Canadian Government Subsidies for Businesses During COVID-19

By Qmulus Team
May 12, 2020

If you’ve been paying attention to the news lately, you would know that the Canadian Government is taking great strides to put in place support for small and medium-sized businesses struggling during the COVID-19 pandemic. SMEs are the heart and soul of the Canadian economy, and our government is working hard to help them survive. There are many initiatives for both maintaining your employees and keeping your business afloat. We’ve put together a quick rundown of the main government subsidies for businesses to give you an idea of what your SME qualifies for.

Maintaining Employees

The government cares as much as you do about keeping your team employed. The Canada Emergency Wage Subsidy (CEWS) has been in place since March 15, and late last week Prime Minister Trudeau announced it’s extension past the original end date of June 6. This program could cover 75% of an employee’s wages, up to a maximum benefit of  $847 per week. Your business may be eligible for CEWS if you saw a drop in gross revenue of at least 15% in March and 30% in April and May 2020. 

Another option for businesses is the Temporary 10% Wage Subsidy. This is a three-month measure that allows you to reduce the amount of payroll deductions required to be remitted to the CRA up to a maximum of $1,375 per employee and $25,000 per employer. You’re eligible if you:

  • Are:
    • An individual (excluding trusts)
    • A partnership
    • A non-profit organization
    • A registered charity
    • A Canadian-controlled private corporation, with under $15 million in taxable capital
  • Have an existing business number and payroll program account with the CRA as of March 18, 2020
  • Pay salary, wages, bonuses, or other remuneration to an employee

If you are eligible for both the CEWS and the Temporary 10% Wage Subsidy, any benefit from the Temporary 10% Wage Subsidy for remuneration paid in a period will typically reduce the amount available to be claimed under the CEWS in the same period.

Credit Options for Businesses

A few different credits have been put in place for businesses during this time. The Business Credit Availability Program (BCAP) provides support through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). This program works to find credit solutions for individual businesses, and includes:

  • Loan Guarantee for SMEs
    • Up to $6.25 million of operating credit and cash flow term loans
  • Co-Lending Program for SMEs
    • Eligible businesses may get incremental credit of up to $6.25 million

To help cover small business’ and not-for-profits’ operating costs, the Canada Emergency Business Account (CEBA) provides interest-free loans of up to $40,000. You qualify for this by proving you paid between $20,000 to $1.5 million in total payroll in 2019. Further, repaying the loan balance on or before December 31, 2022, will result in loan forgiveness of 25% (up to $10,000). This is applied to through your banks and credit unions. 

To assist with rent payments, the government has launched the Canada Emergency Commercial Rent Assistance (CECRA), which lowers rent by 75% for small businesses affected by COVID-19. It also provides forgivable loans that cover 50% of a small business’ rent for a three-month period, for business tenants with financial hardship during April, May, and June. You qualify if your business rent is under $50,000 and your profits have dropped by at least 70%, or you have ceased operations. 

There are even more government actions to assist businesses. If this feels like a lot to sift through, we’re here. 

We’re always up-to-date on government initiatives and can help you find the right one for your business. Schedule an appointment or give us a call at 647-476-2145 and let’s work to get your business back on track.

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