A number of governmental measures and economic benefits have now been introduced to assist small businesses suffering economically as a result of the COVID-19 Pandemic (“Pandemic”). This includes programs such as federal small business loans and wage assistance programs that are currently open and available for businesses.
FEDERAL SMALL BUSINESS LOANS
The Canada Emergency Business Account (“CEBA”) program is now open for qualifying small businesses and not-for-profits to apply for a loan through their financial institutions (“Lender”). The CEBA program is being implemented by eligible financial institutions in cooperation with Export Development Canada, and provides interest-free loans of up to $40,000 to eligible small businesses and not-for-profits to help cover their operating costs where revenues are temporarily reduced due to the economic impacts of the Pandemic.
Small business and not-for-profits (“Borrower”) are eligible for CEBA if:
- the Borrower is a Canadian operating business in operation as of March 1, 2020;
- the Borrower has a federal tax registration;
- the Borrower’s total employment income paid in the 2019 calendar year was between CAD $20,000 and CAD $1,500,000;
- the Borrower has an active business chequing or operating account with the Lender, which is its primary financial institution, and the account:
- was opened on or prior to March 1, 2020, and
- was not in arrears on existing borrowing facilities, if applicable, with the Lender by 90 days or more as at March 1, 2020;
- the Borrower has not previously used the CEBA and will not apply for support under the CEBA at any other financial institution;
- the Borrower acknowledges its intention to continue to operate its business or to resume operations; and
- the Borrower agrees to participate in post-funding surveys conducted by the Government of Canada or any of its agents.
If the Borrower repays the balance of the loan on or before December 31, 2022, up to 25 percent (up to $10,000) of the loan will be forgiven.
CEBA, a $25 billion loan program by the federal government, opened on April 9. More information on the program can be found here.
Borrowers can apply online for CEBA with the following Lenders:
Other initiatives to help Canadian businesses affected by the Pandemic obtain financing were introduced by the federal government under the Business Credit Availability Program (which includes the CEBA), and can be found here.
FEDERAL WAGE ASSISTANCE
The Canada Emergency Wage Subsidy (“CEWS”) is also now available to eligible small and large businesses (other than tax-empt or public corporations), including not-for-profit organizations and charities (unless government-funded), whose business has been affected by the Pandemic, retroactive from March 15, 2020 to August 29, 2020 (the federal government recently announced an extension of the CEWS program from June 6 to August 29, 2020).
CEWS is available to qualifying employers who:
- have experienced an eligible reduction in revenue, and
- have had a Canada Revenue Agency (“CRA”) payroll account on March 15, 2020.
Businesses who are eligible for the CEWS program will be able to re-hire workers that were temporarily laid off as a result of the Pandemic, and will qualify for a subsidy of 75 percent of employee wages for up to 24 weeks. The maximum CEWS benefit per employee is $847 per week for a period of up to 24 weeks. Businesses can calculate the amount of the wage subsidy they are eligible for using an online calculator here.
Applications for the CEWS program, which is administered by the CRA, opened on April 27, 2020. More information about the CEWS program can be found here.
Note that an individual/employee will NOT be eligible to collect both the CEWS and the Canada Emergency Response Benefit that we wrote about here for the same period; anyone who receives both benefits will be required to pay one of them back. The federal government has stated that it intended for the CEWS program to eventually replace the CERB for businesses that are slowly re-opening and re-hiring their employees.
Qualifying landlords who rent commercial premises to eligible small businesses should be able to apply for the Canada Emergency Commercial Rent Assistance program (“CECRA”) starting in mid-May, retroactive to April 1.
The website to apply for the CECRA program is here. Landlords who can demonstrate they meet the eligibility criteria for CECRA can apply retroactively for the program up to the August 31, 2020 deadline. We also wrote about CECRA here.
FEDERAL TAX DEFERMENT
CRA is also allowing businesses to defer the payment of any income tax amounts owing (between March 18 and August 31, 2020) until August 31, 2020. This tax relief applies to both tax balances due and instalments under Part I of the Income Tax Act. For tax relief until September, no interest or penalties will accumulate on these amounts during this period.
In addition, CRA is temporarily suspending audit interaction with taxpayers and representatives and temporarily suspending post assessment GST/HST or Income Tax audits for small or medium businesses.
Provincial Relief Available
The government of Alberta is also offering assistance to small businesses affected by the Pandemic in the form of:
- Corporate income tax relief (deferring Alberta corporate taxes due between March 18 and August 31, 2020);
- Deferring the education property tax;
- Deferring Workers Compensation Board (WCB) premiums (or rebates/credits);
- Utility payment deferrals; and
- Tourism levy deferrals.
More information about provincial relief available to Alberta businesses can be found here.
OTHER GOVERNMENTAL RELIEF AVAILABLE
Other benefits and relief may also be available for businesses through the federal and/or provincial governments. This website can help businesses determine what governmental relief programs and benefits they may be eligible for by answering a few questions relevant to their individual circumstances.
More information on the federal government’s programs for individuals and businesses can also be found here.
Carscallen LLP’s Business Expertise
We understand that the rapid emergence of COVID-19 means that many businesses are dealing with a myriad of legal issues. Please contact us if you have any legal questions about your business in connection with COVID-19, or any other business or contract law matters. Our lawyers routinely work remotely and will continue to do so during this time. We remain available to provide legal advice and guidance to clients for all issues that may arise during the Pandemic
As this is an ongoing situation of a global nature, the information provided herein is current as of the publishing date of this blog.