Published on April 13, 2020
New loan program aimed at supporting small businesses. Ad- ditional measures were put in place to support small business- es through the Canada Emergency Business Account, which provides qualifying companies with access to a $40,000 line of credit. The $25 billion program gives banks the ability to issue interest-free loans to small businesses and nonprofits, which can be used to meet operational cash-flow requirements includ- ing payroll, utilities, rent and mortgage expenses. Organizations with payroll expenses between $50,000 and $1 million last year are eligible.
Portion of loan is fully forgivable. Up to $10,000 of the loan is forgivable for borrowers that pay down $30,000 of the principal on or before Dec. 31, 2022. If the loan is not repaid by this date, it will be converted into a three-year term loan at a 5 percent in- terest rate. The repayment of these loans can be done at any time, though borrowers are not required to make monthly payments until the end of 2022. The loan program coupled with wage subsi- dies provide a stopgap for companies at risk of closing, aiding in- dustries that have been particularly hit hard, including retailers, restaurants and the tourism sector. Combined, these two provi- sions will have the most impact on the commercial real estate industry as they will be key in helping small and medium-sized businesses meet their obligations. They will not be enough to keep all businesses afloat, though, creating some near-term pain for property owners. Healthy fundamentals and strong underly- ing demand entering the crisis will support a quick rebound once the outbreak is contained.
Borrowers apply through their current financial institution:
• Funds are required to cover operating costs including payroll, utilities, rent, property tax and insurance.
• Must provide proof that payroll expenses for 2019 were be- tween $50,000 and $1 million.
The information contained in this report was obtained from sources deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no representation, warranty or guaranty, express or implied, may be made as to the accuracy or reliability of the information contained herein. This is not intended to bea forecast of future events and this is not a guaranty regarding a future event. This is not intended to provide specific investment advice and should not be considered as investment advice.
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