Large Enterprise Tariff Loan (LETL) Facility Factsheet
What is the Large Enterprise Tariff Loan (LETL) facility?
The LETL facility is a program instituted by the Government of Canada to provide liquidity assistance in the form of interest-bearing term loans to large Canadian enterprises who have been (or expect to be) affected by new tariffs and countermeasures.
The intent of the LETL facility is to provide financing to cover an eligible applicant’s 24 month liquidity and operating needs after having sought to secure financing through traditional sources of market financing. The LETL facility is delivered through Canada Development Investment Corporation (CDEV) via its subsidiary, Canada Enterprise Emergency Funding Corporation (CEEFC).
Who is eligible?
An objective of the LETL facility is to provide support to otherwise viable large Canadian firms operating whose operations have been impacted by actual or potential tariffs. It is open to large Canadian enterprises which:
a) which have significant operations in Canada or a significant workforce in Canada;
b) have approximately $150 million, or more, in annual Canadian revenue;
c) do not have a going concern qualification in their most recent annual or interim financial statements (other than directly related to tariffs and countermeasures) unless they can demonstrate that it was solvent as at December 31, 2024;
d) have not filed for protection under bankruptcy or insolvency legislation; and
e) have sought to secure financing through traditional sources of market financing.
Companies that have been found guilty of tax evasion are not eligible. Additional ineligible borrower categories include certain public institutions, specified entities with direct or indirect significant ownership by political office holders, and entities that promote violence, incite hatred or discrimination, among others.
Employment and “Buy Canadian”
Companies seeking support must provide an employment plan, laying out employment expectations over 24 months and will be required to adhere to that plan as a condition of the loan agreement. While employment plans should strive to maintain existing employment, CEEFC may agree to employment levels below full employment for borrowers where there is no reasonable expectation of recovery in demand, or to implement long term strategies that pre-date the impact of tariffs. Borrowers will commit to make commercially reasonable efforts to institute a “Buy Canadian” policy, prioritizing purchases from domestic suppliers and a plan to attempt to increase sales to domestic markets. Where “Buy Canadian” is not commercially feasible near term, borrowers must commit while the loan is outstanding to continual efforts to replace non-Canadian sources of input with Canadian sources.
How much assistance is available?
There is no minimum loan amount. The amount made available will be based on the applicant’s estimated cash needs over the next 24 months, net of available liquidity. The loan size for each applicant will be assessed on a case-by-case basis based on demonstrated need and the reasonableness of management’s business plan assumptions.
What is the application process?
Applicants should submit an enquiry form via the CEEFC website at https://ceefc-cfuec.ca/. A CEEFC representative will promptly send applicants a non-disclosure agreement, application form and instructions. The application form will request important information relating to the applicant and its current financial condition and its projected cash flow requirements.
Is there a deadline?
The LETL facility will be open while the current economic situation persists. Availability of advances is subject to satisfaction of conditions precedent at closing and prior to each subsequent draw.
What are the terms and conditions of the loans?
The terms and conditions will be commercial in nature. The key terms are provided below:
- Security and Advances– Loans may be secured or unsecured and may be advanced in tranches, once per fiscal quarter, during a 24 month availability period.
- Interest Rate– Loan interest rates will set based on a) CEEFC’s assessment of the risk of each loan (e.g. security position, borrower’s financial position, loan structure, b) other factors including borrower’s maintenance of employment, regional unemployment levels and employment conditions, c) the borrower’s ability to play a role in supporting Canada’s economic or national security, d) uniqueness of borrower’s capability or technology, e) the borrowers connectedness to other firms and sectors and whose failure could is lead to an increased reliance on imports or whose failure lead to an increased reliance on imports or whose failure could result in a cascade of other firm failures, f) the degree of the borrower’s actual and potential exports to non-US markets. Interest will never be less than Canada’s 10-year bond at the time of the loan plus 25 basis points.
- Term– the duration of the loan may be up to ten years.
- Restrictions– the borrower will be subject to certain operating requirements while the loan is outstanding including: (i) prohibitions on dividends, capital distributions and share repurchases; and (ii) executive compensation
- Covenants– the borrower will be subject to certain customary affirmative covenants while the loan is outstanding including: (i) performance of obligations under existing pension plans; and (ii) performance of material obligations under applicable collective bargaining agreements.
- Use of Proceeds- the primary purpose of LETL loans is to provide liquidity and operating capital to businesses and to cover operating costs, consistent with a Business Plan which CEEFC agrees is aligned with the objectives of the LETL facility. Proceeds should be used toward a more sustainable business model of diversification. The borrower may not use the proceeds of a LETL loan to refinance or repay existing debt, nor should they be used for major acquisitions, expansion projects or new ventures. The loans should be primarily used to sustain operations in Canada and not be used for operations or expenses outside of Canada.
- Conditions– certain conditions will need to be satisfied before the initial advance of funds, which will include certain waivers from existing lenders or bondholders of the borrower, intercreditor arrangements on terms acceptable to CEEFC, security documentation and registrations (for the secured facility), and customary corporate, AML and legal opinions.
How will CEEFC be compensated?
The LETL facility is designed to help Canadian companies, whilst also protecting the interests of Canadian taxpayers.
Taxpayer protection: If the borrower is a Canadian public company (or a private subsidiary that majority-owned by a public company, including foreign public companies whose shares are traded on certain recognized international exchanges), the borrower may be required to grant warrants to CEEFC, with an option to purchase the borrower’s (or parent public company’s) common shares up to a 20% voting interest in the entity.
Fees and Costs: CEEFC may require that borrowers may certain fees and costs, including advisors fees, in addition to interest,