The COVID-19 outbreak has created unprecedented disruptions across the globe.
Millions of people have lost their jobs, and in a matter of weeks, hundreds of thousands of businesses closed as a result of this global pandemic.
The Canadian government has taken immediate and significant action to help Canadians facing hardship as a result of the COVID-19 outbreak.
Given the importance of cash flow in times like this, Government of Canada is introducing numerous programs to help businesses to get through this difficult time.
Work-Sharing Program Extension
In order to avoid massive layoffs of employees that cause an uncontrollable spike in the unemployment rate, Government of Canada has extended the WORK-SHARING PROGRAM for businesses that are affected by COVID-19.
The maximum duration of the program has been extended from 38 weeks to 76 weeks.
Work-Sharing (WS) is a business recovery program that helps employers and employees avoid layoffs, when there is a temporary decrease in business activity beyond the control of the employer.
The program provides EI benefits to eligible employees who agree to reduce their normal working hours, and share the available work, while their employer recovers.
Work-Sharing is an agreement between employers, employees and the Government of Canada.
It allows Employers to:
- retain qualified and experienced employees, and
- avoid recruiting and training new employees
It allows employees to:
- keep their jobs, and
- maintain their work skills
To be eligible for a Work-Sharing agreement, your business must:
- be a year-round business in Canada for at least 1 year and
- have at least 2 employees in the WS unit
To be eligible for Work-Sharing, your employees must:
- be year-round, permanent, full-time or part-time employees, needed to carry out the day-to-day functions of the business (your “core staff”)
- be eligible to receive EI benefits, and
- agree to reduce their normal working hours by the same percentage and to share the available work
Canada Emergency Wage Subsidy
Another program to help to keep Canadian employed is The Canada Emergency Wage Subsidy.
This program covers 75 % of the wages for qualifying businesses, for up to 3 months (Starting March 15).
Employers of all sizes would be eligible except of public sector entities.
This program is designed to help employers hardest hit by the COVID-19 pandemic to keep and retain workers.
To qualified for this subsidy, your revenue has to drop at least 30 per cent
Temporary Wage Subsidy
Business that do not qualify for the Canada Emergency Wage Subsidy may qualify for the Temporary Wage Subsidy of 10% of wages paid (From March 18 to June 20, 2020.)
Business Credit Availability Program
To help businesses to cope with cash flow problem during this COVID-19 pandemic, the government has established a Business Credit Availability Program (BCAP) to provide $65 billions of additional support through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).
BDC and EDC are working with financial institutions to coordinate on credit solutions for individual businesses.
Loan Guarantee for Small and Medium-Sized Enterprises
EDC is working with financial institutions to issue new Guarantee operating credit and cash flow term loans of up to $6.25 million to SMEs.
Co-Lending Program for Small and Medium-Sized Enterprises
Whereas, 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.
Canada Emergency Business Account
The government of Canada also introduce the new Canada Emergency Business Account, this program will provide 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 temporary reduced.
To qualify, you will need to demonstrate you paid between $50,000 to $1 million in total payroll in 2019.
Defer of Tax Payment
The government is allowing all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18 and before September 2020.
This relief would apply to tax balances due, as well as instalments. No interest or penalties will accumulate on these amounts during this period.
For GST/HST and custom duties owing, the government is allowing all businesses to defer payment until June 30, 2020. Deferral will include amounts owing for March, April and May.
It is hopeful that these measures would provide an immediate reliefs to businesses that affected the most by this global health and economic crisis as a result of COVID-19 pandemic.
