Canada’s cannabis companies will have access to $40 billion in new credit from the Business Development Bank of Canada that’s being made available amid the financial fallout from the coronavirus pandemic, the Canadian Press reports. Previously, cannabis firms were told that the bank does not “do business” with the industry.
Michael Denham, BDC president and CEO, told the Press that “any legal business is eligible to be part of the program” and that the bank would formally announce the clarifications today. The bar industry will also be eligible for the credit lines.
Applicants must go through their own banks to access the BDC program. The BDC is a federal corporation with a loan portfolio of about $35 billion; the new credit will be in addition to that. Denham told the Press that institutions seeking the loans would have to show that they would have been able to handle the loan they are seeking before the coronavirus impacted their business. The bank has lowered its interest rates, waived fees, and increased the amount of risk it is willing to take with its loans amid the catastrophe.
“My advice to all entrepreneurs: Understand the programs, talk to your bank, see what’s right for you, and take advantage.”- Denham to the Press
There are more than 300 cannabis businesses licensed throughout Canada and the industry has contributed about $8 billion for the nation’s gross domestic product, according to George Smitherman, president and CEO of the Cannabis Council of Canada.
Last month, after it was reported that cannabis companies would be shut out of BDC assistance, bank spokesperson Jean Philippe Nadeau said the firm was “evaluating the situation as it evolves.” According to Denham, the BDC received as many applications that normally come in in a full year via its online financing platform since the start of the crisis in mid-March.
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