The COVID-19 pandemic is making a significant impact on the Canadian economy, especially with small and medium sized businesses. The federal and provincial governments have announced different support efforts to relieve businesses and agricultural producers during these anxious times. Let’s help you break down these different measures so that you can brave this storm and best protect your business’ financial well-being.
UPDATED: May 21, 2020
Due to the nature of COVID-19, how it spreads, and how self-isolation is the best way to fight against it, businesses across Canada are facing difficult decisions. Over the last week, many provinces and municipalities have announced measures to stop the spread of the virus that resulted in business closures and massive layoffs. The Government of Canada has also announced multiple initiatives to support businesses to provide economic stability during this time. Agricultural producers are also feeling the weight of the pandemic as they approach the beginning of spring seeding and how to get their goods from a difficult 2019 growing year to market. Most of the information below and how to apply for benefits from the Government of Canada can be found here.
Supports for Businesses
Canada Emergency Wage Subsidy (CEWS)
Canadian businesses, including non-profit organizations and charities, whose March revenue has decreased by at least 15% due to COVID-19 and facing employee layoffs can access a temporary wage subsidy. Business owners can receive 75% of wages per employee to a maximum of $58,700 during the 3-month period, to a maximum of $847/week per employee. These payments will be back dated to March 15, 2020. Businesses will have to apply for the program through the My Business Account portal on the Canada Revenue Agency’s website. They will also need to apply each month. To qualify, they will need to prove that their revenues have fallen at least 15% in March, as compared to January and February’s revenues.For non-profits or charities where revenue verification will be more difficult, may be able to access the subsidy by proving donations have reduced. However, the specific details for these organizations is still being worked out.
The 10% wage subsidy that the government announced earlier this month is still in effect. Small businesses can continue to claim the 10% wage subsidy, to a maximum of $25,000 or $1,375/employee. Businesses do not need to have experienced a decrease in revenue for this and can access this support immediately by adjusting the remittances of income tax that they withhold from employee pay. If a business is already receiving the 10% wage subsidy, they can also receive the CEWS, however the amount they receive will be adjusted down accordingly so that they receive a maximum of 75% subsidy between both programs.
To create some balance between employers and employees, the Government of Saskatchewan will allow businesses to not have to provide notice or pay in lieu in the event of a public emergency when the layoff is 12 weeks or less during a 16-week period. Additionally, if an employee is laid off for more than 12 weeks in a 16-week period, they will be considered terminated and entitled to access federal employment insurance programs.
Businesses also qualify for payment deferrals on loans, skip-a-payment, and interest only payment plans. You are encouraged to reach out to your financial institution to determine what supports are available to you and what makes the most sense with your financial situation.
Canada Emergency Commercial Rent Assistance
The Government of Canada has announced the Canadian Emergency Commercial Rent Assistance (CECRA) program, in co-operation with Canada’s Provinces to provide much needed commercial rent relief to small businesses during this unprecedented time. This program will lower rent by 75% for small businesses that have been affected by COVID-19, in co-operation with the property owner. The program provides commercial property owners access to forgivable loans if they cover 50% of the rent payments for eligible small business tenants.
The commercial property owner must agree to reduce the tenants rent by 75% for the months of April, May and June under a Rent Forgiveness Agreement. The property owner would not be able to evict the tenant under the agreement, and the tenant would cover the remaining 25% of rent owed. Tenants must be paying less than $50,000 a month in rent, have ceased operations or experienced a 70% decline in revenues due to COVID-19. Non-profit and charitable organizations also qualify for the program.
To apply and find more information, visit the CMHC website.
Saskatchewan Small Business Emergency Payment
The Saskatchewan Small Business Emergency Payment program provides much needed financial assistance to Saskatchewan’s small businesses that had to close or reduce operations due to the public health order during COVID-19.
The payment can be used for any purpose, including covering fixed costs or the costs associating with re-opening after the public health order has lifted restrictions. Payments are based of 15% of the businesses’ monthly revenue in April 2019 or February 2020 to a maximum of $5,000. Seasonal businesses 15% payments are based off the average monthly sales revenue for their 2019 operational months.
To be eligible, a Saskatchewan business or not-for-profit must:
- Have been carrying on business in Saskatchewan on February 29, 2020;
- Have been ordered to temporarily close or curtail operations through a COVID-19 public health order;
- Have less than 500 employees:
- Seasonal businesses:
- In the year before the COVID-19 public health order; or
- When averaged for the 3 years before the year in which the COVID-19 public health order;
- Attest that they:
- have experienced a loss in sales revenue from business activities due to a COVID-19 public health order;
- plan to reopen operations following the cancellation of the COVID-19 public health order; and
- have not received any payments or amounts from any other sources, including insurance, to replace or compensate for the loss of sales revenue other than amounts from other government assistance programs; and
- Apply on or before July 31, 2020.
Applications can be completed on the Government of Saskatchewan website.
Business Tax Filing
Like the measures taken for filing personal income taxes, businesses will be able to defer the payment of income tax until September 1, 2020. No interest or penalties will accumulate on these amounts owing. The Canada Revenue Agency will also pause most of its audit interactions for businesses for the next 4 weeks. For businesses requiring assistance understanding your tax obligations, help will be administered over the phone or through webinar.
Businesses and self-employed individuals can defer payments of the Goods and Services (GST)/ Harmonized Sales Tax (HST) until June 30, 2020. Businesses will also be able to defer customs duties owing on imports until June 30, 2020. Details about remittance schedules and how they qualify can be found here.
The Saskatchewan Government is also providing relief for you if you own a business and are unable to submit your Provincial Sales Tax (PST) remittance over the next three-months. You can submit a request for relief from penalty and interest charges here. Like the federal government, they are also pausing audit and compliance programs for businesses.
Canada Emergency Business Account (CEBA)
This emergency loan program will allow businesses to access interest-free loans of up to $40,000 to cover operating costs while revenue is down due to COVID-19. Contact your business advisor or financial institution to learn more about the CEBA and what it means for your business.
What is the CEBA loan?
- $40,000 interest-free loan to help you cover operating costs you were not able to defer because of COVID-19
- $10,000 (25%) of the $40,000 loan is eligible for complete forgiveness if $30,000 is repaid on or before December 31, 2022
- If the loan cannot be repaid by December 31, 2022 it can be converted into a 3-year loan with an interest rate of 5%
- Once your loan application has been reviewed and submitted the process for funding will take up to 7 days from completion.
How does the CEBA loan work?
- The loan will be funded as a $40,000 term loan, 0% interest and no payments until December 31,2022
- No interest will apply until January 1, 2023
- Beginning January 1, 2023, interest accrues on the balance of the term loan at the rate of 5% per annum, payable monthly on the last day of the month
- If you pay 75% of the balance of the term loan on or before December 31, 2022, the remaining balance of your term loan will be forgiven. For example, if your balance is $40,000 on January 1, 2021 and you repay $30,000 on or before December 31, 2022, the remaining $10,000 will be forgiven
- If you do not repay the 75% of the balance of the term loan on or before December 31, 2022, the full loan balance and all accrued and unpaid interest will be due and payable on December 31, 2025.
What’s the eligibility criteria?
The eligibility criteria are as follows, per the Government of Canada’s requirements:
- You are a Canadian operating company (ie. not a holding company) registered and in operation on or before March 1, 2020
- Your Annual payroll expense is between $20,000 and $1.5 million, as evidenced on your 2019 T4 Summary of Renumeration Paid (T4SUM). If you cannot locate your T4SUM contact Revenue Canada for reissue
- A 15-digit Canada Revenue Agency Number also shown on your T4SUM
- Conexus is your primary financial institution – meaning your everyday business banking account and cash management activities are held with Conexus, and opened on or before March 1, 2020
- If your everyday business banking account is held elsewhere, please apply for funding through the Financial Institution that holds your primary Business Operating Account
- Your account must be in Good Standing as an existing member
Expanded eligibility as of May 19, 2020
The criteria for access to the CEBA Loan Program has been expanded to include businesses with sole proprietors, those that rely on contractors or family owned businesses that pay employees through dividends. To be eligible, applicants with payroll less than $20,000 must meet the following criteria:
- Have a business operating account at a participating financial institution
- Have a Canada Revenue Agency business number
- Filed a 2018 or 2019 tax return
- Have eligible non-deferrable expenses such as rent, property taxes, utilities and insurance that equal between $40,000 and $1.5 million
Business Development Bank of Canada (BDC) Co-Loan
On March 27th, the Federal Government announced the BDC Co-Lending Program to support Canadian businesses of all sizes that have been negatively impacted by COVID-19. Eligible applicants can access up to $6.25 million CAD (max loans amount dependent on business size) in loans to cover operating expenses such as rent and payroll and working capital needs such as inventory. The loan will be jointly funded by BDC and your financial institution.
Business with less than $1 Million in Annual Revenue
Businesses with $1-50 Million in Annual Revenue
Businesses with over $50 Million in Annual Revenue
|Up to $312,500
||Up to $3.125 million
Up to $6.25 million
How does the BDC Co-Lending Program work?
- Eligible business members can apply for financing to support their operational and liquidity needs
- Term Loan
- First 12 months to be interest only
What’s the eligibility criteria?
- Been a member with your financial institution as of March 1, 2020
- Been a viable business as of March 1, 2020 prior to COVID-19 impact
- Meet the necessary requirements that will form part of the application process
More information can be found on the BDC website here.
To further ensure Canada’s businesses have access to credit services during this time, the Government of Canada is relaxing its parameters for certain funding:
- The Canada Account ensures Canadian Exporters have access to loans, guarantees, and insurance policies during this time.
- The Business Credit Availability Program (BCAP) is allowing the Business Development Bank of Canada (BDC) and Export Development Canada to support small and medium businesses with an additional $10 billion. In addition, BCAP and BDC will work with private sector lenders to ensure credit solutions are offered for individual businesses, specifically businesses that operate in the oil and gas, air transportation, and tourism sectors.
- Canada’s individual banks will be able to access $300 billion for the economy by lowering the Domestic Stability Buffer of risk-weighted assets by 1.25%. This is in addition to the Bank of Canada reducing its interest rate to 0.75% to support the economy. Further reductions to the interest rate are expected, but not known at this time.
More details on market support measures taken by the Government of Canada can be found here.
Export Development Canada Business Credit Availability Program Guarantee
As part of the federal government’s new $65 billion Business Credit Availability Program (BCAP), Conexus Credit Union and Export Development Canada (EDC) are partnering to provide small-and medium-sized Canadian businesses with financing during the COVID-19 pandemic. Access the credit you need to cover payroll and other operating costs during this global health crisis. The EDC BCAP Guarantee provides businesses with up to $6.25 million in credit to cover operational costs like payroll and rent. Proceeds from the BCAP-supported loan cannot be used to repay or refinance existing debt (further restrictions apply to other non-operational costs). Export sales are not required to qualify for the program.
EDC fees related to this guarantee will be deferred for the first six months, giving some short-term relief to your business. EDC will provide a guarantee to Conexus Credit Union on 80% of the value of your loan. By sharing risk with EDC, we can help your company access the financing it needs. Note that the guarantee is to our institution, not your business, so you remain responsible for the full value of the loan.
For more information on the loan and the eligibility criteria, contact your business advisor.
Information can also be found on the EDC website.
Regional Relief and Recovery Fund
The Government of Canada has announced additional funding for small and medium businesses who need additional relief due to the COVID-19 pandemic. The Regional Relief and Recovery Fund (RRRF) provides $962 million in relief funding delivered through regional development agencies. Specifically, $304 million is allocated to Western Economic Diversification Canada to assist Western Canadian businesses specifically in the tourism sector.
The objective of the RRRF is to assist Western Canadian businesses that do not qualify for other programs such as the Canadian Emergency Business Account (CEBA) or the Community Futures Emergency Loan Program. The RRRF will support businesses in two ways:
- Provides up to $40,000 in repayable contributions to businesses that are not eligible to access other federal support programs. Businesses that receive funds from the RRRF and repay 75% of the contribution (up to $30,000) on or before December 31, 2022 will result in forgiveness of 25% of the contribution (up to $10,000).
- Provide up to $1,000,000 in repayable contributions to businesses that can demonstrate a meaningful contribution to the Western Canadian economy and are experiencing liquidity issues. These companies may not have accessed other Government of Canada relief programs, or may have accessed them, but require additional funding to mitigate cash flow pressures. This contribution is fully repayable.
Further details, including eligibility criteria for each stream, and how to apply, can be found here.
Examples of business that are eligible to apply to the RRRF:
- Pre-revenue firms (e.g. a company that has not had any sales to date)
- Businesses that do not have salaried employees (e.g. a company with a workforce of contract employees)
- Businesses with no payroll that do pay their owners a salary (e.g. a company that pays its owners through dividends)
Examples of businesses that are not eligible to apply to the RRRF:
Applications are being accepted through Western Economic Development Canada and can be found here.
Large Employer Emergency Financing Facility
The Large Employer Emergency Financing Facility (LEEFF) is a program to support large employers through COVID-19. The program provides short-term liquidity assistance in the form of interest-bearing term loans through the Canada Enterprise Emergency Funding Corporation, a subsidiary of the Canada Development Investment Corporation. The assistance is available to large Canadian employers who meet the following criteria:
- Make a significant impact on Canada’s economy by:
- Having significant operations in Canada
- Supporting a significant workforce in Canada
- Have annual revenues of $300 million or more
- Require a minimum loan of $60 million
- Have never been found guilty of tax evasion
Assistance is available to large for-profit enterprises in all industries, except those who operate in the financial sector, as well as certain not-for-profit businesses. They must commit to minimizing loss of employment by sustaining their business operations through COVID-19 and provide an overall plan to return to financial stability.
For full information on LEEFF, visit the Canada Development Investment Corporation fact sheet here.
Canada Summer Jobs Program
On April 8th, the federal government announced changes to the Canada Summer Jobs Program to do more for students and small businesses that rely on the program to deliver essential services. The program creates almost 70,000 jobs for Canadians aged 15 to 30. Temporary changes to the program for this year include:
- Increase to the wage subsidy so that employees can receive up to 100% of the minimum hourly wage for each employee
- End date for employment is now February 28, 2021
- Employers can adapt their activities to support essential services
- Hiring staff on a part-time basis
Supports for Agricultural Producers
Farmers and the agri-food sector will be supported by Farm Credit Canada and an additional $5 billion dollars provided by the Government of Canada. You are encouraged to contact Farm Credit Canada to discuss the supports available to you.
Eligible farmers who have an outstanding Advanced Payments Program (APP) loan that comes due on or before April 30 will receive an automatic stay of default, giving farmers an additional 6 months to repay the loan. Those farmers with outstanding interest free loans, under the $1 million cap, can also apply for an additional $100,000 interest free portion for the 2020-21 year.
Agriculture and Food Business Solutions Fund
Farm Credit Canada will be running the Agriculture and Food Business Solutions Fund, providing agribusinesses and producers much needed relief during the COVID-19 pandemic. $100 million dollars will be available in the form of convertible debt investments and other flexible financing options. Companies that have experienced business disruption can apply for up to $10 million.
Fish Harvesters Benefit
Fish harvesters facing a 25% drop in income due to COVID-19, will have access to $470 million in relief from the Federal Government. The Fish Harvesters Benefit covers up to 75% of losses to a maximum of $10,000. Additional relief in the form of non-repayable grants will be available and the rules for Employment Insurance claims in 2021 will be changed to reflect previous years income.
AgriRecovery Set-Aside Program
The Saskatchewan Government announced an additional $5 million dollars for participation in the AgriRecovery Set-Aside Program, supporting producers in the livestock industry that need to hold their livestock back from markets. Saskatchewan Livestock producers will be able to access a total of $12.5 million under the program. 40% of the program is funded by the Saskatchewan Government, with the remaining 60% funded by the Federal Government. The program will be delivered to Saskatchewan producers through Saskatchewan Crop Insurance Corporation.
Western Livestock Price Insurance Program
The Western Livestock Price Insurance Program (WLPIP) supports livestock producers by reducing the price of livestock insurance purchased through WLPIP. $5 million is being provided by the Saskatchewan Government to offset the premiums producers are facing due to the COVID-19 pandemic. 40% of the increased premium costs, back to February 25, 2020 will be covered by the government. Additionally, the deadline for obtaining calf price insurance through WLPIP is being extended to June 18, from May 28, 2020. Premium adjustments will be in place until September 1, 2020, and reviewed at that time.
Producers may also qualify for payment deferrals on loans, skip-a-payment, and interest only payment plans. You are encouraged to reach out to your financial institution to determine what supports are available to you and what makes the most sense with your financial situation.
Born & raised Saskatchewan farm girl, wife and mother of two spirited girls. I have been completing my Bachelor of Management between work and maternity leaves, with a goal of graduating in 2021…(Full Bio in “Meet The Authors”)
(To read more of my blogs CLICK my name)