Support for businesses expands as COVID crisis evolves

July 23, 2020

I recently wrote about government support programs for individuals and businesses in the ongoing COVID-19 crisis.

Many readers found this article very helpful. But things are changing fast. Indeed, the scope, pace and costs of COVID-related government support programs in Canada all continue to expand as political leaders – in concert with medical experts – guide how and when we move through the pandemic. It can be hard to keep up.

So, in this article, I’ll provide some high-level updates to these programs over the last while. This includes figures from the federal fiscal update by Finance Minister Bill Morneau, released on July 8.

An array of government support programs 

A number of support programs are available at the federal level for small businesses.

Canada Emergency Business Account (CEBA)

CEBA, offered through EDC, provides interest-free loans of up to $40,000 to small businesses and not-for-profits to help cover their operating costs during a period where their revenues have been temporarily reduced. 

As of July 3, 688,000 applicants have been approved for CEBA for a total of $27.41 billion in funds disbursed, including $7 billion of which is forgivable if the loan is paid back before December 31, 2022. Over 65 per cent of the businesses eligible based on the payroll criteria have benefitted from the program.

Canada Emergency Wage Subsidy (CEWS)

CEWS protects jobs by helping businesses keep employees on the payroll and encouraging employers to re-hire workers previously laid off. Since its launch, about 3 million Canadian employees have had their jobs supported through the CEWS, and that number continues to grow.

This program was originally meant to end on June 6, but was later pushed out to August 29 of this year. Another extension – this time to November 21, 2020, with the intent to provide further support until December 19, 2020 – was announced on July 17 by Finance Minister Morneau in proposed changes to the federal government’s legislation for COVID-related support programs.

If the legislation is passed, CEWS would do a number of things, including:

  • make the subsidy accessible to a broader range of employers by including employers with a revenue decline of less than 30 per cent and providing a gradually decreasing base subsidy to all qualifying employers 
  • introduce a top-up subsidy of up to an additional 25 per cent for employers that have been most adversely affected by the pandemic 
  • provide certainty to employers that have already made business decisions for July and August by ensuring they would not receive a subsidy rate lower than they would have had under the previous rules
  • address certain technical issues identified by stakeholders

Business Credit Availability Program (BCAP)

Through the BCAP, the federal government has ensured that credit and liquidity support is available to small and medium-sized businesses who need it. The Small and Medium Enterprise Co-lending Program allows eligible businesses to access up to $12.5 million in liquidity support, and a further loan of up to $6.25 million is available through the BCAP Guarantee Program. 

As of July 3, 148 guarantees have been confirmed for a total loan value of over $303.59 million. Based on the experience with similar products made available during the 2009 financial crisis, uptake of these programs is expected to grow steadily over time.

Canada Emergency Commercial Rent Assistance (CECRA) 

Administered through Canada Mortgage and Housing Corporation, this program provides relief for small businesses experiencing financial hardship due to COVID-19. It offers unsecured, forgivable loans to eligible commercial property owners to reduce the rent owed by their impacted small business tenants and to meet operating expenses on commercial properties. Property owners must offer a minimum of a 75% rent reduction for the months of April, May and June 2020.

As of July 3, CMHC has approved applications representing over 29,000 small businesses with over 209,000 employees, and total requested funding of over $221 million. In addition to thousands of applications by property owners in progress or being processed, CMHC is working closely with large property owners to complete applications to provide rent support to a further 25,000 small businesses.

Canada Emergency Response Benefit (CERB)

CERB gives financial support to employed and self-employed Canadians who are directly affected by COVID-19. This benefit is available to workers who satisfy a number of criteria. For example, they stopped working because of COVID, earned at least $5,000 in 2019 (or the 12 months prior to applying), and who have not voluntary quit their job. Those eligible for CERB can receive $2,000 for a 4-week period.

As of June 28, the CERB has provided over $53 billion in benefit payments to 8.16 million Canadians. That amount is expected to rise to $80 billion based on the eight-week extension and significant take-up of the program. 

Ever-changing policies and programs

We’ve all come to realize over the last several months that COVID-19 changes almost everything. This reality puts a premium on adapting, innovating and being informed.

So, in that spirit, be sure to check for changes to support programs before – or while – you or someone you know is applying for them.

Scott McKenzie, Senior Vice President & Financial Consultant

T.E. Wealth (CWB PIC)