Banks Prepare for Softwood Industry Loans Amid Economic Pressures

Banks have informed Natural Resources Minister Tim Hodgson that loans for struggling softwood lumber companies in Canada will begin rolling out in the coming weeks. This follows the federal government's announcement of a $700 million loan package aimed at supporting the softwood lumber industry, which has been under severe economic pressure due to an escalating trade war with the United States.

Hodgson met with senior banking executives on a Monday evening to discuss the urgency of expediting this financial support. The Business Development Bank of Canada, or BDC, initiated the loan program in October, with lenders starting to accept applications.

However, industry representatives have expressed frustration over the slow rollout, warning that without immediate assistance, many businesses could face closure. The BC Lumber Trade Council, the Forest Products Association of Canada, and other industry groups have voiced concerns about the pace of support, noting that sawmills are operating below break-even levels.

Kurt Niquidet, president of the BC Lumber Trade Council, highlighted the growing frustration over the program's implementation delays. Minister Hodgson emphasized to the banks the need to address barriers to issuing loans swiftly, as the industry faces deepening challenges.

While the BDC guarantees the loans, the banks are responsible for assessing and administering them, which has led to complex due diligence and credit risk evaluations that typically take weeks. Some companies may struggle to qualify for loans due to high debt levels or low credit ratings, despite BDC's efforts to set inclusive lending standards.

Miguel Barrieras, chief community banking and impact officer at the BDC, mentioned that they are reviewing loan applications on a case-by-case basis, aiming to validate businesses that narrowly miss traditional lending criteria.

Ottawa is expected to announce additional assistance for the softwood lumber sector soon, with the package still under consideration. The situation is complicated by the current U.S. import taxes, which have reached over 45 percent on most Canadian softwood lumber producers, and new tariffs imposed by President Donald Trump, citing national security concerns.

Provincial leaders, including B.C. Premier David Eby and Forests Minister Ravi Parmar, have warned of widespread job losses and community impacts if timely relief measures are not implemented. As the stakes rise, industry stakeholders and government officials are calling for immediate action to avert a crisis in the softwood lumber sector.