Advice on financing during the current crisis
The whole of Quebec mobilised this week to support Quebec businesses. Financial institutions, venture capitalists and governments have announced easing of loans already taken out and new loans available to support companies' working capital.
FOR BORROWINGS ALREADY CONTRACTED:
Tip: immediately negotiate a moratorium on your existing loans
At all institutions, moratoria are easily and quickly available for a period of 3 to 6 months. In addition to the usual moratorium on capital, some institutions offer moratoria on interest, thereby deferring a payment in full. Of course, this is only a deferral.
Your Mallette advisers are in daily contact with all the financial institutions and will be able to inform you of the various measures available, by institution.
NEW BORROWINGS AVAILABLE (A RECALL OF THE MEASURES ANNOUNCED BY IQ AND BDC):
INVESTISSEMENT QUÉBEC (IQ)
Guarantee of term loan or line of credit from a financial institution (direct loan also possible).
Amount of $50,000 or more to support working capital for a maximum
of 12 months.Moratorium of 36 months plus 12-month moratorium.
Security will depend on the amount of the loan, but possibilities include personal, corporate and universal sureties of movable property.
Annual guarantee fee of 1% or the interest rate on Quebec savings bonds (depending on the term of the term loan) + 1.75%
Unlike IQ's normally eligible companies, with rare exceptions, this program is intended for all Quebec companies temporarily affected by the repercussions of Covid-19.
BANQUE DE DÉVELOPPEMENT DU CANADA (BDC)
Term loan of up to $2,000,000 eligible for customers and non-customers.
Amortization of 24 months after a 12-month moratorium.
Repayment of 40% of the loan over that 24 months, and 60% in balloon repayment
at the end.Variable interest rate: Base - 1.75% (3.30% as of today).
Securities consist of personal sureties and other movable or immovable mortgages after the guarantees currently in place in the company.
Tip: Prepare immediately to provide the information needed to obtain this funding
Prepare anything that can support the fact that you are affected by the current situation and its impact on your liquidity. For example, the following may be required:
A cash budget or 12-month financial forecast demonstrating anticipated cash requirements.
Your financial statements for the last three years.
Your most recent interim financial statements with last year's comparison.
Any justification for the drop in your level of activity (reduction in the number of customers, partial or complete closure, drop in sales since the pandemic, etc.).
Internal information such as the corporate organisation chart, your list of accounts receivable, accounts payable and other information.
The forms required by BDC and IQ.
Other tips
According to our discussions with representatives of the institutions concerned, the sums earmarked for these measures represent an initial response to the current crisis.
Other than the rush to cover your cash, no rapid disappearance of available funds is anticipated (this is not a toilet paper run!!!).At present, no harmonisation appears to be present between IQ and BDC.
There is therefore nothing to stop you applying to both places.
MALLETTE IS VERY CONCERNED ABOUT THIS SITUATION AND ITS IMPACT ON YOUR FINANCIAL SITUATION. WE HOPE THIS ADVICE WILL HELP YOU BETTER THROUGHOUT THIS CRISIS.
Do not hesitate to contact your Mallette advisor or associate in your region among our 30 offices
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