In many ways, the Export Help Hub serves as a barometer for gauging Canadian business needs here at Export Development Canada (EDC). As you might expect, during the current COVID-19 crisis, the requests for help have been pouring in.
Help is needed to support those companies that have seen a downturn in their business volumes. Similarly, help is needed to support manufacturers that want to re-tool their production lines, to furnish our frontline heroes with life-saving personal protection equipment. Still, other companies need help to continue delivering essential goods and services, south of the border and around the world.
As Canada’s export credit agency, we help Canadian companies go global. And although we’ll continue doing that throughout the pandemic, our risk expertise can be put to use to serve not only exporting companies, but those that operate solely at the domestic level as well. As such, the Government of Canada has broadened our mandate, so we can provide emergency liquidity for micro-, small- and medium-sized domestic companies.
5 ways we can help you now
1. Access loans during the COVID-19 slowdown
One of the most significant ways that we’ll be able to support Canadian companies during these challenging times is through the Business Credit Availability Program (BCAP). Administered by financial institutions, this $65-billion program includes two possible streams of funding support fuelled by EDC and the Business Development Bank of Canada (BDC).
EDC loan guarantee
- Provides $6.25 million in operating credit and cash flow term loans.
- Essentially, this is the same type of loan we typically offer to our exporting customers—known as the Export Guarantee Program—but now it’s also available to all domestically operating companies. It’s a type of risk-sharing program, whereby we guarantee 80% of the loan issued by the bank, making it easier for them to lend your company funds.
BDC co-lending program
- Provides $6.25 million in term loans for operational and liquidity needs for businesses with revenues in excess of $50 million.
- For businesses with revenues between $1 million and $50 million, up to $3.125 million will be available, while $312,500 will be provided to those with revenues of less than $1 million.
Assuming you’re a small- or medium-sized company that was financially viable prior to COVID-19, and you’re now experiencing difficulties directly related to the pandemic, you can apply to your bank for both of these types of financing. Eligibility requirements will be set by each financial institution and it’s expected that the program will be fully operational by the end of April 2020. And yes, you can benefit from both types of support, for a total combined funding of $12.5 million.
2. Ensure you get paid by your customer
For some Canadian companies, it’s hardly business as usual since they’re running on all cylinders just to keep up with the increased demand due to COVID-19. On the one hand, you want to continue to support your customers; on the other, the last thing you can afford is to take on any type of bad debt right now. For those firms, Credit Insurance has likely never been more important. If you’ve insured your contract and your customer either cancels it or goes bankrupt, then 90% of your losses will be covered. Not only that, your bank will be more likely to lend you cash—up to 90% of your insured receivables. Plus, you’ll be able to provide longer payment terms, which is especially important to your buyers right now.
We've put a lot of effort into refining our credit insurance solution—both the conditions and terms of our policies—to make it more flexible for businesses during these trying times. So please reach out to us with any questions you may have, whether you’re an existing customer or new to EDC.
3. Get your advance payment returned from your supplier
Given the challenging times, you may be faced with suppliers who are insisting on advanced payments before they ship their goods to you. Although understandable, this scenario puts you at risk, should that supplier fail to return your advance payment prior to shipping the goods. That’s where Advance Payment Insurance comes into play. With this type of insurance in place, you’ll be covered.
We’ve made some exceptions within the program, as they relate to the provision of personal protective equipment in response to COVID-19. In short, the program doesn’t apply exclusively to capital goods, but extends to any product required to address the emergency needs we have here in Canada. This is especially important to companies with suppliers from China and Japan—both common sources of supply right now—who are asking for advanced payments.
4. Protect your margins against currency fluctuations
There’s a lot of volatility in currency markets right now. Securing exchange rates with a Foreign Exchange Facility Guarantee (FXG) is an important way to protect your margins. Typically, financial institutions will require a 5% to 10% security on these types of facilities, which puts unneeded stress on your cash flow during these exceptional times. EDC’s FXG solution removes that stress by providing a guarantee to your bank, which effectively removes the collateral requirements, leaving more operational cash in your business.
“ As an organization, we’ve been focused on refining our solutions to meet the needs of all Canadian small businesses during these unprecedented times. ”
5. Post a bond without tying up your cash
If your supplier is asking you to provide a security against an order in exchange for open account terms, then chances are, you’ll have to tie up considerable funds to issue a letter of guarantee. Unless you have an Account Performance Security Guarantee (APSG). With an APSG in place, EDC will provide a 100% guarantee on any bonds it posts on behalf of your company. This is a win-win solution in all directions: you’ll have more access to cash, you’ll get better terms from your supplier, and you’ll be able to protect your margins.
Reach out to us...now and always
We live with the hope that better days are ahead, and that we’ll be able to weather this unprecedented storm if we stand together. In addition to the five ways noted above, we’ve set up a new interactive COVID-19 Business Resources tool to help you find solutions specific to your company. And don’t forget: We’re here to talk. You can call us at 1-800-229-0575 to speak with a trade advisor, who can either get answers to your questions, or point you in the right direction. And also remember to sign up for a MyEDC Account to stay up-to-date on any new programs, or changes to existing ones.
In the days, weeks and months ahead, we’ll continue to stand by Canadian businesses, so be sure to check back regularly to learn about new ways we can help you during the COVID crisis.