As the COVID-19 pandemic continues some businesses, such as those in tourism and hospitality, have been more heavily impacted and are struggling more than others to access financing. Once again, the Government of Canada has come forward with additional funding support for those most impacted. This particular program leverages both the speed and capacity of our nation’s financial institutions (“FIs” – such as RBC, CIBC, Scotia, etc.) paired with the backing power of the Business Development Bank of Canada (BDC). BDC has been mandated to provide a guarantee to your financial institution for 100% of the value of your loan, to help you access additional liquidity and cover operating costs.
These loans are low cost (as low as 4% interest) with a long-term payback (up to 10 years) plus potential to postpone principal payments for 12 months from the start of the loan. Keep in mind these loans are to be used to continue or resume operations – they cannot be used to pay off or refinance existing debt.
How do you qualify?
The qualification is explained most easily by saying if you experienced at least a 50% drop in revenue in 3 of the past 8 months you may qualify. If you qualified for CEWS and CERS you would look to those claim calculations to confirm whether you met the 50% threshold. These months are not required to be consecutive, meaning they could be June, July and January for example. Because the wording speaks to qualifying for CEWS and CERS it is our interpretation that you could rely on one of any of the 4 methods of comparison to confirm the revenue drop, such as:
a) Year over year Revenue comparison
b) Year over year Receipt comparison
c) Revenue as compared to Jan/Feb 2020 average
d) Receipts as compared to Jan/Feb 2020 average
If you did not qualify for CEWS you may still qualify if you did experience a 50% drop in revenue as compared to the same month the previous year. The qualifying documentation will just be a little different.
How much can I get?
The loan is tiered based on your revenue. They start at $25k and if your pre-covid annual revenue was less than $500k you are capped at up to $100k. Over $500k pre-covid revenue would increase your access to up to $250k in HASCAP funding. If you were also profitable pre-covid you could be eligible to the maximum of $1million in HASCAP funding. You’ll need to support amounts greater than $100k with Accountant prepared financial statements prior to March 1, 2020 to demonstrate your financial performance.
Do I need to be in tourism or hospitality in order to qualify?
No – the program is available to all sectors that meet the eligibility criteria.
If I already have a BDC loan am I disqualified from this program?
No – BDC is guaranteeing these loans but there is no correlation between HASCAP and any previously secured BDC loans. Just keep in mind that you cannot use HASCAP funding to refinance or pay off loans.
Where do I apply?
Reach out to your bank to apply. Personally, I would start with with googling HASCAP plus your bank name to get your bank’s specific instructions as some may have online portals set up.
What do I need to apply?
If you qualified for CEWS you’ll need your attestation forms demonstrating a minimum of 50% revenue decline for at least 3 months within the 8 month period before applying for HASCAP. If you are eligible for CEWS or CERS but have not yet submitted claims for it, you must do that first (because again you’ll need the attestation forms as well as proof of payment via bank statements). If you didn’t qualify for CEWS or CERS but did have a 50% revenue drop for 3 months you’ll need to present monthly financial statements that demonstrate the revenue drop.
Other qualifying criteria?
You must have been in operation as of March 1, 2020 and must have been considered viable before COVID-19 impacted the business. To be clear, I’m not sure how they would determine whether a business was viable or not. If your business was not profitable prior to COVID-19 I’d suggest you’d just need to demonstrate that there was sufficient cash and other funding supports in place to show a strong probability of viability (evidence of investor support, loans, etc).
This loan is available until June 30, 2021. If you need help with assessing your eligibility, we are offering 20% discounts on all COVID-19 support efforts. Get in touch with us today to get started.