This article is the first in a two-part series on the Large Enterprise Tariff Loan (LETL) facility. This first part outlines the facility’s framework, its eligibility criteria, and the key viability conditions. The second article will cover the financing structure, terms and conditions relating to rates, term and drawdowns, the covenants and restrictions imposed on borrowers, and the application process.

What is the LETL and who is it for?

The LETL (Large Enterprise Tariff Loan) is a federal loan facility of last resort for large Canadian companies whose liquidity is affected by trade tariffs or countermeasures.

Amid heightened trade tensions and new tariffs, the Government of Canada announced the creation of the facility on March 21, 2025. Administered by the Canada Development Investment Corporation (CDEV) through its subsidiary, the Canada Enterprise Emergency Funding Corporation (CEEFC), the facility is intended to provide liquidity support to companies that face challenges accessing traditional sources of financing because of these trade measures, and that have exhausted other available sources of capital.

The LETL will cover a liquidity deficit over a period of up to 36 months. It is open only to companies that are otherwise viable but have been temporarily weakened by a specific trade shock.

Since its launch, three loans totalling $605 million have been granted under the facility: $400 million to Algoma Steel Inc., $115 million to Arctic Canadian Diamond Company Ltd., and $90 million to C.A.T. North America Inc. The fact that only a limited number of loans have been granted to date speaks to the thoroughness of the assessment process and underscores the importance for companies to thoroughly prepare their applications in advance.

For companies considering whether to apply, the fundamental question is twofold: do they meet the eligibility criteria, and can they demonstrate this convincingly?

What are the LETL’s eligibility criteria?

To be eligible, a company must meet all of the following conditions:

1. A significant economic presence in Canada

The company must demonstrate that it has a significant impact on Canada’s economy, in particular through substantial commercial activities in Canada or a significant Canadian workforce.

2. A minimum revenue threshold

The company must demonstrate that it has approximately $150 million, or more, in annual Canadian revenue.

3. Minimum loan need

The company must demonstrate a genuine need for financing, i.e., a loan of at least $30 million.

4. A genuine impact as a result of tariffs

The company must demonstrate that it has been, or expects to be, affected by tariffs or countermeasures, and that these measures are the cause of its financial difficulties.

The causal link between tariffs and the liquidity shortfall must be documented in detail. In practice, this could be the most demanding aspect of the application, and the most difficult requirement to satisfy. It is not enough simply to operate in a sector affected by tariffs, as the company must quantify the impact on its cash flow and demonstrate that its liquidity shortfall did not exist prior to the tariffs, or would not have existed if the tariffs had not been introduced.

5. Viability and no alternative

In addition to the criteria set out above, the LETL requires the company to meet one basic condition: it must be viable, but nevertheless temporarily short of cash.

In particular, the company must be able to demonstrate that it was solvent as at December 31, 2024, and that it did not face any major business continuity issues, other than those relating to tariffs.

Furthermore, the company must demonstrate that it has exhausted traditional sources of financing, or that such sources are insufficient in the current environment. In practice, this means that it must have approached financial institutions and other usual lenders and be able to document their refusals, the limits they set, or the unacceptable terms they proposed.

6. Return to financial stability

Lastly, a company that wants to obtain financial assistance under the LETL facility must draw up a detailed plan confirming that:

  • Commercially reasonable steps have been taken and will continue to be taken to protect jobs in Canada and maintain the company’s domestic business operations.
  • The financial support the company receives is part of its overall transition plan to return to financial stability, and that efforts have been made to increase sales in Canada while continuing to source from Canadian markets.
  • There is a reasonable likelihood that the company will return to financial stability, enabling it, among other things, to repay the loan granted under the LETL facility when it falls due.

Which companies are excluded from the LETL facility?

Certain companies are not eligible for the facility. This includes:

  • companies involved in insolvency proceedings;
  • companies that have sought protection under the Companies’ Creditors Arrangement Act (CCAA);
  • companies found guilty of tax evasion;
  • certain public bodies or companies that have a significant political involvement;
  • organizations whose activities run counter to the public interest.

Please note: a company that is close to insolvency but has not yet initiated formal restructuring proceedings is in a delicate position, where every financial decision increases the risk of its application for assistance being refused. In our view, this means that the timing of an LETL application becomes a truly strategic issue.

Should you have any questions regarding this topic, please do not hesitate to contact a lawyer with Miller Thomson’s Financial Services Group.