With the economic uncertainty brought on by COVID-19, many business owners are faced with the difficult task of navigating the current crisis. While it's true that many people and businesses are feeling the pressure of the financial downturn, the Government of Canada has introduced a series of programs to help small businesses remain economically viable. Below is a rundown of some programs offered, and which businesses or entrepreneurs are eligible for each.
This article was last updated: May 4, 2020.
Business Credit Availability Program (BCAP)
BCAP refers to a series of programs designed to help Canadian businesses secure financing to help endure the economic consequences of the global pandemic. BCAP aims to provide:
- Loan Guarantee for Small and Medium-Sized Enterprises
Export Development Canada (EDC) is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to SMEs.
- Co-Lending Program for Small and Medium-Sized Enterprises
The Business Development Bank of Canada (BDC) is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.
Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program. These loans would be interest free for the first 12 months.
- Both EDC and BDC loans are available to any businesses who were financially viable and creating revenue immediately prior to the COVID-19 pandemic. For more information consult the Government of Canada's website.
Canada Emergency Business Account (CEBA)
The Canada Emergency Business Account is a loan financed by the Canadian government to help small businesses pay "immediate operating costs." This includes expenses such as rent, payroll, utilities etc. CEBA provides up to $40,000 of capital to qualifying businesses and is interest free until the end of 2022. If the loan is repaid on or before December 31, 2022, the government will forgive 25% of the loan's total value, otherwise the balance of the loan will be converted to a 3-year term with 5% interest.
This program is available to any businesses operating on March 1st, 2020, with a total payroll between $20,000 and $1.5 million. For more information, click here.
Canada Emergency Commercial Rent Assistance (CECRA)
The intent of the Canada Emergency Commercial Rent Assistance (CECRA) program is to provide forgivable loans to commercial property owners to cover 50% of three monthly rent payments. CECRA will be applied to April retroactively, and continue forward through the months of May and June.
The loans will be forgiven if the property owners agrees to reduce their small business tenant's rent by at least 75%, through a "rent forgiveness agreement".
To be eligible, businesses must be paying less than $50,000 per month in rent, and have temporarily ceased operations or have experienced at least a 70% drop in pre-COVID revenues.
While this is a federal program, implementation will require a partnership with provincial and territorial governments as these governments are responsible for property owner-tenant relationships.
More details on CECRA will be available soon and you can signup for updates here.
10% Temporary Wage Subsidy
This aptly named program seeks to offer relief to employers in the hope that it will allow them to keep some or all of their workers employed throughout the crisis. It provides a subsidy of 10% for the remuneration paid by qualifying employers between March 18th, 2020 and June 19th, 2020, capped at $1375 per employee and $25,000 per employer
Most employers are eligible, as long as they have paid employees and had an existing payroll program account with the CRA as of March 18th, 2020.
Employers do not need to apply for this subsidy. Simply calculate the amount you are eligible for, and deduct it from your payroll tax remittances. For more information on this subsidy, including a full list of eligible employers, visit the official government website.
Canada Emergency Wage Subsidy (75% Temporary Wage Subsidy)
Not to be confused with the above 10% wage subsidy, this subsidy is intended to allow employers to rehire employees who had been laid off or furloughed because of the COVID-19 crisis, and help prevent further job losses. Unlike the above 10% subsidy, there is no maximum to the amount you can claim.
Employers are eligible to apply for this subsidy if they have suffered an eligible revenue reduction as setout below:
|Period dates||Baseline revenue||Eligibility period revenue||Required reduction|
|March 15, 2020 to April 11, 2020||March 2019, or Average of January and February 2020||March 2020||15%|
|April 12, 2020 to May 9, 2020||April 2019, or Average of January and February 2020||April 2020||30%|
|May 10, 2020 to June 6, 2020||May 2019, or Average of January and February 2020||May 2020||30%|
You can apply directly through the CRA's website, which also contains more information about which employers and employees qualify and how much relief you are eligible for.
Innovation Assistance Program (IAP)
The Innovation Assistance Program is a fund of $250 million to support small and medium-sized enterprises by providing wage subsidies for a 12-week period.
IAP is part of the National Research Council Canada's Industrial Research Assistance Program. To apply, you must be a for-profit company, incorporated before March 1st, 2020, with fewer than 500 employees, that "plans to pursue growth and profit by developing and commercializing innovative, technology-driven new or improved products, services or processes in Canada."
Applications closed April 29th, 2020 11:59 EST.
For more information or to submit an application, visit the program's webpage here.
Canada Emergency Response Benefit
The Canada Emergency Response Benefit (CERB) is a fund offered to employees who have lost their job due to COVID-19. It provides $500 per week for up to 16 weeks to anyone who qualifies.
In order to be eligible, you must have had an income of at least $5,000 in the 12 months prior to applying, have lost your job because of COVID-19, and be at least 15 years old.
You can read more and start your application on the Government of Canada's website.
While not specific to the COVID-19 pandemic, the Work-Sharing Program is another resource employers can take advantage of. It is designed to prevent layoffs when companies experience a temporary reduction in their business, for reasons beyond the control of the employer. This program allows employees to receive Employment Insurance benefits while still employed by agreeing to reduce the hours they would normally work, sharing the workload with their coworkers.
A Work-Sharing Program requires the employees and employer to mutually agree to the conditions. All workers must reduce their hours by the same percentage, and that percentage must be between 10% and 60% on average (the reduction can vary from week to week but the average must be between 10% and 60%). The agreement must exist for at least 6 weeks, and can be extended for no more than 76 weeks.
Private businesses and publicly held companies are eligible provided they operate year-round and have been in business for at least 1 year. Employees are eligible if they are important to the day-to-day business functions, are eligible for Employment Insurance, and agree to participate in the Work-Share program.
More information including how to download the application forms and where to submit can be found on the program's webpage here.