A Guide to Financial Resources During COVID-19 Crisis

Right now there is an information overload surrounding the different resources that have been announced to help support small businesses and individuals during this COVID 19 outbreak.

More than that, we are also seeing lots of misinformation, assumptions and unfortunately a lack of details.

Keep an eye on this blog for an updated list of all of the resources that are available to you as a small business.


Federal Financial Resources

Wage Subsidy

10% Wage Subsidy

Initially, the government had implemented a 10% wage subsidy on remittances for qualifying businesses. This wage subsidy is still in play and can be applied to payrolls submitted last week, this week or next week even though the information on the new subsidy has not been released. 

Qualifications:

  • You are an eligible employer (individual, partnership, non-profit, registered charity or Canadian Controlled Private Corporation (including co-ops)
  • Have an existing business number and payroll program account with CRA before March 18, 2020
  • Pay salary, wages, bonuses or other remuneration to eligible employees

The subsidy is 10% of remuneration paid from March 18th - June 19, 2020, up to $1375 for each eligible employee for a maximum of $25,000 per employer. You do not need to apply for the subsidy. The subsidy will reduce the amount of money you need to remit to the CRA for your payroll in that period. It is important that you keep proper books and notes to support your calculations and the subsidy is considered taxable income. 

If you are working with an existing payroll provider, many of them are calculating the subsidy for you. If you must calculate it manually, please see this resource), or reach out to me and I can help you. 

75% Wage Subsidy

  • Eligible Employers include individuals, taxable corporations, partnerships, non profits and registered charities
  • Employers must have seen a drop in revenue of at least 15% in March and 30% in the following months
  • The benefit will be 75% of remuneration paid to an employee up to a maximum of $847/week
  • Remuneration includes salary, wages and other various forms that require deductions to be held and remitted to the government
  • Special rules will apply to employees that do not deal at arms length from the company and will include the eligible benefit
  • Employers must make an effort to top up employees salaries to bring them to pre-crisis levels, however special consideration will be given in certain circumstances
  • Eligible dates are for wages paid from March 15 - August 29, 2020
  • You can not access the 75% wage subsidy and the CERB for your employees at the same time
  • Everything will administered through the CRA My Business Portal and its essential that you sign up for this in order to receive benefits
  • For registered charities and non profits you can choose whether or not to include government funding in your calculations for the decrease but once you make this decision you must stick with it for each month after you apply
  • This is applicable to new employees
  • Employers may be eligible for a 100% refund on employer contributions to CPP and EI if the employees are on leave from work, still being remunerated but not actually working during this time
  • The change in revenue can be calculated by comparing your month in 2020 to the same month in the previous year. For example March 2020 compared to March 2019. However, in order to address high growth businesses an alternative method of calculating can be used to determine eligibility however it must be used consecutively in each month of application following. You must take the average of your sales from January and February 2020 and compare it against your March 2020 sales to determine if you meet the 15% decrease.
  • If you determine that you are eligible for the CEWS it automatically qualifies you for the first two periods of the subsidy, March 15 - April 11 and April 12 to May 9
  • If you are participating in the Work Sharing program then it will decrease the amount of CEWB eligible for your employees
  • All of the CEWB is taxable income to the business

Update: BDO have put together an incredible detailed document on the wage subsidies that you should check out here.

Recent updates to CEWS in May 2020 have also allowed:

  • Partnerships that are up to 50-per-cent owned by non-eligible members;
  • Indigenous government-owned corporations that are carrying on a business, as well as partnerships where the partners are Indigenous governments and eligible employers;  
  • Registered Canadian Amateur Athletic Associations;
  • Registered Journalism Organizations; and
  • Non-public colleges and schools, including institutions that offer specialized services, such as arts schools, driving schools, language schools or flight schools.


Business Credit Availability Program (CEBA)

This is being broken down into two tiers that you can apply for and roll out will be happening over the next three weeks.

The Canada Emergency Business Account 

  • interest-free loans of up to $40,000 for small businesses and nonprofits to cover their costs where revenues have been temporarily reduced
  • Must have paid between $20,000 and $1 million in payroll in 2019
  • Up to $10k of this can be forgivable if paid back before December 31, 2022
  • If the loan can't be paid in full before December 31, 2022 it will be moved into a 5 year term loan with 5% interest
  • The portal for applications will be available through your specific banking institution, likely through online banking means
  • This will be operated by the big 6 banks in Canada
  • No mandatory payments need to be made up until December 31, 2025 but by that time the loan is due in full
  • You will need a T4 summary of remuneration paid to prove payroll eligibility

Changes to this program have been made to include sole proprietors, non profits and small businesses that were not otherwise eligible before. If you have payroll under the $20,000 mark then these smaller businesses must have an eligible bank account at an existing bank offering CEBA, have filed a 2018 or 2019 tax return and have non deferrable expenses over $40,000.

EDC Loan Guarantee for Small to Medium Sized Businesses

This program is now available through banks and credit unions and provides cash and credit term loans to small businesses. This applies to all sectors as long as your business was revenue generating and viable before COVID-19. Loans can be issued for up to $6.25 Million and are 80% backed by EDC. These loans are for operational expenses. You cannot use this money for dividend payouts, shareholder loans, bonuses, stock buyback, option issuance, increases to executive compensation or repayment/refinancing of other debt.

BDC Co-lending Program for Small and Medium Sized Businesses

These are term loans for operational and liquidity business needs. The business applying must have been financially viable and revenue generating before COVID-19. The loans are interest only for the first 12 months and have a 10 year repayment period. This program is not yet available but will be though all major financial institutions. Loans will fit into the following categories.

  • Loans of up to $312,500 to businesses with revenues of less than $1 million.
  • Up to $3.125 million for businesses with revenues between $1 million and $50 million.
  • Up to $6.25 million for businesses with revenues in excess of $50 million.



Work Sharing Program

The Work Sharing Program is a Service Canada program that helps employers and employees avoid layoffs when there is a temporary decrease in business activity. The program provides EI benefits to eligible employees who agree to reduce normal working hours and share the work while the employer recovers.

This program, effective March 15, 2020, has extended the possible benefit period from 38 weeks to 76 weeks. If you have used the Work Sharing program in the last 6 months you can still apply and you need to only be in business for one year (year-round) to be eligible. 

Qualifications

  • Be a private business, public company or not-for-profit
  • Have at least 2 employees

You can find more specific information on this program here. 

Canadian Emergency Response Benefit (CERB)

This is something that both businesses and employees/self-employed contractors can apply for. The Canadian EI system was not designed to take such an influx of applications which is why they have created the CERB. The government is encouraging all Canadians to sign up for the CRA My Account portal to access the CERB program and any other supports that have been released.

The basics:

  • $2000 a month for up to 4 months
  • Must self attest to making at least $5000 CAD in the 12 months prior to application (needs to be traceable income from any form including EI benefits, sick benefits, etc.)
  • Applications will be processed through myCRA online
  • Money will start flowing within 10 days of application
  • Can make up to $1000 in income during the time period eligible
  • If you are a self employed person then you are eligible to make $1000 more than your monthly business expenses. Therefore if you are taking in monthly income to pay basic expenses but not taking that income personally then you are still eligible.
  • You are not eligible if you have voluntarily quit your job
  • If you pay out dividends then you are now eligible to collect the CERB

The nuances:

  • If you are already receiving EI benefits before March 15th then you can not get the CERB until after your EI benefits have run out (but you will still be eligible to apply for it)
  • If you applied for EI after March 15th as a result of COVID 19 and they find you are not a regularly eligible EI participant, you will be automatically moved into the CERB pool
  • If you are eligible for EI you are still being encouraged to apply immediately
  • You do not have to be up to date with your taxes with the CRA to apply
  • This is available to people who have lost their job, are sick, are taking care of someone who is sick, who can’t work in order to stay home with children, are self-employed, contract workers, or gig workers
  • Most importantly, if you are an employer who is struggling to pay wages at this time, you can bring your staff wages down to $0.00 without laying off your staff. This will make them eligible for the CERB. This supports small businesses by allowing the government to pay your staff directly and will make it quicker for you to bring them back to work, whenever the time is right. This also reduces the need for ROE’s, as this system is completely overrun, and just not working. It is important to note that an employee can not receive any remuneration during this time or the CERB will be null and void. 

Please note they are asking individuals to apply on a staggered basis to avoid system overflow. This means:

  • If you were born in January, February or March apply on Monday, April 6
  • If you were born in April, May, June apply on Tuesday, April 7
  • If you were born in July, August, September apply on Wednesday, April 8
  • If you were born in October, November, December apply on Thursday, April 9
  • If you don't apply on either of these four days then the system will be fine and you can apply as needed

Follow this link to the official government site with information on the CERB.

Canadian Emergency Commercial Rent Assistance (CECRA)

This program will help lower rent for small businesses by 75% by giving forgivable loans to commercial rent providers. The details released are as follows:

  • Forgivable loans will be provided to qualifying commercial property owners to cover 50% of three months rent for April, May and June 2020
  • The loans will be forgiven if the property owner agrees to reduce the rent by 75% for those three months under a rent forgiveness agreement.
  • The rent forgiveness agreement eliminates the possibility that the tenant can be evicted for lack of payment
  • The tenant is required to cover the remaining 25% and the property owner is required to cover 25%
  • It is available to non profits and charities

You are a qualified small business if your business is:

  • Paying less than $50k per month in rent
  • You have temporarily ceased operations or have seen a 70% drop in revenues

This program will be delivered by the Canadian Mortgage and Housing Association and is expected to be open for application in Mid May with retroactive support.


Tax deadlines 

Most tax deadlines for the CRA have been pushed forward. The following tax deadlines have NOT been pushed forward:

  • Regular payroll remittances if you are still paying employees (though the wage subsidy will be applied)
  • Self-employed income tax remittances (normally June 15th and is remaining that date)
  • Non-resident taxes

The dates for pushed tax deadlines can be seen here.


The general rule is that all tax submissions have been pushed to June 1, 2020, with payment being remitted by September 1, 2020. Please see the above CRA list for specifics returns.

If you do want to submit your taxes during this downtime, CRA is accepting electronic signatures and is encouraging filing through your MyCRA account. If you have not yet signed up for a MyCRA account, now is the time. You can find more information here

Collection on Debts or Debts with the CRA: The CRA will not be collecting on new debts filed with CRA during this time. They are encouraging that if you hold current debts with CRA and payment arrangements are not possible at this time that you file a Request for Taxpayer Relief form. If you qualify, this allows them to waive interest and penalties on amounts owing during this time. 

CRA Auditing: CRA will not be doing any auditing for the next 4 weeks. 


HST

For monthly filers who need to remit payments from March to June 2020, Q1 filers who have remittances that are due or annual filers whose returns are due in March, April or May 2020, the deadline has been moved to June 30, 2020, for payment remittance. 

Provincial Resources

Small Business Credit and Support Program

Eligibility

  • Less than $20,000 in payroll in the previous fiscal year
  • Experienced a decline in revenue of 15% in March and 30% in April May or June

Details

  • Managed through the Credit Unions
  • Applications start April 29th, 2020
  • Maximum loan amount is $25k and is 100% guaranteed by the province
  • Upon approval you will receive a grant of $1500 and a Business Continuity Voucher of $1500 to hire a professional for advice and support
  • It is available until June 30th 2020


Small Business Loan Guarantee Program

The Small Business Loan Guarantee Program is run through the NS Cooperative Council in partnership with the local credit unions. Information here. 

If you are a current recipient of this program your payments on principal and interest will be deferred until June 30, 2020. 

For current recipients and new recipients, the province has made it easier for businesses to access credit up to $500,000. For those that may not qualify, the government is guaranteeing the first $100,000 for businesses. 

If you are looking to apply for this program please contact the NS Cooperative Council to discuss options with them specifically. 


Commercial Rent Deferral Program

Landlords are being encouraged to defer rent payments from commercial tenants for 3 months and spread the deferred rent out over the rest of the lease term. If your business has been closed due to the Health Protection Act then you could be eligible for coverage.


This program requires the landlord to register with the Provincial government by April 3. The deferral agreement has to be in place by April 1. The program has the landlord and tenant sign a commercial rent deferral agreement. This will protect the landlord and give them up to $15,000 per commercial tenant up to a maximum of $50,000 in the event that your business may never go back to its normal operations and needs to break the lease.

Qualifications (These qualifications are currently being reviewed for the province to increase the catch-all for small businesses and they have removed the previous guideline of having 5 employees with 1 full time)

  • Not a corporate franchise
  • Active under the income tax act
  • Registered to do business in NS
  • Engaged in the following business activities (Gyms and fitness establishment, hair salon, barbershop, spa, nail salon, body art establishment, restaurants offering in-person dining service, drinking establishment, registered daycare, craft brewery or distillery with tasting room, personal service business serving only individuals, dentist, optometrists, chiropractors, massage therapists, naturopathic doctor, Chinese medicine practitioner, Acupuncturist Live, performing arts for audiences)

Work Emergency Bridge Fund

This program has been announced to support self employed people and laid off workers who do not qualify for EI. This will be a one time payment of $1000 to bridge the gap between layoffs and the receipt of the first payment of claims for the federal government programs. This program will be administered through Dalhouse University.

Eligibility

You may qualify for the Worker Emergency Bridge if you:

  • are a Nova Scotia resident
  • are 18 or older
  • were employed and laid off, or self-employed and lost all revenue because of COVID-19 on or after 16 March 2020
  • earned between $5,000 and $34,000 in 2018
  • have applied (or plan to apply) for the Canada Emergency Response Benefit (CERB)

You do not qualify if you’re:

  • receiving Employment Insurance benefits
  • eligible for Employment Insurance benefits
  • receiving Income Assistance
  • receiving any income or benefit (like salary, sick leave, disability insurance or workers’ compensation) because you lost your income for reasons other than COVID-19
  • incarcerated in a federal or provincial institution

The Worker Emergency Benefit is for each worker who qualifies – if you and your spouse both qualify, you’ll both receive it.

If you were employed and laid off

You’ll need a copy of your Record of Employment (ROE). You should have received it from your employer. You can also view it online through your My Service Canada Account.

Your Record of Employment needs to show:

  • Box 11: date must be March 16 or later
  • Box 15A: hours must be less than what’s needed to qualify for Employment Insurance
  • if you live in Halifax Regional Municipality (except west of Sheet Harbour): must be less than 700 hours
  • if you live in Cape Breton, Antigonish County, Halifax County west of Sheet Harbour or Guysborough County: must be less than 420 hours
  • if you live in the rest of the province: must be less than 630 hours
  • Box 15B: amount must be greater than $5,000 and less than $34,000
  • Box 16: must show code A (laid off) – if you were fired or you quit, you’re not eligible for this program
If you’re self-employed:

If self employment income is your primary source of income, you’ll need to provide:

  • your Social Insurance Number
  • your CRA business number, if you have one
  • a copy of your 2018 tax return (T1 - personal tax return, T2 - corporate tax return, T4002 - self employed, professional, commission, fishing or farming income, or T2125 - Statement of Professional Business Activities) that shows you earned at least $5,000 and less than $34,000. If you do not have a copy of this on file you could find it with your accountant or tax filer.
How to apply
  1. Make sure you meet all the eligibility criteria.
  2. Gather the supporting documentation you need for your application.
  3. Call 1-800-863-6582 to speak with a Canadian Red Cross agent. Agents are available 7 days a week (including holidays), 8am to 8pm.

Small Business Impact Grant

DEADLINE FOR APPLICATIONS IS APRIL 25th, 2020

This is a grant which will be eligible for small businesses that will provide a grant of 15% of gross revenues based on either the months of April 2019 or the months of February 2020 (for businesses that have just recently opened). This grant can provide up to a maximum of $5000 that can be used for any purpose.

If you are a new business that has opened since February 2020 then you are required to reach out to the program to discuss potential options at this time. This program will be administered through Dalhousie University.

Online applications are open and to apply you need the following information:

  • Your NS Registry of Joint Stock number which you can find through the database here.
  • Your banking information
  • An unaudited income statement (Profit and Loss or Income minus Expenses) from April 2019 or February 2020
  • Depending on your business type, a recent tax document including a T1 - personal tax return, T2 - corporate tax return, T3010 - Charity tax return, or an HST return
  • An image of a void cheque
  • A copy of a bank statement
  • A partial income statement (Profit and Loss or Income minus Expenses)or a business plan if your business does not have any revenue history

The application will make you determine your eligibility, provide business contact and banking information, upload the supporting documents you need (and my advice is to upload as many as you have and anything you have) and attest to the truthfulness of this information.

You are eligible IF:

  • were directed to close or to substantially curtail operations in the COVID-19 public health order issued by the Chief Medical Officer of Health;
  • anticipate revenue loss of at least 30% for the month of April 2020;
  • established prior to March 15, 2020;
  • are sole proprietorships, partnerships, corporations, societies, social enterprises, not for profits, charities in business, and other similar organizations;
  • if incorporated, pays the small business corporate tax rate on income.

The grant covers 15% of your monthly revenues from sales in either the month of April 2019 or February 2020 up to a maximum of $5000. This is gross sales, not income minus expenses.


Other Provincial Changes to note:
  • Nova Scotia Power are not pursuing disconnections for non-payment at this time
  • Student Loan Payments have been suspended until September 30, 2020. Interest will not accrue and you do not need to apply
  • The government is deferring payments on loans (Farm Loan Board, Fisheries and Aquaculture Loan Board, Jobs Fund, Nova Scotia Business Fund, Municipal Finance Corp. and Housing Nova Scotia) to June 30, 2020
  • WCB premiums and business registration renewal fees are deferred until June 30, 2020
  • Small businesses working with the government will have a payment turn around of 5 days instead of 30

Individual Resources

Student Support

Canadian Emergency Student Benefit

- eligible to students and new grads who are not eligible for CERB
- provides $1250 a month for eligible students and $1750 a month for students with dependants or diabilities
- is available from May to August 2020

Canada Student Service Grant

  • Available to students to gain valuable work experience and skills while helping their commuities during the COVID-19 pandemic
  • Students who choose to do a national service will have the $5000 grant toward their education in the fall

Additionally you can see the following help for students in the fall:

  • Canadian Student Grants will be doubled
  • Eligibility for financial assistance will be broadened by removing student and spouse contributions in 2020-21
  • Raising the amount provided to a student from$210 to $350 via the Canada Student Loans Program
  • Increase support for the Canadian Indigenous population with an additional $75 million in 2020-21
  • Expand research scholorships, fellowships, grants and inhance work opportunities for these students through NRC


Mortgage Support

The federal government is working with the big banks to help individuals with mortgage support. If you have a personal or business mortgage they are requesting you contact your bank specifically to talk one on one about options that are available to you. At this time, flexibility is being provided on payment deferrals, loan re-amortization, interest arrears and other special payment arrangements. 

Remember there is no one size fits all here, and an argument can and should be made for each of you to sustain help at this time. If you run into issues during these conversations with the banks, then please reach out so I can facilitate helping. 


GST Credit

A one-time payment top-up will be made early in May 2020. It will be $400 for single individuals and $600 for couples or families. 


Canadian Child Benefit (CCB)

There will be a top-up of the CCB as well. This will be a one-time payment in May 2020 that will equal $300/child. 


Student Loans

Student loan payments have been suspended for 6 months with no accumulated interest. You do not have to apply for this, it is being automatically applied.


Other resources


BDC

  • Working capital loans of up to $2 million with flexible repayment terms such as principle postponements
  • Reduced rates on eligible new loans
  • Flexible repayment terms of existing loans including the postponement of principal payments for up to 6 months on loans of $1 million or less


Tourism operated business

Tourism operated businesses are being asked to contact your local Regional Development Association to discuss options. These include access to funding to stay in business, advice on other programs, increased funding if you already have something in place or flexible payment arrangements on loans. 

Please see more information here.


ACOA

ACOA has suspended payments on debt for the next three months and is also working with businesses to get them access to cash in specific scenarios. If you are a current client of ACOA please reach out to your account manager to discuss options.

Facebook

Facebook has announced that they will be giving out small cash grants to small businesses. This program has not been finalized yet but they do have an active page and they are asking for applicable small businesses to sign up for their updates. You can find more information here.

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