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Liquidity programs for Canadian businesses



Canada Publication April 1, 2020 - 5 PM ET

COVID-19’s impact on the economy is leading to liquidity concerns for many Canadian businesses. The Government of Canada has announced the reintroduction of the Business Credit Availability Program (BCAP) aimed at providing much-needed liquidity to qualifying Canadian businesses. The following provides a short summary of BCAP, with additional details and changes expected in the coming weeks. 

BCAP was originally introduced in 2009 as part of the Extraordinary Financing Framework of Canada’s Economic Action Plan in response to the 2008 financial crisis. On March 13, Canada reintroduced BCAP to help qualifying businesses in all sectors and regions of Canada obtain financing during the COVID-19 pandemic. The program consists of two mains parts: the SME Loan and Guarantee program, which is delivered through Export Development Canada (EDC) or the Business Development Bank of Canada (BDC) in partnership with a financial institution, and the Canada Emergency Business Account program, which is administered directly through financial institutions. 

The program 

BCAP is aimed at filling gaps in market access, and will leverage additional lending by private financial institutions. It was announced there will be no limit on total BCAP support for a single business. However, BDC, EDC and participating financial institutions will continue to employ internal risk management practices for granting credit. The program will be delivered through relief measures such as interest-free loans, working capital loans, flexible repayment terms for existing BDC clients, reduced rates on new eligible loans, purchase order financing and export guarantee programs. Many of these relief measures under BCAP are already available and the remaining relief measures are planned to roll out mid-April according to the Department of Finance.

BDC/EDC SME Loan and Guarantee programs 


BDC supports Canadian entrepreneurship by providing financial and management services to Canadian businesses, with a focus on the needs of small and medium-sized enterprises. 

As part of BCAP, BDC plans to provide:

  • working capital loans up to $2 million with flexible terms and payment postponement; 
  • flexible repayment terms for existing BDC clients with total BDC loan commitment of $1 million or less; 
  • reduced rates on new eligible loans; and
  • other industry-specific support, which is to be announced in the coming days. 

Additionally, a new BDC Co-Lending program has been announced to bring BDC together with participating financial institutions to provide qualifying small and medium businesses with credit up to $6.25 million – 80% of which would be provided by BDC and the remaining 20% provided by a financial institution. Eligible financial institutions will conduct the underwriting and manage the interface with their customers. The potential for lending for this program will be $20 billion.


EDC is Canada’s export credit agency, offering innovative financing, insurance and risk management solutions to help Canadian exporters and investors expand their international business. Its domestic mandate was recently enhanced to support Canadian businesses in response to  COVID-19.

As part of BCAP and in partnership with various financial institutions,1 EDC plans to provide guarantees to financial institutions on loans up to $6.25 million to small and medium businesses, to assist businesses with addressing their liquidity needs immediately. These loans will be 80% guaranteed by EDC, to be repaid within one year. The program cap for this loan program will be $20 billion for export sector and domestic companies.

Eligibility for the SME Loan and Guarantee Program

To be eligible for the SME Loan and Guarantee program, a Canadian business must meet each of the following criteria:

  • is creditworthy;
  • had, prior to the impact from COVID-19, a viable business model and activities that fall within the mandate of either BDC and/or EDC; 
  • has been affected directly or indirectly by COVID-19; and
  • its needs and circumstances fall beyond what existing private financial institutions can provide.

How to Access the SME Loan and Guarantee Program

Businesses seeking support through the SME Loan and Guarantee program should first contact their financial institutions for an assessment of their needs and circumstances. If it is determined the business’s needs and circumstances fall beyond what existing private financial institutions can independently provide, the financial institutions will refer the business to BDC or EDC where appropriate. Existing BDC clients can reach out to their account managers.

Canada Emergency Business Account

In addition to the SME Loan and Guarantee program, a separate $25 billion Canada Emergency Business Account was announced, which is intended to provide interest-free loans up to $40,000 to small businesses and not-for-profits with total payroll between $50,000 to $1 million in 2019. 

Qualifying businesses can contact their financial institutions directly to apply for this loan. 

The program’s announcement also stated that 25% of the loan (up to $10,000) would be forgiven if the balance of the loan is repaid on or before December 31, 2022. 

Other business support programs

The federal government and many provincial and territorial governments have also implemented various programs to provide wage support and otherwise prevent lay-offs in light of COVID-19. These programs are and will be the subject of other Norton Rose Fulbright legal updates, accessible here


Each of the programs discussed above is accessible by Canadian businesses through their financial institutions. Further details on these programs should be finalized in the coming days. Given the continued changes and enhancements to the announced programs, including changes to the eligibility criteria, regularly monitoring Government of Canada, BDC and EDC websites is recommended. 

We anticipate that the foregoing relief measures will provide Canadian business with much-needed liquidity during this uncertain period.

The author wishes to thank Hansik Ha, articling student, for his help in researching and preparing this legal update.


1   The complete list of approved financial institutions under the EDC BCAP Guarantee program can be found at: 

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