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Covid-19 Economic Support for Small Businesses

In an effort to support Canadian businesses and workers impacted by COVID-19 the Government has introduced the Economic Response Plan. The details of the programs have been summarized below. For full program information visit CANADA.CA/Coronavirus.

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Note: All the information below is pulled from publicly available websites. For the most up-to-date information, please see ‘Useful links’ at the end of this article.


The highlights of the plan benefits for small businesses include:

  1. Helping Businesses Keep their Workers: Through the Canadian Emergency Wage Subsidy (CEWS) the government is providing eligible small/medium employers (including non-profits and charities) with a temporary wage subsidy of 75% for up to three months on the first $58,700 paid (up to $847/week) retroactive to March 15, 2020.

    Who qualifies?

    This subsidy is available to businesses who saw a revenue drop of at least 15% in March 2020 and 30% in the following months due to Covid-19.

    To determine eligibility employers must calculate revenue under the accrual method or cash method but not a combination of both and must exclude revenues from extraordinary items and amounts on account of capital.

    The program application will open on Monday, April 27, 2020. Full details, along with a calculator to help businesses estimate the amount of money they can get back through the program is available here: : https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-calculate-subsidy-amount.html

    Canada Emergency Wage Subsidy (CEWS) Eligibility Schedule

    Claiming period Required reduction in revenue Reference period for eligibility
    Period 1 March 15 to April 11 15% March 2020 over: March 2019 or Average of January and February 2020
    Period 2 April 12 to May 9 30% Eligible for Period 1 OR April 2020 over: April 2019 or Average of January and February 2020
    Period 3 May 10 to June 6 30% Eligible for Period 2 OR May 2020 over: May 2019 or Average of January and February 2020

    On July 13 the Government announced that the CEWS program would be extended until December 2020.

    Note: On June 23, the federal government extended the time period for temporary layoffs by up to six months, giving employers more time to recall employees who were laid off due to COVID-19. Before the extension a worker would be deemed terminated if their temporary layoff notice expired before their employer brought them back to work.

    Details:

    • Employees who were laid off before March 31: Their employers have six months (or until December 30, 2020) to bring back their worker, whichever comes first.
    • Employees laid off between March 31 and September 30: Their employer will also have until December 30 to bring back their worker, unless a later recall date was given on their layoff notice.

    Government made these changes to help protect the jobs of federally regulated private-sector employees and support employers facing economic hardship as a result of the pandemic.

  2. Rent Support:

    The Canada Emergency Commercial Rent Assistance (CECRA) for small businesses will lower rent by 75 per cent for small businesses who are paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70% drop in pre-COVID revenues.

    It will provide forgivable loans to qualifying commercial property owners to cover 50% of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.

    The loans will be forgiven if the mortgaged property owner agrees to reduce the small business tenants’ rent by at least 75% under a rent forgiveness agreement, including a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25% of the rent.

    The program launches on May 25th

    Note: On July 31, the Government announced that CECRA will be extended through August 2020.

  3. Supporting Canadian Business through the Canada Account: The government is changing the Canada Account to provide additional support to Canadian companies through loans, guarantees or insurance policies during these challenging times.

    This $55 billion Canada Emergency Business Account (CEBA) program, implemented by eligible financial institutions in cooperation with Export Development Canada (EDC), provides interest-free loans of up to $40,000 to small businesses and not-for-profits. If the loans are repaid on or before December 31, 2022 a loan forgiveness of 25 percent (up to $10,000) will be activated.

    The program was expanded on June 26 to include owner-operated small businesses that do not have a payroll, sole proprietors receiving business income directly, as well as family-owned corporations remunerating in the form of dividends rather than payroll.

    Applicants will have to demonstrate having eligible non-deferrable expenses between Cdn.$40,000 and Cdn.$1,500,000 in 2020.

    The expanded CEBA is being made available gradually by more than 230 financial institutions across the country, starting with the larger banks. Other participating financial institutions will start offering the program over the coming weeks.


  4. Small Business Loans: Government will guarantee interest-free bank loans of up to $40,000 for small businesses who have paid between $20,000 and $1.5M in 2019 payroll. Repayment of the balance of the loan on or before December 31, 2022, will result in loan forgiveness of 25 per cent (up to $10k). (full details will be posted on Canada.ca soon).

  5. Note: On May 19 the Government expanded this program to include sole business owner-operators, businesses that rely on contractors, and family-owned businesses that pay employees through dividends.

  6. Larger Business Loans: The Large Employer Emergency Financing Facility (LEEFF) will provide support to employers from all sectors with annual revenues of more than $300 million whose credit needs aren't being met through conventional financing.

    To qualify, businesses must be looking for financing of $60 million+, have significant operations or workforce in Canada and not be involved in ongoing insolvency proceedings.

    Interested companies must disclose their climate action plans and sustainability goals to qualify and must meet other conditions, including not having "excessive" executive pay. Companies that have been found guilty of tax evasion are disqualified.

  7. (The application period is now open, for more details visit: https://www.cdev.gc.ca/home-ceefc )

  8. Flexibility for Businesses Filing Taxes: The Canada Revenue Agency (CRA) will allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. CRA will not contact any small or medium (SME) businesses to initiate any post-assessment GST/HST or Income Tax audits for the next four weeks.

  9. Ensuring Businesses Have Access to Credit: The Business Credit Availability Program (BCAP) will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses. This will be an effective tool for helping viable Canadian businesses remain resilient during these very uncertain times.

  10. Mortgage Support: As a further proactive and coordinated measure to bolster the financial system and the Canadian economy, the government announced on March 16 that it is launching an Insured Mortgage Purchase Program (IMPP). Under this program, the government will purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). This action will provide long-term stable funding to banks and mortgage lenders, help facilitate continued lending to Canadian consumers and businesses, and add liquidity to Canada’s mortgage market. Details of the terms of the purchase operations will be provided to lenders by CMHC in late March.

  11. Business Development Bank of Canada (BDC): Providing additional support to businesses and entrepreneurs through:
    • Working capital loans of up to $2 million with flexible terms and payment postponements for up to 6 months for qualifying businesses;

    • Postponement of payments for up to six months, free of charge, for existing BDC clients with total BDC loan commitment of $1 million or less

    • Reduced rates on new eligible loans
    • Additional details regarding Business Credit Availability Program (BCAP) measures, including industry-specific support, to be announced in the coming days.

For more details visit: https://www.bdc.ca/en/financing/pages/default.aspx

Useful links:

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