Small businesses are some of the hardest hit in the current COVID-19 pandemic. Fortunately, the Canadian government is well-aware of the problems that small businesses are encountering.
Business has dried up for many and many more have been forced to close their doors to protect themselves and others. While small businesses do their part for their neighbors and their country, the Government of Canada has taken immediate action to support businesses throughout Canada that are struggling due to COVID-19.
These are some of the actions taken by the Canadian Government for business:
Changes to the Canada Account
Administered by Export Development Canada (EDC), the Canada account is not new. However, previously there were limits that were difficult to adjust in response to a constantly changing situation like COVID-19. Now, the government has made it possible or the minister of Finance to change the limit on the Canada Account as necessary to meet the current challenge. This change will make it possible for the government to help companies in Canada by offering insurance policies, loans and guarantees.
Assistance for Employers to Keep Workers
The government wants to help employers keep their workers on the payroll. To assist with this need, they are proposing a temporary wage subsidy for three months. Non-profit organizations, charities and corporations that are eligible for the small business deduction can take advantage of this support. It will be equal to 10% of the money paid to an employee during the three month period.
Income Tax Deferment
All businesses can defer their income tax payments until after August 31, 2020. Those waiting to pay will not need to worry about penalties or interest payments as long as they pay by the end of August 2020.
Canada Emergency Wage Subsidy (CEWS)
CEWS is a more robust form of support for employers who are the most affected by the pandemic. This subsidy pays for 75% of an employee’s wages. It does max out at $847 per week. The subsidy is available for employers of all sizes, so small, mid and even large businesses can qualify. However, they need to have experienced a reduction in gross revenues of at least 15% for March and 30% for April and May.
The program is good for a three month period beginning March 15.
Business Credit Availability Program (BCAP)
Through this program, loan guarantees are available for small and mid-sized businesses through financial institutions working with the Canadian government. Both new operating credit loans and cash flow term loans are possible up to $6.25 million. Co-lending term loans are also possible for operational cash flow requirements.
Funding for Indigenous Businesses and Aboriginal Financial Institutions
The Canadian government has also announced a funding program for Indigenous businesses. The program is funded up to $306.8 million. The money has been set aside to help fund short-term, interest-free loans through Aboriginal Financial Institutions. The goal is to help approximately 6,000 Indigenous-owned businesses in Canada.
Extension of Work-Sharing Program
The original duration of the Work-Sharing program was 38 weeks, but the government has extended the program all the way up to 76 weeks. The goal is to help provide some support for employees who qualify for Employment Insurance and are willing to reduce their hours due to COVID-19 related circumstances.
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