Photo: Graham Hughes The canadian Press
The government Legault has decided to invest $ 100 million to establish a fund to share capital to stimulate the economic recovery post-COVID, and support companies in their transition to digital.
A new source of potential funding will be added to the landscape of SMES in québec : the government Legault has decided to invest $ 100 million to establish a fund to share capital to stimulate the economic recovery post-COVID, and support companies in their transition to digital.
Managed by the National Bank, the fund will have a funding maximum of 200 million, a goal that relies on the participation of the financial institution as well as that of other investors. It will be marketed in the coming months.
In the eyes of the National Bank, the creation of the fund is to ” complete the bank financing available to SMES “. Its president, Louis Vachon, said that ” entrepreneurs must be able to rely on different forms of capital to stimulate their growth “, particularly at a time when the economy faces a need of stimulus.
We welcome this news, because in the context where the recovery will be slow and difficult for SMES, assistance to businesses is welcome
— Gopinath Jeyabalaratnam
The programme of capital stock differs from what has been established to support the enterprises since the beginning of the crisis, aid which is often based on loans, and loan guarantees, a salary grant from the federal government or even the concerted action Program for employment maintenance, announced by Quebec at the beginning of the month of April. The Caisse de dépôt et placement du Québec, for its part, has already announced that it was setting aside $ 4 billion to support businesses shaken by the crisis, provided that they have been profitable before the COVID-19, they are looking for funding of over 5 million and they foresee an interesting growth potential.
Not always compatible
The gesture is worth to be mentioned, referred to the canadian Federation of independent business. But all companies will not be systematic eligible. “We welcome this news, because in the context where the recovery will be slow and difficult for SMES, any help for business is welcome,” said Gopinath Jeyabalaratnam, senior policy analyst with the CFIB.
The support is intended for companies seeking to grow or to engage in a digital transformation, ” noted Mr. Jeyabalaratnam. “As it is in the form of share capital, it will not be necessarily compatible with all business models. We would therefore like to see direct support programs of the government for smaller companies who still have many difficulties to face months of confinement. “
Enterprises with net assets less than 100 million or assets of less than $ 200 million will be targeted by the fund, reported the National Bank. They will be in all the sectors of the economy, and at various stages of their development.
According to the latest data of Network Capital, about 40% of the transactions of the “development capital” in 2019 are estimated to be between 1 and 5 million dollars. Those between 5 and 25 million accounted for approximately 22 % of the transactions.