Government Resources to Support Small Business during COVID-19
Last Updated: April 07, 2020
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If you’re an entrepreneur, you’ve probably discovered that there will always be some challenges you can’t easily plan for, no matter how careful you are. The COVID-19 outbreak in Canada is one of these unexpected difficulties, and you might be wondering what kind of government support you can access for your small business during this time.
Luckily, Canada’s federal and provincial governments have shifted into high gear and created a number of new programs that you may benefit from. We’ll help you navigate the new support programs that have been put in place over the last couple of weeks to help businesses during the coronavirus outbreak.
Keep in mind that some of these programs are being updated very quickly, sometimes even on a daily basis, to keep up with the needs of Canadians and the changing situation. The Government of Canada website and your provincial government website will have the most up to date information about these changes, so make sure to consult those resources before applying.
To access this support, you should first determine if your business requires registration with your provincial government. If your business name is anything other than your legal name, you will need to register. You can do so online quickly and easily with Ownr.
The following support programs are available to all Canadians who meet the eligibility criteria.
This benefit, which you can apply for through your CRA My Account or through an automated phone service, provides $2000 per month for up to four months to eligible Canadians impacted by the coronavirus. Unlike EI, this federal support includes self-employed people. Whether you have a sole proprietorship or you have completed your incorporation, you can apply for this benefit if you have lost income due to COVID-19.
There are some eligibility requirements to keep in mind. For example, you must have earned $5000 in 2019 or in the 12 months prior to applying, and you must be or expect to be without self-employment income for 14 days in the initial four-week period beginning on March 15th. Applications for CERB are scheduled to open on April 6th.
If your small business has employees and you have seen a drop in revenue of 30% or more, you may be eligible for this 75% wage subsidy, up to $847 per week per employee, available for 12 weeks starting from March 15th. If you qualify, the subsidy will be paid retroactively.
If you were thinking about business incorporation before the coronavirus outbreak, you can still incorporate now. This will ensure that you protect your business name, so no one else can register with that name before you. Even new employees are eligible for this wage subsidy, as long as they are employed during the eligibility period.
If you qualify, you can apply through the CRA’s My Business Account portal. Just like the CERB, this benefit requires that you reapply each month, in case your situation changes.
Maybe you need some credit during this period to stay afloat. That’s where the BCAP comes in. It will provide up to $6.25 million in loans and financial support to qualifying businesses who might not otherwise be able to access financing during the COVID-19 outbreak.
Make sure you’ve completed your business registration, and then you can contact your financial institution directly to talk about accessing this program. They will contact the Business Development Bank of Canada (BDC) or Export Development Canada (EDC) on your behalf if you qualify.
This is similar to the BCAP, but is provided in partnership with financial institutions. The interest rate and repayment period may differ between the two loans. Your primary financial institution will be able to help you determine which loan is right for you.
Provincial support for businesses impacted by COVID-19
In addition to these programs, each province has its own support response to the coronavirus outbreak. The types of businesses that are allowed to operate at this time also vary from one province to the next, and since the situation is changing every day, it’s a good idea to regularly check announcements in your home province.
If your business is incorporated and you maintain a minute book, you’ll want to make sure you keep a clear record of which supports you have accessed, to make things as simple as possible when tax time comes next year.
- Business Closures in Ontario: Ontario has limited the type of businesses that are allowed to operate to this list of essential businesses. Most of the business categories are related to food and agriculture, communication, transportation, infrastructure and sanitation, but if you have a small business that can operate from home and mostly online, you should still be able to stay open.
- Premium and Tax Deferrals: Workplace Safety and Insurance Board (WSIB) premiums and many provincially administered taxes, such as the Employer Health Tax (EHT), have been deferred without interest or penalty until August 31st.
- The EHT exemption threshold has been increased from $490,000 to $1 million for one year.
- Business Education Property Tax payments may be deferred for one payment quarter.
- Property tax assessments, which would have been due this year, have been postponed.
- Business Closures in Alberta: The government of Alberta has also released a list of essential businesses that may operate during the COVID-19 outbreak. Businesses not on this list should remain closed until further direction is provided by the government. Make sure to check regularly for any updates, to see how your small business might be affected.
- Income Tax Deferrals: To increase access to cash, any corporate income tax balances and payments that would have been due between March 18th and August 31st are now deferred until August 31st.
- Utility Payment Deferral: Your small business may qualify for interest- and penalty-free deferral of electricity and natural gas bill payments until June 19. This deferral can be arranged directly with your electricity or natural gas provider, or, if you do not deal with the utility providers directly, with your landlord.
- Education property tax rate freeze and deferral: The 3.4% population and inflation increase to this tax outlined in the 2020 budget has been reversed, and payments for businesses are being deferred for 6 months. You’ll have to repay the deferred amount eventually, but the grace period should help small businesses during the coronavirus outbreak.
- Worker’s Compensation Board premium deferral: If you’re an employer in Alberta, you can defer this payment until 2021. If you’re a small or medium-sized business, your 2020 premium will also be subsidized by 50%. Plus, if you’ve already paid, you may be eligible for a rebate or credit.
- BC’s list of essential services that are allowed to remain open can be found here.
- Tax Deferrals: The BC EHT as well as sales taxes have been deferred until September 30th.
- School tax reduction: the school tax rate for commercial properties has been reduced to 50% for 2020.
- BC Climate Action Tax Credit: You may also qualify for this one-time $1000 credit paid out in July 2020. The CRA will calculate eligibility for this credit, and you don’t have to apply.
If you live in a province or territory outside of Ontario, British Columbia or Alberta, make sure to check your government website for updates related to new programs specific to your region. The federal programs outlined above are available to you too.
Financial Institution Support During COVID-19
Canada’s major financial institutions, such as RBC, CIBC, Scotiabank, TD and BMO are also offering some support programs during the coronavirus outbreak. In addition to the co-lending program in partnership with the BDC, the Canada Emergency Business Account (CEBA) may provide interest-free loans of up to $40,000 to your small business if you are eligible. If you paid between $50,000 to $1 million in total payroll in 2019 you may qualify, and if the loan is repaid by the end of 2022, 25% of the loan (up to $10,000) may be forgiven.
Contact your financial institution for details about this and any other support they may be able to offer during this time.
These programs were designed to aid entrepreneurs just like you manage these challenging times. Keeping up with changes and additions to federal and provincial guidelines will help you take advantage of any new supports that are made available to small businesses as the coronavirus outbreak progresses.