New Small Business Relief Measures Announced: COVID-19 Update

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This article was last updated on April 4, 2020. 

 

It was another tumultuous week for Canadian small business owners as they continue to grapple with the challenges presented by the outbreak of COVID-19.

At this point in time there is no clear indication of when we can expect business to return to some level of normalcy, and in the interim countless small business owners are at risk of going bankrupt.

According to a recent study by the Canadian Federation of Independent Businesses (CFIB), one third of all Canadian small businesses fear that closure is imminent unless they receive some additional support.

In addition to the measures taken by the federal government last week, outlined in the previous post, there have been further developments Canadian entrepreneurs should know about.

Table of Contents

1. Trudeau Ups Wage Subsidy

Only days after unveiling a 10% wage subsidy for small and medium sized business owners, the federal government announced on Friday March 27th that they’re upping the subsidy to 75% of employee salaries. 

The move comes in response to a concerted lobbying effort by the Canadian Federation of Independent Businesses, the Canadian Chamber of Commerce, and others, and follows similar action taken in the U.K. and Europe.

 The wage subsidy is intended to help small businesses keep their staff employed through the crisis, and will be backdated to March 15. Further details, such as a cap and end date, are expected on Monday March 30th.

April 4, 2020 update: Wage Subsidy Program Requirements Announced

This week Finance Minister Bill Morneau clarified the requirements for the recently announced 75% wage subsidy offered to businesses impacted by COVID-19. The subsidy will be provided to qualifying employers for up to three months, backdated to March 15th, and will be equivalent to 75% of the first $58,700 normally earned by employees, or up to $847 per week. In order to qualify companies need to prove a reduction in gross revenues of at least 30% as compared to the same month in 2019.

 

When asked about pre and low-revenue start-ups Morneau was unable to provide a clear response, but indicated that the government is considering allowing companies without 2019 revenues to compare against revenues from more recent months. Details on how to apply are still forthcoming, but will be available through the Canada Revenue Agency’s online portal.

2. New Emergency Business Account

Prime Minister Justin Trudeau’s announcement on Friday also included the introduction of a new Canada Emergency Business Account, which will provide Canadian SMBs with up to $40,000 in loans that will be interest free for one year.

There’s also a chance that up to $10,000 could be forgiven. More details and specifics are also expected Monday.

April 4, 2020 Update: More details on Canada Emergency Business Account (CEBA)

The federal government also clarified qualification requirements for accessing up to $40,000 in interest free loans offered to small businesses struggling to cover their operating costs. In order to qualify businesses must demonstrate that they spent between $50,000 and $1 million on payroll in 2019 via their T4 Summary of Remuneration Paid.

 

Up to $10,000 of the loan is eligible for forgiveness if the remainder is full repaid before December 31st, 2022. Otherwise the loan will be converted into a 3-year term loan with an interest rate of 5%.

 

CIBC is the first major bank to launch a digital application for the CEBA, allowing small business customers to apply online in minutes once loans become available the week of April 6th. Other major financial institutions, including RBC and Scoatiabank, have announced plans to offer similar digital application services to small business clients as quickly as possible. Tying the CEBA to payroll, however, means businesses that rely on contractors and freelancers could be left out.

3. Facebook Grants

Facebook launched a small business grant program this week, offering $100 million in cash grants and credits to help entrepreneurs through the crisis.

The company says they will provide credits to up to 30,000 eligible small businesses in the 30 countries it operates in, Canada included. The program is explicitly designed to keep workers employed, assist with rent and operational costs, and to help small businesses connect with more customers.

4. Thinking Capital Advice Centre

Canadian alternative small business lender Thinking Capital has launched its own advice centre, providing guidance to small businesses that are struggling right now.

The company is also offering a number of free resources, including a white paper breaking down how COVID-19 is impacting small businesses, along with advice on how to brace for impact, tax filing updates, cash flow management advice and more.

April 4, 2020 Update: Thinking Capital Launches Small Business Health Index

This week Thinking Capital launched a Small Business Health Index that provides up to date performance data on small businesses across industries and provinces as they face the ongoing impacts of the COVID-19 crisis. Thus far the index has found an average drop of 33% in week-over-week sales since mid-March, with the retail and health and wellness industries, as well as the provinces of British Columbia and Ontario, particularly hard hit.

5. Restaurants Canada Lobbying Efforts

Restaurants Canada has been actively lobbying the government to ease restrictions and provide some additional support to the country’s 90,000 food service establishment. The organization is calling for more loans, flexible rent and tax payment options and further payroll assistance.

They’ve also launched a separate effort to take evictions and property seizures “off the table” in the coming months. This past week the organization successfully lobbied all provinces in Western Canada to allow alcohol with takeout and delivery orders, with Alberta, British Columbia and Saskatchewan all changing their alcohol policies this past week.  

6. Save Small Business Online Petition

On March 22nd a group of small businesses launched an online petition titled “Save Small Business” with three main focal points:

The petition, which has been signed by more than 17,000 small businesses, calls on the government to provide landlords with the resources to waive $10,000 of commercial rent for three months, increase wage subsidies to 80% and defer debt obligations on all loans. 

7. BMO Offers Financial Relief for Small Business Clients

BMO Financial group this week announced a series of measures aimed at small and medium sized businesses, including:

  • payment deferrals on loans
  •  lines of credit
  • access to additional working capital

The company is also offering one-on-one advice to assist with adapting business plans or to discuss liquidity concerns.  

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Jared Lindzon

Jared Lindzon is an experienced journalist, writer and public speaker. He specializes in Business, Technology, Lending and FinTech industries in Canada and abroad. Jared is a regular contributor to Smarter Loans and top tier publications around the World, including Fortune Magazine, Fast Company, the Guardian, Rolling Stone, the Globe and Mail, and many more.

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