Government expanding COVID-19 subsidy program
Companies of all sizes have been impacted by the COVID-19 pandemic, but there are a number of programs in place or under development aimed at helping navigate the difficult economic times.
Over the past week, the federal government has pledged to extend qualifying dates for one of the core programs aimed at assisting small and medium-sized businesses, the Canada Emergency Wage Subsidy (CEWS) and has introduced plans to help larger firms as well.
According to Prime Minister Justin Trudeau, details of an extension of the CEWS program, which provides companies with up to $847 per week per employee, are pending.
“We are extending the wage subsidy beyond the month of June to kickstart the economy and boost job creation,” explained Prime Minister Justin Trudeau late last week. The parameters of the COVID-19 Emergency Response Act, No. 2 pertaining to CEWS allow for qualifying periods to extend to September 30, 2020 without a need to make additional revisions to the act, but the government has yet to announce how far past June they plan on extending the program.
To date, employers have applied for CEWS benefits for 2 million employees, and almost 8 million Canadians have accessed the Canada Emergency Response Benefit (CERB), amounting to $29 billion in benefits under that program.
In addition to help for small and medium-sized firms, this week Trudeau announced support for larger businesses as well, with the Large Employer Emergency Financing Facility (LEEFF). The LEEFF program is designed to provide bridge financing to Canada’s largest employers, whose needs during the pandemic are not being met through conventional financing.
“This will help businesses keep workers on the payroll, and put more Canadians in a position to recover quickly once we make it through these uncertain times,” explained Trudeau.
“Employers, large and small, are facing challenges due to the COVID-19 global pandemic,” added Minister of Finance Bill Morneau. “We know that many businesses of all sizes need our help in order to keep their many employees on the payroll and their suppliers paid until the economy recovers. That is why today’s measures will help both large and mid-sized employers to get access to the financing they need to make it through this extraordinarily challenging time.”
The Canada Emergency Wage Subsidy (CEWS) supports employers that are hardest hit by the pandemic, and helps protect the jobs Canadians depend on.
The subsidy generally covers 75% of an employee’s wages – up to $847 per week – for employers of all sizes and across all sectors who have suffered a drop in gross revenues of at least 15% in March, and 30% in April and May.
The program will be in place for a 12-week period, from March 15 to June 6, 2020, with details of a further extension in the works.
Employers who are eligible for the CEWS are entitled to receive a 100% refund for certain employer contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan paid in respect of employees who are on leave with pay.
The Canada Emergency Response Benefit (CERB) provides temporary income support to workers who have stopped working due to COVID-19. To help more Canadians benefit from the CERB, workers may earn up to $1,000 per month while collecting the benefit.
Individuals who are eligible for Employment Insurance regular or sickness benefits, or who have recently exhausted Employment Insurance regular or fishing benefits may also be eligible.
The CERB provides $500 per week for a maximum of 16 weeks, and is available from March 15, 2020, to October 3, 2020.
For information on eligibility and how to apply, visit www.canada.ca/coronavirus-CERB.
To ensure that small businesses have access to the capital they need to see them through the current challenges, the Government of Canada launched the new Canada Emergency Business Account, which is delivered by eligible financial institutions in cooperation with Export Development Canada (EDC).
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 temporarily reduced due to the economic impacts of the COVID-19 virus.
This will better position them to quickly return to providing services to their communities and creating employment. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).
As of May 7, 564,000 applicants have been approved for CEBA for a total of $21.8 billion in cumulative funds disbursed. Additional applications are received daily.
For information on eligibility and how to apply, visit https://ceba-cuec.ca/.
The government’s support for large companies through Large Employer Emergency Financing Facility (LEEFF) will be delivered by the Canada Development Investment Corporation (CDEV), in cooperation with Innovation, Science and Economic Development Canada (ISED) and the Department of Finance.
The LEEFF program will be open to large for-profit businesses – with the exception of those in the financial sector – as well as certain not-for-profit businesses, such as airports, with annual revenues generally in the order of $300 million or higher.
To qualify for LEEFF support, eligible businesses must be seeking financing of about $60 million or more, have significant operations or workforce in Canada, and not be involved in active insolvency proceedings. Broader sectoral dynamics for LEEFF applicants will be considered through processes led by ISED.
The government is in the final stages of establishing the program and further information about the application process will be provided shortly.