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The Highly Affected Sectors Credit Availability Program (HASCAP)

The Highly Affected Sectors Credit Availability Program (HASCAP)

February 2022 update: Availability for the HASCAP Guarantee has been extended until March 31st, 2022.

On January 26, 2021, the Minister of Small Business, Export Promotion and International Trade, announced the launch of the Highly Affected Sectors Credit Availability Program, or HASCAP. As first outlined in the 2020 Fall Economic Statement, HASCAP provides financial support to businesses that have been hardest hit by the pandemic.

As the COVID-19 pandemic continues to take a toll on the Canadian economy, many continue to need additional financial relief to help them survive the negative impact of the pandemic on their business and their corresponding cash flow. By now we are familiar with the financial support and lending programs that have been introduced by the federal government since the pandemic’s onset in 2020, including: the Canada Emergency Business Account (CEBA) Program, the BDC Co-Lending Program, the EDC Loan Guarantee Program, and BDC Working Capital Loan Program.

In January, 2021, in response to the continuing need of Canadian businesses for further financial relief, the federal government announced the implementation of the Highly Affected Sectors Credit Availability Program (HASCAP). As of February 1, 2021, HASCAP has been available since February 1, 2021, to provide additional support to highly affected businesses that were otherwise financially viable and stable prior to the pandemic and have subsequently experienced a 50% or greater decline in revenue.

Businesses heavily impacted by COVID-19 can access guaranteed, low-interest loans of $25,000 to $1 million to cover operational cash flow needs.

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Under HASCAP, Business Development Bank of Canada (BDC) will provide a guarantee of up to $1 million, with the restriction that the loan funds will be used solely for a Canadian business and for such business to continue or resume Canadian business operations. As with the other federal financial relief programs, Canadian businesses will be required to meet certain eligibility criteria in order to qualify for the HASCAP.

Hard-hit businesses, like a chain of hotels or restaurants with multiple locations under one related entity, could be eligible for up to $6.25 million. HASCAP will help businesses with their day-to-day operating costs during the COVID-19 crisis and enable them to invest in their longer-term prosperity. HASCAP is available to businesses across the country, in all sectors, that have been hit hard by the pandemic. This includes restaurants, businesses in the tourism and hospitality sectors, and those that rely on in-person service.

HASCAP eligibility requirements include that the business must be Canadian-based, must have been financially stable and viable prior to COVID-19, and must meet the following criteria:

Highly Affected Sectors Credit Availability Program
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Note: In lieu of providing financial statements, if the business qualifies for one or both of the CEWS or CERS programs, but has not received any benefit, the business can apply for the CEWS or CERS program prior to applying for HASCAP

The calculation of the drop in revenue will be the same as the calculation used for the CEWS and CERS program, which can be found at the Government of Canada website.

To apply, a business must contact its primary financial institution and a business cannot apply at more than one financial institution. The HASCAP program is currently expected to be available until March 31st, 2022.

Who can apply:

If you are a Canadian business that needs additional cash flow to cover operational costs, you may be eligible for the HASCAP Guarantee through your financial institution.

Qualifying businesses must:

  • have been financially stable and viable pre-COVID;
  • have received payments either from the Canada Emergency Wage Subsidy (CEWS) Program or the Canada Emergency Rent Subsidy (CERS) Program by having demonstrated a minimum 50% revenue decline for at least three months (not necessarily consecutive) within the eight-month prior to the date of a HASCAP Guarantee application

How it works:

BDC has been mandated by the Government of Canada to provide a guarantee to your financial institution for 100% of the value of your loan, to help you access additional liquidity and cover operating costs, as follows:

  • loans ranging from $25,000 to $1 million to qualifying businesses;
  • low-interest loans and repayment terms of up to 10 years;
  • up to a 12-month postponement on principal repayments at the start of the loan.

For further information on the HASCAP program and the eligibility criteria, visit the BDC website or contact our office to see if the HASCAP program or another federal financial lending program could support your business.

For more information on the various government assistance programs during COVID-19, click here.

-Baber Rahim, Tax Law Clerk & JD Candidate

Baber works in our tax department assisting our tax lawyers in preparing Voluntary Disclosure Applications, Taxpayer Relief Applications, and with Appeals, Audits and Objections within the CRA. Baber’s passion for tax law was sparked by an advanced tax law professor at the Goodman School of Business at Brock University, where he received his Bachelor of Accounting (Honours) degree. He subsequently worked for the Canada Revenue Agency (CRA) for several years. After working in the federal public service for a number of years, Baber decided to pursue a career in law and is currently working towards completing his law degree at Western University, while working for Kalfa Law.

© Kalfa Law, 2021

The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.

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