that may offend public morals.

Existing IQ clients should contact their account manager by email or telephone using the online directory: https://www.investquebec.com/quebec/en/nous-joindre/nos-experts.html.

 

Non-clients seeking a loan guarantee should contact their financial institution, which will then get in touch with one of IQ’s account managers.

 

Applications will be reviewed on a case-by-case basis, according to the business’s circumstances and IQ’s management practices.

 

https://www.investquebec.com/quebec/en/financial-products/all-our-solutions/Concerted-temporary-action-program-for-businesses.html

 

Several financing programs are available through the Business Credit Availability Program.

BDC Co-Lending Program for SMEs

  • This program provides term loans for operational and liquidity needs of businesses, which can include interest payments on existing debt. The program is available to businesses that were financially viable and revenue-generating prior to the pandemic.
  • Loan amounts vary in accordance with revenues:
    • Up to $312,500 to businesses with revenues of less than $1 million.
    • Up to $3.125 million for businesses with revenues between $1 million and $50 million.
    • Up to $6.25 million for businesses with revenues in excess of $50 million.
  • 80% of the amount financed is provided by BDC and the remaining 20% by a financial institution
  • 80% can be guaranteed by EDC
  • Loans are interest-free for the first 12 months and have a 10-year repayment period.

Canada Emergency Business Account (CEBA)

  • This program will provide interest-free loans of up to $40,000 to small businesses and not-for-profits impacted by COVID-19 to help temporarily cover their operating costs.
  • Loans will be made available through primary financial institutions.
  • Repaying the balance of the loan on or before December 31, 2022 results in loan forgiveness of 25% (up to $10,000).
  • If the loan is not repaid by December 31, 2022, the remaining balance will be converted into a three-year term loan at 5% interest.
  • To qualify, businesses need to demonstrate they paid between $20,000 and $1.5 million in payroll in 2019.
  • The funds from this loan can only be used to pay non-deferrable operating expenses of the borrower, including payroll, rent, utilities, insurance, property tax and regularly scheduled debt service, and may not be used to fund any payments or expenses such as prepayment or refinancing of existing indebtedness, payments of dividends or distributions or increases in management compensation.
  • To be eligible, the borrower must have a chequing or operating account with the lender, which must be its primary financial institution, and the account must have been opened on or prior to March 1, 2020 and have not been in arrears on existing borrowing facilities by more than 90 days on March 1, 2020.

 

BDC Oil and Gas Sector Financing

  • For Canadian-based oil and gas producers, oilfield service companies and midstream providers.
  • Funds to be used for operational cashflow and business continuity purposes.
  • Qualifying businesses must have been financially viable prior to the current economic environment.
  • Loan size between $15 million and $60 million.
  • Offered at commercial rates, repayable within 4 years.

 

BDC Capital, BDC’s investment arm, has also launched the BDC Capital Bridge Financing Program:

 

  • BDC Capital will match, with a convertible note, a current financing round being raised through qualified existing and/or new investors made for eligible Canadian start-ups.
  • To be eligible, companies must be Canadian, backed by a qualified venture capital firm, have raised at least $500,000 in external capital before applying for the program, and be specifically impacted by the COVID-19 pandemic.
  • Any matching investment by BDC Capital will be further subject to satisfactory due diligence review by BDC, agreement on terms of the investment and approval by a BDC investment committee.
  • The program is ideal for high potential companies who have venture capital investor syndicates that are willing to support them. BDC will invest alongside these groups.
  • All companies that meet the criteria are eligible to apply, whether or not they are currently in BDC’s portfolio.

Applications details about the BDC Co-Lending Program for SMEs will be made available in the days to come by financial institutions. The EDC Loan Guarantee for SMEs program is now available at various financial institutions and credit unions. Interested businesses should contact their current financial institutions.

The CEBA program is now available at various financial institutions and credit unions. Interested businesses should contact their current financial institutions.

The deployment strategy for BDC’s Oil and Gas Sector Financing will be finalized shortly. A form will be made available on BDC’s website once more information becomes available.

 

Businesses interested in BDC Capital’s Bridge Financing Program should speak to their lead investor for details.

https://www.bdc.ca/en/pages/special-support.aspx

https://www.canada.ca/en/department-finance/programs/financial-sector-policy/business-credit-availability-program.html

https://ceba-cuec.ca/

https://www.bdc.ca/en/bdc-capital/venture-capital/pages/venture-capital.aspx

Fondaction et le CETEQ s'allient pour accélérer la transition ...

  • Fondaction will allocate a financial assistance program of $40 million to Québec-based SMEs in the agribusiness sector over the next year.
  • Fondaction has made its financing offer more flexible for companies in the sector needing development capital for projects of $500,000 or more.
  • Main eligibility criteria are: 
    • Pre-crisis profitability
    • Good growth prospects
    • Strong management team.

Businesses wishing to use Fondaction's financing offer are invited to fill out this form.

https://www.fondaction.com/nouvelles/fondaction-soutien-secteur-agroalimentaire/

 

Deferred Payments

Institution

Financial Relief

How to Apply

IQ is offering its existing clients a deferral on capital repayments for up to six months. Payment will be deferred until the end of the term of the financing such that the term will be extended by the duration of the deferral.

This is not an automatic measure. To apply, existing IQ clients must contact their account managers.

 

https://www.investquebec.com/quebec/fr/a-propos/COVID-19.html

The FSTQ is offering its portfolio companies a six-month deferral of loan interest and principal payments. This measure is meant to ease the short-term financial pressures faced by businesses in its network.

Existing clients are invited to contact the person responsible for their file within the FSTQ network. Entrepreneurs may also contact FSTQ by email at entreprise@fondsftq.com.

 

https://www.fondsftq.com/en/salle-de-presse/liste-communiques-de-presse/communique.aspx?nom=20200319-mesures-financieres-covid19

Fondaction et le CETEQ s'allient pour accélérer la transition ...

Fondaction is deferring the repayment of loan principals and interest for a period of six months for all companies it directly finances.

 

 

The measure is automatic for existing clients and began March 13, 2020.

 

https://www.fondaction.com/nouvelles/fondaction-annonce-un-repit-de-trois-mois-pour-les-entreprises-de-son-portefeuille/

PME MTL is deferring capital and interest repayments on its existing loans for a six-month period. This measure does not affect future financings granted after the month of March.

This measure was announced on March 25, 2020 and is automatic for existing businesses that hold active loans with PME MTL.

 

https://pmemtl.com/blogue/prets-actifs-de-pme-mtl-moratoire-de-six-mois-sur-le-capital-et-les-interets

 
 

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