Announced August 20: Canada Recovery Benefit will help self-employed and gig workers who don't qualify for CERB.
Other benefits for Canadians will provide 10 paid days of sick leave for any employee who is ill due to COVID-19.
Read more here.
As a small business owner in Canada, you may be feeling some anxiety and stress as you navigate through new challenges as a result of COVID-19. You may be facing decisions that are really tough to consider, ranging from having to lay off employees, how to pay the rent, or even worse, contemplating having to close permanently.
According to a survey by the Canadian Federation of Independent Business, a staggering 40% of small business owners don’t believe that they will re-open. And 25% of them say that they can only survive for less than a month under the current conditions.
The good news is that the government has rolled out several programs to help relieve your financial burden including emergency loans, tax relief and financial support.
Here’s a list of some of the government assistance programs that you might find helpful:
Canada Recovery Benefit for Self-Employed Canadians, Gig Workers
The new Canada Recovery Benefit will come into effect on September 27, 2020 and will last for one year. This program is designed to support Canadians who don't qualify for EI because they are self-employed, including those working in the gig economy.
Self-employed Canadians and gig workers who have stopped working or had reduced incomes due to COVID-19 can apply for the Canada Recovery Benefit and could receive $400 per week for up to 26 weeks.
To be eligible for the Canada Recovery Benefit, you must:
- Be at least 15 years old and have a valid Social Insurance Number (SIN);
- Have stopped working due to COVID-19 and are available and looking for work; or are working and have had a reduction in their employment/self-employment income for reasons related to COVID-19;
- Are not eligible for Employment Insurance;
- Have had employment and/or self-employment income of at least $5,000 in 2019 or in 2020;
- Nave not quit their job voluntarily.
Workers would apply after every two-week period for which they are seeking income support and attest that they continue to meet the requirements. In order to continue to be eligible for the benefit the claimant wound need to look for and accept work when it is reasonable to do so. The benefit is taxable.
Canada Recovery Benefit is taxable.
To ensure that the benefit is reaching those who need it most, claimants will need to repay some or all of the benefit on their 2019 income tax return if their annual net income, excluding the Canada Recovery Benefit payment, is over $38,000.
In other words: "claimants would need to repay $0.50 of the benefit for each dollar of their annual net income above $38,000 in the calendar year to a maximum of the amount of benefit they received," the federal government explained in a backgrounder.
Read more here.
COVID-19 Small Business Support: Temporary Wage Subsidies
The shutdown of non-essential services due to COVID-19 has caused a loss of income for both businesses and their employees. Recognizing a need to step in and help avoid further job loss, the federal government has implemented wage subsidy programs to help employers re-hire workers so they can continue operating once the crisis is over.
75% Canada Emergency Wage Subsidy (Canada Emergency Wage Subsidy)
Announced May 15: Canada Emergency Wage Subsidy will be extended until August, 2020.
Read more here.
This wage subsidy can help you pay 75% of your employees’ salaries for up to three months. The Canada Emergency Wage Subsidy is available for employers of all sizes. You can apply through the CRA’s My Business Account portal.
To be eligible, you will need to show a 15% revenue decrease in March and 30% decrease in April and May compared to either 2019 or 2020 figures; or compared to an average of your revenue earned in January and February 2020. It is meant to cover:
- Salaries paid between March 15 and June 6, 2020
- 75% of the salary amount that was paid pre-COVID-19, up to $847 per week with employers expected to pay the remaining 25%
- Independent contractors if they meet the zero-income requirement
10% Temporary Wage Subsidy
This 10% Temporary Wage Subsidy program helps employers reduce the amount of payroll deductions for 3 months (March 18, 2020 – June 19, 2020). Instead of paying the full salary, you get a wage subsidy of 10%, up to a maximum of $1,375/month per employee, to a maximum of $25,000 total per employer.
To be eligible, you must:
- Be an individual business, partnership, non-profit, or private business
- Have a business number and payroll account with the CRA
- Have paid employees a wage, salary or bonuses
COVID-19 Small Business Support: Business Credit Availability Program (BCAP)
Announced May 11: Prime Minister announces additional support for mid-sized businesses to help save Canadian jobs.
Read more here.
This Business Credit Availability Program (BCAP) backed by the federal government provides $40 billion of additional support through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). Two financing programs are available: Canada Emergency Business Account (CEBA) and SME Loan and Guarantee Program.
Canada Emergency Business Account (CEBA)
Thanks to the federal government, small businesses can apply for interest-free loans (for the first year) of up to $40,000 to help with income loss and operating expenses. If you repay the loan on or before December 31, 2022, 25% of the loan is forgivable (up to $10,000). CEBA is available through any financial institution and is subject to eligibility.
To be eligible, you must demonstrate that you had a total payroll between $50,000 and $1 million in 2019 and your business has to have a viable business model.
SME Loan and Guarantee Program
This SME Loan and Guarantee Program by the federal government and BDC will enable up to $40 billion in additional lending. Backed by the BDC and Export Development Canada (EDC), this program provides funding to financial institutions so they can issue credit and cash flow term loans of up to $6.25 million. Loans backed by the BDC will cover 80%, with the remaining 20% by a financial institution.
We are here to help.
When you feel hopeless, remember there are lots of government programs out there to ease your financial burden. Check out our COVID-19 Resource Centre for more information. We are here to help.