Canada’s COVID-19 Economic Response Plan
The Government of Canada is taking action to protect our economy, health, safety, and jobs of Canadians during the global COVID-19 outbreak. The following is a summary of some of the most recent programs that are available as pertaining to small businesses:
Canada Emergency Wage Subsidy
The Federal Government has increased the 10% wage subsidy for eligible businesses adversely affected by COVID-19 to a 75% wage subsidy for businesses of any size. The subsidy will be backdated to March 15, 2020.
· For businesses that experience a 30% drop in revenue versus the same period in 2019 for each and every month they apply (businesses must reapply each month).
· Details will be released in the coming days on measures for early-stage companies who were pre-revenue in 2019.
· The subsidy will cover up to 75% of wages on the first $58,700 that an employee earns, up to a maximum of $847 a week.
· Businesses must attest to try paying remaining 25% of wages
· The portal for accessing the wage subsidy will be accessible through the CRA website, and is expected to be available in 3-6 weeks
Note that the 75% subsidy does not necessarily replace the 10% wage subsidy that was originally introduced. Small businesses that have not seen a direct decline in revenue due to COVID-19, or cannot prove the 30% decline criteria for the 75% subsidy, will still be eligible for the 10% subsidy.
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Canada Emergency Response Benefit (CERB)
A taxable benefit of $2,000 a month for up to 4 months to:
workers who must stop working due to COVID19 and do not have access to paid leave or other income support.
workers who are sick, quarantined, or taking care of someone who is sick with COVID-19.
working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures.
workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work.
wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance.
Business Credit Availability Program
Canada Emergency Business Account
The new Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced. To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019.
Loan Guarantee for Small and Medium-Sized Enterprises
EDC is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to SMEs.
Co-Lending Program for Small and Medium-Sized Enterprises
BDC is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements. Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program.
These programs will roll out in the three weeks after March 27, and interested businesses should work with their current financial institutions.