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When it comes to credit, get it: BDC president urges businesses to take full advantage of COVID-19 aid options

BDC president Michael Denham says the first step in small to medium-size businesses closing the productivity level gap between Canada and the U.S. is to measure where it can be increased. Late last year, the BDC launched a free online tool to help entrepreneurs do just that.
BDC president Michael Denham says the first step in small to medium-size businesses closing the productivity level gap between Canada and the U.S. is to measure where it can be increased. Late last year, the BDC launched a free online tool to help entrepreneurs do just that. - Kenn Oliver

Michael Denham has some simple advice for businesses hit by the first wave of COVID-19 and fearing a second: when it comes to credit, get it.

Denham, president of the Business Development Bank of Canada, said Thursday business owners should take full advantage of all government support and loan programs that they can access.

"Especially if there is a second wave or if the recovery is kind of choppy, you know these companies are going to need access to money. So, take full advantage of what's out there and, even if it's for a rainy day ... get access now because it's better to have it and not need it then scramble," he said.

On Thursday, the BDC announced a new lending option through its Business Credit Availability Program (BCAP) that partners with Canadian banks to provide a mid-market credit solution for companies that need between $12 million and $60 million. The program helps small and medium sized enterprises that have lost revenue and customers to more easily access loans from banks. In turn, the program also allows banks to lend more and take on more risk.

So far, banks have done a good job with interest relief and the government has done a good job with programs such as wage and rent subsidies, said Denham. But he adds that SMEs need access to working capital in order to grow, especially as other funding options may diminish in the upcoming months.

Denham also says SMEs and entrepreneurs should be on top of their cash flow.

"Understanding week by week when money is leaving and when money is coming in (and) run some scenarios. This modelling serves as an early warning indicator of problems, and as a result, entrepreneurs can act sooner rather than later and pre-empt the problems," he said.

A third strategy is to be creative and find new ways to bring in revenue. In Atlantic Canada, we’ve seen sign-makers turning out face shields, distilleries making hand sanitizer and restaurants embracing take-out and delivery when they couldn’t serve customers inside.

"Even if there is nothing obvious, and it seems difficult, you've got to find a way to be as creative as possible and just find ways to participate and generate as much revenue as one can in the months ahead," he said.

Denham said the provincial economies, and the sectors in each, are being hit to varying degrees. Newfoundland and Labrador is facing more challenges than P.E.I. and Nova Scotia, he said. And oil and gas, tourism and the fisheries are affected more than other sectors. Still, restaurants are reopening, seafood companies are rebounding and the wider economy appears to be coming out of its slumber.

All told, Denham expects the Newfoundland and Labrador economy to shrink this year by about 10 per cent.

With Nova Scotia and P.E.I. will likely pull back by about six per cent this year but pick up by about five per cent in 2021.

Businesses, particularly in the hospitality and tourism sectors, have been pushing for eased border restrictions within the region. It has been suggested that a bubble including New Brunswick and P.E.I. could come as early as next month, with Nova Scotia following later.

Denham said he supports the idea so long as it doesn't come at the expense of public health and safety.

"Certainly on the domestic tourism side, the flow of people would help. It would help restaurants. I think it would help psychologically. People would have a chance to visit what are incredibly attractive part of Canada. But all that has to get done in a sense of public health, social distancing - all the things we need to respect in order to ensure that we stay healthy," he said.

terrence.mceachern@theguardian.pe.ca

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