Canada Development Investment Corp. (CDEV) has announced the launch of the Large Enterprise Tariff Loan (LETL) facility, a new government-backed loan facility to support large Canadian enterprises affected by actual and potential new US tariffs and associated Canadian import countermeasures and which face challenges accessing traditional sources of market financing.
CDEV, a Canadian federal Crown corporation reporting to the Minister of Finance, will manage the facility through its subsidiary, Canada Enterprise Emergency Funding Corp. (CEEFC) CEEFC was initially established to administer the Large Employer Emergency Financing Facility (LEEFF), which offered emergency funding to big businesses during the COVID-19 pandemic, which we described at the time in our blog, More COVID-19 Relief for Employers: The Large Employer Emergency Financing Facility and on which Bennett Jones represented several clients, such as Gateway Casinos & Entertainment Limited, to obtain LEEFF financings.
In Brief: The Tariff Crisis
Since March 4, 2025, the United States has targeted Canadian exports with punishing new 25 percent import tariffs on all goods of Canadian origin that do not qualify for tariff preference under the United States-Mexico-Canada Agreement (except that the rate that applies to energy products, critical minerals and potash is 10 percent). The United States has also imposed additional 25 percent tariffs on Canadian motor vehicles, steel and aluminum products and derivatives, with investigations underway to impose further tariffs on other sectors. In March and April 2025, the Canadian government responded with three rounds of retaliatory surtax orders (import tariffs) against a wide range of US products. This disruption to longstanding duty free and low-barrier trade flows across the Canada-United States border has roiled markets and may push Canada into a recession.
What is the Purpose of the LETL Facility?
The facility is designed as a bridge facility to assist otherwise viable businesses in overcoming difficulties in securing traditional market financing during the tariff crisis, by providing short-term financing to help them preserve operations and employment until they can access more traditional market financing.
Who is Eligible for LETL Financing?
The LETL facility is available to large Canadian businesses that can show they have been (or expect to be) impacted by the new tariffs and countermeasures. To qualify, companies must:
- play a significant role in Canada's economy, either through major operations or a large Canadian workforce;
- have approximately C$300 million or more in annual Canadian revenue;
- need a loan of at least C$60 million;
- commit to keeping job losses to a minimum and maintaining operations in Canada; and
- demonstrate that the LETL funding is part of a broader plan to get back to financial stability, whether or not tariffs remain.
Large for-profit companies across all sectors can apply, and some not-for-profits might also be eligible. However, companies already involved in insolvency proceedings before the tariff crisis began, or which were previously guilty of tax evasion, will not be eligible.
What Are the Terms of a LETL Loan?
The features of the loan program and its terms and conditions are stated to be commercial in nature and are modeled after the COVID-era LEEFF funding offered by CEEFC. The key terms as outlined by CEEFC:
- Size/principal amount: Two loan facilities: an unsecured facility of up to 80 percent of the aggregate loan and a secured facility of at least 20 percent of the aggregate loan. The minimum aggregate loan must be C$60 million. The loan can be advanced in tranches, once per fiscal quarter over 12 months.
- Interest: For the unsecured facility, 3-month Term Canadian Overnight Repo Rate Average (CORRA) plus a predetermined premium, payable on calendar quarters in arrears. The premium to Term CORRA will increase by 200 bps per annum. Accrued interest may be capitalized for the first two years of the loan. For the secured facility, the interest rate will be the interest rate of the borrower's existing secured debt with its other lenders.
- Term and prepayment: The term of the unsecured facility will be five years. The term of the secured loan facility will match that of the borrower's existing secured debt. The borrower may prepay the loans and accrued interest at any time without penalty.
- Negative covenants: The borrower will be subject to certain operating requirements while the loan is outstanding including (1) prohibitions on dividends, capital distributions and share repurchases, (2) executive compensation restrictions for named executive officers and (3) restrictions on transferring equipment, assets, employees, production or operations outside of Canada.
- Affirmative covenants: The borrower will be subject to certain affirmative covenants while the loan is outstanding including (1) performance of obligations under existing pension plans, (2) performance of material obligations under applicable collective bargaining agreements and (3) publishing an annual climate-related financial disclosure report, highlighting how corporate governance, strategies, policies and practices will help manage climate-related risks and opportunities and contribute to achieving Canada's climate commitments.
- Governance: CEEFC will reserve the right to appoint an observer to the board of the borrower.
- Conditions: Pre-advance conditions will include certain waivers from existing lenders or bondholders of the borrower.
- Canadian public company warrants: If the borrower is a Canadian public company (or the private subsidiary that is majority-owned by a public company), the borrower must grant warrants to CEEFC, with an option to purchase the borrower's (or parent public company's) common shares based on a meaningful proportion of the principal amount of the unsecured facility. The warrants will enable CEEFC to share in the upside of the borrower's recovery. These warrants may be settled with the borrower prior to being exercised, or sold to third party buyers after the loan is repaid.
- Private company fees: Borrowers without publicly traded shares will be required to provide CEEFC with compensation in the form of additional fees, at a level commensurate with the value of the warrants for public company borrowers.
- Closing fee: The borrower will pay a transaction fee to CEEFC on the closing date.
It will be informative to see whether LETL facilities are more broadly accessed than the LEEFF facilities.
How Long Will LETL Financing Be Available and How to Apply?
According to CEEFC, the LETL facility will remain available while the current tariff-induced economic situation persists. To apply, eligible parties must complete an enquiry form and email it to CEEFC at info@ceefc-cfuec.ca. Upon evaluation, qualifying applicants will be contacted for further information and will receive a non-disclosure agreement, application form and further instructions. The application form will request information relating to the applicant and its current financial condition and its projected cash flow requirements.
How Bennett Jones Can Help
LETL presents encouraging relief for qualifying companies; however, as with the LEEFF program during COVID, given the restrictions and requirements associated with the program, LETL may not be suitable for all entities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
