A flurry of new economic measures to support Canadian businesses were announced late last week across all levels of government. The details are still pending on the majority of these, and we will continue to update you as these details are made available.
Working closely with your bank’s relationship manager appears to be one of the best strategies you can pursue right now as a business owner. It looks like financial institutions will be partnering with the BDC to implement many of the programs announced by the Federal government this week—including access to the $40,000 emergency business account. Here are the key points surrounding the most recent announcements:
Temporary wage subsidy (TWS)
The previously announced TWS has been expanded from 10% to 75% retroactive to March 15th. Further details are to follow from the Federal government before the end of March.
GST/HST remittance deferral
The Minister of National Revenue has extended until June 30th, 2020, the time that:
- Monthly filers have to remit amounts collected for the February, March and April 2020 reporting periods;
- Quarterly filers have to remit amounts collected for the January 1, 2020 through March 31, 2020 reporting period; and
- Annual filers—whose GST/HST return or instalments are due in March, April or May 2020—have to remit amounts collected and owing for their previous fiscal year, as well as instalments in respect of the filer’s current fiscal year.
It appears that GST/HST returns will still need to be filed on time.
Canada emergency business account
The Government of Canada announced the launch of the new Canada Emergency Business Account, which will be implemented by eligible financial institutions in cooperation with Export Development Canada (EDC).
This program will provide interest-free loans of up to $40,000 to small businesses and not-for-profits to help cover operating costs during a period when their revenues have been temporarily reduced due to the economic impact of COVID-19.
Small businesses and not-for-profits should contact their financial institution to apply for these loans.
Note: Organizations will need to demonstrate that they paid between $50,000 to $1 million in total payroll in 2019. Organizations that repay the balance of the loan on or before December 31st, 2022 will have 25 percent of the loan forgiven (up to $10,000).
A New Loan Guarantee for small and medium enterprises (SMEs)
EDC may guarantee new operating credit and cash flow term loans issued by financial institutions to SMEs, up to $6.25 million.
A New Co-Lending Program for SMEs
To provide additional liquidity support for Canadian businesses, the Co-Lending Program will bring the Business Development Bank of Canada (BDC) together with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.
Eligible businesses may obtain incremental credit amounts up to $6.25 million—with BDC’s portion being a maximum of $5 million per loan. Eligible financial institutions will conduct the underwriting and manage customer interface.
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