To help answer common questions related to the HASCAP program The Rise SMB team has put together a list of most frequently asked questions.
These questions and their answers have been sourced from a range of government and non-government resources. Additional relevant links will be attached at the bottom of the article.
What is the HASCAP Loan Guarantee?
- The HASCAP Guarantee program is financial relief program mandated by the Government of Canada and 100% guaranteed by the Business Development Bank of Canada (BDC). That helps provide Canadian businesses highly affected by Covid-19 with cash flow to support day-to-day operational expenses in amounts ranging from $25,000 up to $1 million per legal entity.
The loan is accessible via your primary financial institution including RBC, CIBC, Scotiabank, TD Bank, National Bank and BMO, as long as it is included in the BDC’s lists of lenders and is for businesses in “highly affected” sectors, currently defined as Tourism and Hospitality.
Why was the HASCAP Guarantee created?
- The HASCAP Loan Guarantee Program was designed to support Canadian businesses deemed as highly-affected by the Covid-19 pandemic. This includes businesses that have witnessed a revenue decline of 50% or more in any 3 months over the last 8 month period and currently operate in a sector deemed highly affected.
These sectors are currently defined as tourism and hospitality but other types of businesses may be eligible to access financing under this program,
What are the eligibility requirements for a HASCAP Loan?
To qualify for a HASCAP loan you must meet the eligibility criteria established by the Government of Canada. Your primary financial institution (Bank/Credit Union) will determine whether you qualify based on these criteria. The eligibility requirements are as follows:
- Your business is Canadian-based.
- Your business must have been financially stable and viable prior to the current economic situation.
- You must have received payments either from the Canada Emergency Subsidy (CEWS) or the Canada Emergency Rent Subsidy (CERS) by having demonstrated a minimum 50% revenue decline for at least three months (not necessarily consecutive) within the eight-month period prior to the date of the HASCAP Guarantee application. If your business does not qualify for CEWS and CERS, but otherwise meets all HASCAP eligibility criteria, you must provide financial statements that reflect at least three months (not necessarily consecutive) in which monthly year-over-year revenue decreased by at least 50% within the eight-month period prior to the date of the HASCAP Guarantee application.
- The loan will be used to continue or resume operations.
- The loan cannot be used to pay or refinance existing debts.
- Minimum risk ratings will apply, varying by size of the new loan.
- You can apply for a loan under the HASCAP Guarantee for each legal entity you own, up to a maximum combined amount of $6.25 million (all legal entities combined).
- Other conditions may also apply.
Source: BDC, Highly Affected Sectors Credit Availability Program (Web Page)
Important Dates for the HASCAP Loan?
- The HASCAP loan is available via your primary institution starting February 1st, 2021.
- The last day to apply for your HASCAP loan is June 30th, 2021
How much can I apply for under a HASCAP Loan?
- HASCAP Loans are available in amounts ranging from CAD $25,000 to CAD $1 million. The amount provided to your business by your financial institution will be determined by your business’s current operating costs.
For business owners and entrepreneurs operating multiple legal entities, you are entitled to apply for a HASCAP loan for each entity that meets the program requirements, up to and not exceeding $6.25 million across all businesses owned.
What businesses are categorized as “Highly Affected” under HASCAP?
- Currently, businesses in the hospitality, arts and tourism sectors are categorized as highly affected under the HASCAP Loan Program.
With that being said, even if you do not meet the sector requirements, if you meet the other eligibility criteria there is still the potential you could be approved for financing under this program.
To learn more contact your primary financial institution.
Can I pay off or refinance existing debt with a HASCAP Loan?
- No. The HASCAP loan cannot be used to pay off or refinancing existing debt. It is only to be used to resume operations and manage day-to-day operational costs.
What does HASCAP stand for?
- HASCAP is an acronym for “Highly Affected Sectors Credit Availability Program”.
Am I eligible for a HASCAP Loan if I have not received CEWS or CERS?
- While the HASCAP program is primarily intended for businesses that have already made use of the Canada Emergency Wage Subsidy (CEWS), and or, Canada Emergency Rent Subsidy (CERS), if you otherwise meet the eligibility requirements for the HASCAP loan you may still be eligible to apply.
If you are a member of this group, you may be requested to provide financial statements for 3 months from the last 8 month period clearly denoting a revenue decrease of 50% or greater, prior to the date of your HASCAP application.
Do I need to repay a HASCAP Loan?
- Yes the HASCAP loan needs to be repaid. This is a loan provided by your financial institution to your business, backed by the Business Development Bank of Canada (BDC). It is not a grant.
The loan comes with a low-interest rate of 4% and flexible repayment terms of up to 10 years.
Additionally, the HASCAP Guarantee offers a 12 month postponement period on principal repayments at the start of the loan. This is done with the intention of providing even greater flexibility for Canadian business owners.