Government of Canada introduces more measures to support businesses
By CO Staff @canadaone | March 27, 2020
Today the federal government announced several significant new programs to support small businesses during the Covid-19 pandemic.
There are four key areas of support.
75% wage subsidy
Qualifying business will receive this payroll subsidy for up to 3 months retroactive to March 15, 2020. The details of this program are being finalized and are expected to be announced before the end of the month.
This appears to be seperate from the three-month temporary wage subsidy that was announced earlier and we look forward to learning the specifics of the program requirements. The earlier announced subsidy provides 10 per cent of the remuneration paid, up to a maximum subsidy of $1,375 per employee and $25,000 per employer, during the three month window. Since employers will receive the subsidy by reducing their remittances of income tax withheld on their employees’ remuneration they will receive the funds immediately.
Deferred GST / HST payments
Businesses, including self-employed Canadians, will be able to defer all Goods and Services Tax/Harmonized Sales Tax (GST/HST) payments until June, as well as customs duties owed for imports.
Canada Emergency Business Account for small businesses
Qualifying businesses with payrolls under $1 million will be able to secure interest-free lines of credit up to $40,000 through their financial institutions to cover rent and other important costs. One quarter of the loan (up to $10,000) is eligible for forgiveness. The government will provide $25 billion to guarantee and fund these loans.
Small and Medium-sized Enterprise Loan and Guarantee program
The government will launch the that 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.
CanadaOne is compiling a list of these and other financial supports for businesses during the Covid-19 pandemic in our article, Covid-19 Grant and Loan Programs for Canadian Small Businesses.
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