{"id":29617,"date":"2025-03-12T11:15:00","date_gmt":"2025-03-12T15:15:00","guid":{"rendered":"https:\/\/www.millerthomson.com\/?p=29617"},"modified":"2025-03-20T16:03:49","modified_gmt":"2025-03-20T20:03:49","slug":"trade-war-covid-era-type-support","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/financial-services\/trade-war-covid-era-type-support\/","title":{"rendered":"Trade war \u2013 COVID-era type support"},"content":{"rendered":"\n<p>In recent weeks, the federal government of Canada has increasingly indicated that COVID-era type supports would be established as part of Canada\u2019s broader response to what is now a very real and ongoing trade war with the United States. Please see our <a href=\"https:\/\/www.millerthomson.com\/en\/insights\/financial-services\/emerging-financial-aid-for-businesses-hit-by-u-s-tariffs\/\">Financial Services Group\u2019s article from February 21<\/a>, which sets the stage regarding potential financing and other fiscal supports from both federal and provincial governments across Canada.<\/p>\n\n\n\n<p>On March 7, as part of a broader statement, the Canadian federal government announced a $6.5 billion aid package that will be made available to Canadian businesses through three specific federal Crown corporations: Export Development Canada (\u201c<strong>EDC<\/strong>\u201d), the Business Development Bank of Canada (the \u201c<strong>BDC<\/strong>\u201d), and Farm Credit Canada (\u201c<strong>FCC<\/strong>\u201d), to support Canadian businesses through the trade war with the United States. While many details are still unknown, below is a brief summary of the new programs being established by EDC, the BDC, and FCC:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>EDC: <\/strong>Through the Trade Impact Program, EDC will deploy $5 billion over the next two years. The purpose of this program is to help Canadian businesses that export Canadian goods diversify away from their existing overreliance reliance on trade into the United States and to reach other markets around the world. The announcement further states that the program will \u201chelp companies navigate the economic challenges imposed by the tariffs, including losses from non-payment, currency fluctuations, lack of access to cash flows, and barriers to expansion.\u201d Our expectation is that this program will supplement and complement EDC\u2019s existing programs, such as the Export Guarantee Program and Portfolio Credit Insurance. However, several questions remain regarding how this program may be implemented. Will advances be made by the banks again? Will EDC guarantee less than 100% of the loan? How will these loans get repaid on maturity? Will they be available to, and assumed by, a non-bank lender? These are just some of the issues we have encountered with COVID-era support loans.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>BDC:<\/strong> Through Pivot to Grow, $500 million will be made available to BDC to establish and issue loans and loan deferrals to small and medium-sized Canadian businesses. At this time, the expectation is that these loans will be six year working capital loans between $200,000 and $2 million, with \u201cpreferred interest rates,\u201d and may also include principal payment postponement options for up to 12 months. This financing and these deferrals will be focused on small and medium-sized Canadian businesses with \u201cconcrete impacts to their financials as a direct result of the looming threat of US tariffs, such as cancelled contracts, increased costs, or lost customers.\u201d Who will qualify for these loans? Where will these loans sit within the capital structure? What will be the terms of repayment? Will they be senior term loans or fully subordinated loans? What will the intercreditor arrangements be? This is all yet to be determined.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>FCC: <\/strong>Through the Trade Disruption Customer Support Program, $1 billion will be made available to FCC to establish and issue loans to Canadian businesses in the agriculture and food sectors. This program may provide eligible Canadian businesses with access to an additional line of credit of up to $500,000, as well as new term loans. Current FCC clients may also have the option to defer principal payments for up to 12 months on existing loans. The same questions as above apply to these potential loans as well.<\/li>\n<\/ul>\n\n\n\n<p>From a financing and lending perspective, eligible businesses should stay informed as these programs are rolled out and as new opportunities arise to improve liquidity and manage cash flow during economic uncertainty. Miller Thomson LLP\u2019s <a href=\"https:\/\/www.millerthomson.com\/en\/expertise\/corporate\/financial-services\/\" target=\"_blank\" rel=\"noreferrer noopener\">Financial Services Group<\/a> will continue to monitor these developments and provide timely updates as more details of the programs become available.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In recent weeks, the federal government of Canada has increasingly indicated that COVID-era type supports would be established as part of Canada\u2019s broader response to what is now a very real and ongoing trade war with the United States. Please see our Financial Services Group\u2019s article from February 21, which sets the stage regarding potential [&hellip;]<\/p>\n","protected":false},"author":86,"featured_media":25987,"parent":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[554],"insight-format":[416],"class_list":["post-29617","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-services"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>US Tariffs: Financial aid for Canadian businesses<\/title>\n<meta name=\"description\" content=\"Canada announces $6.5B in trade war support for businesses through EDC, BDC &amp; FCC. 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