Applications for the Large Employer Emergency Financing Facility (LEEFF)
On May 20, 2020, the Federal Government announced that applications for the Large Employer Emergency Financing Facility (LEEFF) are now open. The LEEFF is designed to provide bridge financing to Canada’s largest employers whose needs during the COVID-19 pandemic are not met through conventional financing. We previously reported on the LEEFF here.
The goal of the LEEFF is to help Canada’s largest businesses and their suppliers remain active and help protect Canadian jobs as they weather the economic difficulties caused by the COVID-19 pandemic. The LEEFF is not to be used to resolve insolvencies or restructure firms, nor will it provide financing to businesses that do not need it to manage through the COVID-19 pandemic.
The LEEFF will be delivered by a subsidiary of the Canada Development Investment Corporation (CDEV), in cooperation with Innovation, Science and Economic Development Canada (ISED) and the Department of Finance.
The LEEFF will be open to large for-profit businesses (except for those in the financial sector), as well as certain non-profit businesses such as airports, with annual revenues of generally $300 million or higher. To qualify for the LEEFF, eligible businesses must be seeking financing of $60 million or more, have significant operations or workforce in Canada, and not be involved in active insolvency proceedings.
A factsheet on the LEEFF, including additional eligibility requirements, can be accessed here. The factsheet indicates that the LEEFF will be available so long as the “current economic situation persists.”
Applications for the LEEFF, and information on how to apply, can be accessed here. Applicants are to email LEEFF-CUGE@cdev.gc.ca to receive a non-disclosure agreement, application form, and further instructions.
Applications for the Canada Emergency Commercial Rent Assistance (CECRA)
The Federal Government also announced that application documents and updated eligibility criteria for the Canada Emergency Commercial Rent Assistance (CECRA) for small businesses are now available. The CECRA application portal opens at 8:00 am EST on May 25, 2020. We previously reported on the CECRA, here.
In short, the CECRA will provide forgivable loans to qualifying commercial property owners to cover 50% of three (3) monthly rent payments that are payable by eligible small business tenants that are experiencing financial hardship during April and May (retroactive), and June of 2020. This loan will be forgiven if the property owner agrees to reduce the small business tenants’ rent by at least 75% under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25% of the rent.
The CECRA for small businesses program is administered through the Canada Mortgage and Housing Corporation (CMHC).
To qualify for the CECRA, the property owner must:
- ·own commercial real property which is occupied by at least one impacted small business tenant;
- have entered or will enter into a rent reduction agreement for the period of April, May, and June 2020, that will reduce an impacted small business tenant’s rent by at least 75%; and,
- ensure the rent reduction agreement with each impacted tenant includes:
- a moratorium on eviction for the period during which the property owner agrees to apply the loan proceeds, and,
- a declaration of rental revenue included in the attestation.
“Commercial real property” is defined as a commercial property with small business tenants. Further, the CECRA does not apply to any properties owned, in whole or in part, by the federal, provincial, or municipal governments, but there are exceptions to this. Please see the CMHC’s website for more information on these exceptions, accessible here.
Impacted small business tenants eligible to receive the CECRA are businesses, including non-profit and charitable organizations, that:
- pay no more than $50,000 per month in gross rent per location;
- generate no more than $20 million in gross annual revenue, calculated on a consolidated basis (at the ultimate parent company level); and,
- have temporarily ceased operations (i.e. generating no revenges) or have experienced at least a 70% drop in pre-COVID revenues.To measure revenue loss, small businesses can compare revenues in April, May, and June of 2020 to the same month of 2019.They may also elect to use an average of their revenues earned in January and February of 2020.
However, small businesses that opened on or after March 1, 2020 are not eligible.
The deadline to apply for the CECRA is August 31, 2020. Please visit the CMHC’s website for more information on eligibility requirements, and how property owners can apply.
Our firm will continue to provide you with updates as the Federal Government’s response to the COVID-19 pandemic evolves.
The foregoing is for informational purposes only and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyers by email or telephone.