Attention Waterloo Region startups and scaleups: Financial help is coming. In some cases, it’s already here.
With the COVID-19 virus ravaging the world’s economy, not to mention the world’s health, businesses of all stripes are worried about short- and long-term implications. For many, the spectre of immediate layoffs loom in order to reduce cash burn amid reduced revenues and funding.
For entrepreneurs in Waterloo Region, many of whom are in the vulnerable early stages of building their businesses, the pain is particularly acute. Their available runway has been suddenly shortened.
The federal government on March 13 stepped in with emergency measures, announcing that BDC (the Business Development Bank of Canada) is collaborating with Export Development Canada (EDC) and the chartered banks to roll out $10 billion in direct lending and other support.
On Wednesday, BDC announced that support has been bolstered further, including:
- Working capital loans of up to $2 million with flexible terms and payment postponements for up to six months.
- Postponement of payments for up to six months, free of charge, for existing BDC clients who have BDC loan commitments of $1 million or less.
- Reduced rates on new eligible loans.
Additional measures, BDC says, will be announced in the coming days.
“This is not the first time BDC steps in and acts as a shock-absorber for entrepreneurs,” BDC President and CEO Michael Denham said in a release.
“We did it during the financial crisis in 2008-2009 and when the oil prices collapsed in 2016.
“When available credit goes down, BDC lending goes up.
“Entrepreneurs are telling us the current situation is putting pressure on their supply chains, their cash flow and their people. We are here for them and their business.”
BDC’s Assistant Vice-President Shawn Salewski told Communitech News Friday that in the preceding seven days BDC had received more than 7,500 applications for Business Credit Availability Program support and was doing everything in its power to expedite those requests.
“We are receiving an unprecedented volume of requests [for help]; we understand the urgency of the situation and have mobilized all BDC teams to respond as fast as possible,” he said.
Other government measures have been introduced.
Ottawa has proposed to provide eligible small employers with a temporary wage subsidy for a period of three months. The subsidy will be equal to 10 per cent of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses are able to benefit immediately by reducing the payroll tax withheld from their employees’ pay. Non-profit organizations and charities are eligible, as well. Supporting legislation is pending.
The federal government announced that companies can also apply for a work-sharing agreement, which would allow employees to work a temporarily reduced work week while receiving EI benefits.
“We’re working as quickly as possible to expand existing programs and roll out new measures to help,” said Joey Barnes, EDC’s Strategic Alliances Director and Communitech liaison. EDC maintains a Waterloo Region-focused office at Catalyst137, and Barnes added that companies should not hesitate to reach out.
An additional fear of many local companies is that VC money is in the process of drying up – or already has. There was a positive indication in that regard Thursday: Ada Support, a Toronto-based maker of an AI-based chatbot platform, announced a US$44-million Series B raise. Ada Support is a graduate of Communitech’s Rev accelerator and the co-winner of the 2017 Rev Demo Day.
Toronto-based scaleup Hockeystick, meanwhile, has created and distributed a list of active equity lenders and government funders in Canada.
The post Follow the money – how local firms can access help appeared first on Communitech News.
Communitech is a partner of Startup HERE Toronto. This article originally appeared on their site.