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COVID-19: A Brief Guide to Financial Help for Businesses

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* This article has been updated to include new changes as of July, 2020.

The COVID-19 pandemic has led to a global financial crisis. To help businesses at this difficult time, the government of Canada has rolled out several economic measures over the last few weeks.

This guide provides a list of existing relief programs tailored for the specific challenges that your business may be facing.

Challenge: Managing layoffs and employee recalls
Program: Canada Emergency Wage Subsidy (CEWS)

Under this wage subsidy, the government will cover 75% of an employee’s salary — up to $847 per week — for a 24-week period, from March 15, 2020 to August 29, 2020

You qualify for this wage subsidy if you’ve experienced a drop of 15% in your revenue for March 2020 and a loss of 30% thereafter.

On July 17, 2020, the government proposed changes to CEWS that would further extend the program until November 21, 2020, with the intent to provide further support until December 19, 2020.

Program: Temporary 10% Wage Subsidy

Under this three-month program, you can reduce the amount of payroll deduction to be paid to the Canada Revenue Agency. The subsidy is equal to 10% of the salary you pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per employer.

If you are eligible for both CEWS and the 10% Temporary Wage Subsidy, any benefit from the 10% wage subsidy for salary paid in a specific period will reduce the amount you can claim under the CEWS in that same period.

Program: Work-Sharing program (WS)

The Work-Sharing program was devised to prevent layoffs during a period of decreased business activity due to reasons beyond the control of the employer. It is a three-party agreement between employers, employees and the government of Canada.

This program provides Employment Insurance benefits to employees who consent to a reduced work schedule and to share available work till the time business improves.

The government has added temporary special measures to the Work-Sharing program for businesses affected by COVID-19. These measures will be in effect from March 15, 2020 to March 14, 2021 and are not limited to a specific sector or industry.

Challenge: Access to Credit
Program: Business Credit Availability Program (BCAP)

The BCAP program can help businesses across sectors and regions get access to funds. Export Development Canada (EDC) and Business Development Bank of Canada (BDC) will provide $65 million in direct loans and other types of monetary support.

BCAP includes the following programs:

EDC Loan Guarantee for Small and Medium-Sized Enterprises

Under this program, banks can issue credit and cash flow term loans of up to $6.25 million to existing clients, with 80% guaranteed by EDC. These funds are to cover operational expenses and not for dividend payouts, shareholder loans, bonuses, stock buyback, option issuance, increases to executive compensation or repayment/refinancing of other debt.

BDC Co-Lending Program for Small and Medium Enterprises

This program allows businesses to avail of term loans for operational and liquidity needs. It will provide interest-only loans for the first 12 months, with a 10-year repayment period. Banks will release more details about the application process soon.

Canada Emergency Business Account

Using the Canada Emergency Business Account program, small businesses can apply for an interest-free loan of up to $40,000 to cover expenses such as payroll, utilities, rent and property tax, insurance or debt service.

If you repay $30,000 by December 31, 2022, you will not have to pay the remaining 25% (up to $10,000) or any interest. After this date, you can convert the loan to a three-year term loan at 5% interest.

Businesses across sectors affected by COVID-19 are eligible to apply for BCAP loans through their banks.

Other temporary measures
Temporary changes to Canada Summer Jobs program

Canada Summer Jobs offers wage subsidies to employers from the not-for-profit, public and private sectors — with 50 or fewer full-time employees — to provide work experience for young people between the ages of 15 to 30. Temporary measures introduced include:

  • An increased wage subsidy to help employers get reimbursement of up to 100% of the minimum hourly wage for each employee
  • Extension of the employment end date to February 28, 2021
  • Part-time placements
Deferral of Sales Tax Remittance and Customs Duty Payments until June

Businesses can now defer payments of the GST/HST as well as customs duty on imports until June 30, 2020.

Extension of deadline for income tax payment

Businesses can defer income tax payment until after August 31, 2020, for taxes owed on or after March 18, 2020 and before September 2020.

Need support navigating business issues related to the COVID-19 pandemic?

Whether you are struggling to sustain cash flow or update HR policies, we can help you get through this crisis. To get advice on how to maintain your business during the COVID-19 pandemic, call our experts today: 1 (833) 247-3652.

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