Ottawa begins assuming its duties Wednesday (May 20) as the “lender of last resort” for large employers unable to access conventional financing during the pandemic.
Prime Minister Justin Trudeau last week used the term “lender of last resort” to describe the federal government’s Large Employer Emergency Financing Facility (LEEFF) program.
LEEFF, which starts accepting applications Wednesday, provides bridge financing to businesses with at least $300 million in annual revenue.
Applicants must be seeking minimum loans of $60 million to keep their operations afloat during the pandemic, but the financing is not permitted to be used to resolve insolvencies or restructure firms.
Big companies with enough capital to make it through the pandemic will not be able to access the program if they are simply looking for low-interest financing.
In addition to large businesses, the LEEFF program will be open to not-for-profit businesses, like airports.
Companies convicted of tax evasion will not qualify and companies must share their complete financial structure as they apply for funding.
The program will have limits on dividends, share buy-backs and executive pay, and the government said it will be reviewing companies’ international organizational structure when determining eligibility.
Companies applying for the program will be required to publish annual climate-related disclosure reports and detail how their future operations will support national climate goals.
The duration of the facility is set for five years, while the interest rate comes in at 5% annually within the first year.
The interest rate rises to 8% the second year and 10% the third year.