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Federal government announces low-interest loans for businesses hit hard by COVID-19


On Jan. 26, 2021, Canada’s Minister of Small Business, Export Promotion and International Trade announced a new government loan guarantee program targeting businesses most affected by the COVID-19 pandemic. The Highly Affected Sectors Credit Availability Program (HASCAP), first introduced in the federal government’s 2020 Fall Economic Statement, will involve the Business Development Bank of Canada (BDC) working with participating Canadian financial institutions to offer government-guaranteed, low interest loans.

Learn more about the BDC program here.

What you need to know

  • HASCAP targets small- and medium-sized businesses that have experienced a year-over-year revenue decrease of 50 per cent or more due to COVID-19.
  • The guarantee covers loans between $25,000 and $1 million.
  • The HASCAP-guaranteed loans will offer low interest rates and repayment terms of up to 10 years, with a 12-month postponement of principal payments at the start of the loan.
  • HASCAP is available until June 30, 2021.

What is HASCAP?

HASCAP is a government guarantee of 100 per cent of the value of eligible loans between $25,000 and $1 million issued by financial institutions to eligible businesses that have been severely impacted by the COVID-19 pandemic.

Businesses that operate multiple locations (including multiple hotels) under a parent entity could be eligible for loan guarantees of up to $6.25 million. The guarantee is available for loans intended to cover operational cash flow needs of these businesses, not to pay or refinance existing obligations. The program is available to businesses from all sectors across Canada but will benefit those in sectors hardest hit by the pandemic, such as tourism and hospitality.

The loans will be provided through the business’ primary financial institution and will offer low interest rates and repayment terms of up to 10 years. These loans will also offer interest-only payments for the first 12 months at the start of the loan.

Who is eligible for HASCAP?

The BDC has outlined the following eligibility requirements for HASCAP:

  1. The business must have been financially stable and viable prior to the current economic situation;
  2. The business must have received either the Canada Emergency Wage Subsidy (CEWS) or the Canada Emergency Rent Subsidy (CERS) by demonstrating a minimum 50 per cent year-over-year revenue decline for at least three months within the eight-month period prior to applying for HASCAP;
  3. The loan will be used to continue or resume operations and not to pay or refinance existing obligations; and
  4. The business is based in Canada (it is not yet clear whether this may restrict HASCAP availability to Canadian-owned businesses).

Other eligibility requirements may apply in the future. The BDC notes that no financial institution has the authority to grant any exceptions to the pre-financing eligibility requirements. Businesses will be eligible even if they have received other federal COVID-19 related benefits.

How to apply

Eligible businesses may apply through a limited set of financial institutions beginning on Feb. 1, 2021. Additional financial institutions will begin to offer the program by Feb. 15, 2021. Businesses have until June 30, 2021 to apply.

If the business has already received CEWS or CERS, the application must include their Canada Revenue Agency attestation forms demonstrating a revenue drop of a minimum of 50 per cent for at least three months during the eight-month period prior to applying for HASCAP.

If the business has not received CEWS or CERS and is eligible for either program, the business must apply for one or both prior to applying for HASCAP and provide proof of receiving payment under the respective program during the HASCAP application process.

Although the CEWS or CERS eligibility requirement is set out on the BDC website, it also anticipates a situation where the business is not eligible for these programs. We recommend that businesses interested in applying for HASCAP but not eligible for either CEWS or CERS consult with the BDC website and their financial institution to determine their eligibility for HASCAP.

Please note that the three months of revenue decline for any of the foregoing circumstances do not need to be consecutive.

As part of the application process, the business applicant will need to complete the HASCAP Guarantee Online ID Form, which requires high-level information be provided about the company. This is to provide information to the federal government about what types of businesses are seeking relief under HASCAP.


HASCAP aims to provide much needed support to sectors that continue to struggle with the effects of COVID-19. It will especially help those in the tourism and hospitality sector as they face continued travel restrictions and another summer of anticipated decreased demand.

BLG’s Hotel and Hospitality group would be pleased to advise your business on HASCAP applications, any other COVID-19 support programs, or questions you may have regarding your hospitality business. Reach out to our key contacts below for assistance.

Key Contacts