The COVID-19 crisis has impacted the economic aspect of life in a massive manner. This blog takes a look at how the Canadian government has offered to help small businesses sustain amidst this crisis via COVID-19 economic response plan
Canadian government offering help to small businesses
The Canadian government has come forward to help the small businesses amidst this COVID-19 crisis. The Hon. Prime minister, Justin Trudeau announced an aid package and certain measures to help small businesses overcome the economic hit caused by the COVID-19. These measures will help business pay wages to their employees as well as safeguard the jobs of several Canadians.
The Canadian government announced a 75 percent wage subsidy for qualifying businesses, for up to 3 months, backdated to March 15, 2020. This will help small and medium-sized businesses in keeping their workers on the payroll. It will also allow businesses, including self-employed individuals, to defer all Goods and Services Tax/Harmonized Sales Tax (GST/HST) payments until June, as well as customs duties owed for imports. This measure is the equivalent of providing up to $30 billion in interest-free loans to Canadian businesses. It will help businesses so they can continue to pay their employees and their bills, and help ease cash-flow challenges across the country.
The deferral to June of GST/HST payments, as well as customs duties owing on imports, will generally apply to remittances that become due in March, April, and May. These amounts would normally have been due to the Canada Revenue Agency and the Canada Border Services Agency as early as the end of this month. This measure will take effect immediately, through existing authorities.
Canada Emergency Business Account
This program will provide up to $25 billion to eligible financial institutions so that they can provide interest-free loans to small businesses. These loans – guaranteed and funded by the Government of Canada – will ensure that small businesses have access to the capital they need, at a zero percent interest rate, so they can pay for rent and other important costs over the next few months.
It will provide funding to eligible financial institutions so that they can provide interest-free loans in the form of lines of credit of up to $40,000 to businesses with payrolls of less than $1 million. A quarter of this loan (up to $10,000) is eligible for complete forgiveness depending on certain conditions that will be known at the time of application.
Small and Medium-sized Enterprise Loan and Guarantee program
This program will enable up to $40 billion in lending, supported through Export Development Canada and Business Development Bank, for guaranteed loans when small businesses go to their financial institutions to help weather the impacts of COVID-19. This is intended for small and medium-sized companies that require greater help to meet their operational cash flow requirements. Export Development Canada will provide guarantees to financial institutions so that they can issue new operating credit and cash flow term loans of up to $6.25 million to small and medium-sized businesses. These loans will be 80 per cent guaranteed by Export Development Canada, to be repaid within one year.
Small and medium-sized businesses can also get support through a new Co-Lending Program that will bring the Business Development Bank of Canada together with financial institutions to co-lend term loans to these businesses for their operational cash flow requirements. Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program, which will be risk-shared at 80 per cent between the Business Development Bank of Canada and the financial institutions. Eligible financial institutions will conduct the underwriting and funding directly for customers.
Quotes from the Prime Minister and Minister of Finance
Some other benefits for small business and workers
Check your eligibility and apply for COVID-19 benefits
These are some of the benefits announced by the government of Canada for small businesses and workers. To know more about additional support that the Canadian government is offering, visit the official website Canada.ca and go to the Department of Finance page.
We hope that this crisis situation eases down soon and all the small businesses will be able to recover from the financial hit that they have already taken. For more information on all the finance related news and articles amidst the COVID-19 crisis in addition to the special coverage on the economic response plan, sign up to Chango and get the updates quickly.