Financial institutions have begun the low-interest loan rollout promised for business operators experiencing pandemic-related financial stress. As announced in the federal government’s economic statement last fall, loans of $25,000 to $1 million will be available through the Highly Affected Sectors Credit Availability Program (HASCAP), fully guaranteed by the Business Development Bank of Canada (BDC).

HASCAP is targeted to previously financially stable small and medium-sized businesses based in Canada that have experienced a drop in revenue of 50 per cent or more for reasons related to COVID-19. Loans are intended to support continuation or resumption of business operations and cannot be applied to paying down or refinancing existing debt. Businesses with more than one location, such as hotels, restaurants or retail outlets, could be eligible for multiple loans to a maximum of $6.25 million.

“We know that the second wave of this virus continues to weigh on many workers and businesses. HASCAP gives those in highly affected sectors — like tourism, hospitality, arts and culture — new support so they can weather this storm and be ready for a robust recovery,” says Minister of Finance Chrystia Freeland.

Major financial institutions are set to begin administering HASCAP on February 1 with other lenders expected to come on board by mid-month. Loans will have a 10-year term at 4 per cent interest, and approved borrowers may be able postpone payments on the principal for up to 12 months from initial receipt.

To qualify, businesses can present evidence that they have been eligible for the Canada Emergency Wage Subsidy (CEWS) and/or the Canada Emergency Rent Subsidy (CERS) in at least three of the eight months prior to submitting their applications. Alternatively, some business that did not qualify for CERS or CEWS may be accepted if they can provide financial statements showing three months when year-over-year revenue slipped by at least 50 per cent within the preceding eight months.

Although prospective borrowers are required to apply through their primary financial institution, they will also be asked to complete an online form providing “high-level information” for the BDC. “This information will help the Government of Canada understand which businesses are seeking relief through this program,” accompanying information states.

“We know that even the most resilient businesses continue to face incredible challenges,” notes Mary Ng, Minister of Small Business, Export Promotion and International Trade.

HASCAP will be open for applications until June 30, 2021.