Canada’s COVID-19 Economic Response Plan
SUPPORT FOR BUSINESSES
Updated on May 1, 2020
Avoiding layoffs and rehiring employees
Canada Emergency Wage Subsidy (CEWS)
The Canada Emergency Wage Subsidy (CEWS) supports employers that are hardest hit by the pandemic, and 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.
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.
For employers that are eligible for both the CEWS and the 10% Temporary Wage Subsidy for a period, any benefit from the Temporary 10% Wage Subsidy for remuneration paid in a specific period will generally reduce the amount available to be claimed under the CEWS in that same period.
Temporary 10% Wage Subsidy
The Temporary 10% Wage Subsidy is a three-month measure that will allow eligible employers to reduce the amount of payroll deduction required to be remitted to the Canada Revenue Agency (CRA).
You are an eligible employer if you:
- are a(n):
- individual (excluding trusts),
- partnership.
- non-profit organization,
- registered charity, or
- Canadian-controlled private corporation (including a cooperative corporation) eligible for the small business deduction;
- have an existing business number and payroll program account with the CRA on March 18, 2020; and
- pay salary, wages, bonuses, or other remuneration to an eligible employee.
Note: Partnerships are only eligible for the subsidy if their members consist exclusively of individuals (excluding trusts), registered charities, or Canadian-controlled private corporations eligible for the small business deduction.
Extending the Work-Sharing program
We are extending the maximum duration of the Work-Sharing program from 38 weeks to 76 weeks for employers affected by COVID-19. This measure will provide income support to employees eligible for Employment Insurance who agree to reduce their normal working hours because of developments beyond the control of their employers.
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Access to credit
Business Credit Availability Program (BCAP)
We established a Business Credit Availability Program (BCAP) to provide additional support through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).
BDC and EDC are working with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation, exports and tourism.
This program includes:
- Loan Guarantee for Small and Medium-Sized Enterprises
Through the Business Credit Availability Program, Export Development Canada (EDC) is working with financial institutions to guarantee 80% of new operating credit and cash flow term loans of up to $6.25 million to small and medium-sized enterprises (SMEs).
This financing support is to be used for operational expenses and is available to both exporting and non-exporting companies.
Contact your financial institution for more information.
- Co-Lending Program for Small and Medium-Sized Enterprises
Through the Business Credit Availability Program, Business Development Canada (BDC) is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.
The program offers differing maximum finance amounts based on business revenues.
Financed amount:
- 80 % provided by BDC
- 20 % provided by your financial institution
This support is available until or before September 30, 2020.
These programs are now available at various financial institutions and credit unions.
Canada Emergency Business Account (CEBA)
The Canada Emergency Business Account (CEBA) 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.
To qualify, these organizations will need to demonstrate they paid between $20,000 to $1.5 million in total payroll in 2019.
Business owners can apply for support from the Canada Emergency Business Account through their banks and credit unions.
Canada Emergency Commercial Rent Assistance (CECRA)
We reached an agreement in principle with all provinces and territories to implement the Canada Emergency Commercial Rent Assistance (CECRA) for small businesses. This program will lower rent by 75 per cent for small businesses that have been affected by COVID-19.
The program will provide forgivable loans to qualifying commercial property owners to cover 50% of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.
The loans will be forgiven if the mortgaged property owner agrees to reduce the small business tenants’ rent by at least 75% under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25% of the rent.
Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70% drop in pre-COVID revenues. This support will also be available to non-profit and charitable organizations.
It is expected that CECRA will be operational by mid-May, and further details will be announced soon.
Rural businesses and communities
We are providing $287 million to support rural businesses and communities by providing them with much-needed access to capital through the Community Futures Network.
Assisting innovative and early-stage businesses
We are investing $250 million to assist innovative, early-stage companies that are unable to access other COVID-19 business supports through the Industrial Research Assistance Program (IRAP).
IRAP provides advice, connections, and funding to help Canadian small and medium-sized businesses increase their innovation capacity and take ideas to market.
Young entrepreneurs
We are providing $20.1 million in support for Futurpreneur Canada to continue supporting young entrepreneurs across Canada who are facing challenges due to COVID-19. The funding will allow Futurpreneur Canada to provide payment relief for its clients for up to 12 months.
Businesses in the territories
We are making available $15 million in non-repayable support for businesses in the territories to help address the impacts of COVID-19. This support will assist businesses with operating costs not already covered by other Government of Canada measures.
Small and medium-sized businesses unable to access other support measures
We are providing $675 million to give financing support to small and medium-sized businesses that are unable to access other COVID-19 business supports, through Canada's Regional Development Agencies.
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Deferred payments
More time to pay income taxes
We are 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, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.
Deferral of Sales Tax Remittance and Customs Duty Payments until June
We are allowing businesses, including self-employed individuals, to defer until June 30, 2020 payments of the GST/HST, as well as customs duty owing on their imports.
Any GST/HST payment that becomes owing from March 27 until the end of May can be deferred until the end of June. For GST and customs duty payments for imported goods, deferral will include amounts owing for March, April and May.
These amounts were normally due to be submitted to the Canada Revenue Agency and the Canada Border Services Agency as early as the end of March 2020.
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Support for self-employed individuals
Canada Emergency Response Benefit (CERB)
We will provide a taxable benefit of $2,000 every 4 weeks for up to 16 weeks to eligible workers who have lost their income due to COVID-19.
The CERB is available to workers who meet all of the following conditions:
- live in Canada and are at least 15 years old
- stopped working because of COVID-19 or are eligible for EI regular or sickness benefits
- have not voluntarily quit their job
- had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application.
On April 15, we announced changes to the eligibility rules to:
- Allow people to earn up to $1,000 per month while collecting the CERB.
- Extend the CERB to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19.
- Extend the CERB to workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19.
An online questionnaire will help us direct you to the service option that best fits your situation (i.e. eligibility for Employment Insurance benefits or not).
Do not apply for the CERB if you have already applied for EI.
You can also apply over the phone: 1‑800‑959‑2019 or 1‑800‑959‑2041
Deferral of Sales Tax Remittance and Customs Duty Payments until June
We are allowing businesses, including self-employed individuals, to defer until June 30, 2020 payments of the GST/HST, as well as customs duty owing on their imports.
Any GST/HST payment that becomes owing from March 27 until the end of May can be deferred until the end of June. For GST and customs duty payments for imported goods, deferral will include amounts owing for March, April and May.
These amounts were normally due to be submitted to the Canada Revenue Agency and the Canada Border Services Agency as early as the end of March 2020.
More time to pay income taxes
We are 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, under Part I of the Income Tax Act.
No interest or penalties will accumulate on these amounts during this period.
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Indigenous business
Funding for small and medium-sized Indigenous businesses, and Aboriginal Financial Institutions
We announced up to $306.8 million in funding to help small and medium-sized Indigenous businesses, and to support Aboriginal Financial Institutions that offer financing to these businesses.
The funding will allow for short-term, interest-free loans and non-repayable contributions through Aboriginal Financial Institutions, which offer financing and business support services to First Nations, Inuit, and Métis businesses.
These measures will help 6,000 Indigenous-owned businesses get through these difficult times.
Financial support for Indigenous businesses will be provided through Aboriginal Financial Institutions, and administered by the National Aboriginal Capital Corporations Association and the Métis capital corporations in partnership with Indigenous Services Canada.
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Supporting financial stability
Relief for federally regulated pension plan sponsors
We are providing immediate, temporary relief to sponsors of federally regulated, defined benefit pension plans in the form of a moratorium, through the remainder of 2020, on solvency payment requirements for defined benefit plans.
This relief will help ensure that employers have the financial resources they need to maintain their operations and their pension plans, and to protect the retirement security of their workers and retirees.
Launching an Insured Mortgage Purchase Program
We launched an Insured Mortgage Purchase Program, in which we will purchase up to $150 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation.
This action will provide long-term stable funding to banks and mortgage lenders, help facilitate continued lending to Canadian consumers and businesses, and add liquidity to Canada's mortgage market.
Bank of Canada's actions
The Bank of Canada is acting in several ways to support the economy and financial system and stands ready to take any and all actions that it can to protect the well-being of Canadians during this difficult time. The Bank has responded by lowering interest rates, intervening to support key financial markets and providing liquidity support for financial institutions.
Office of the Superintendent of Financial Institutions actions
The Office of the Superintendent of Financial Institutions announced it is lowering the Domestic Stability Buffer by 1.25% of risk-weighted assets. This action will allow Canada’s large banks to inject $300 billion of additional lending in to the economy.