The federal government has announced a 75 per cent wage subsidy for small and medium-sized businesses.
The subsidy was one of four measures announced by the federal government Friday aimed at helping workers and businesses who have been affected by the economic shutdown due to the COVID-19 pandemic.
Addressing media from Rideau Cottage as he has done for the last two weeks as he self-isolates due to his wife’s COVID-19 diagnosis, Prime Minister Justin Trudeau said that after announcing a 10 per cent wage subsidy last week, it became clear more help was required, causing the government to increase the subsidy to 75 per cent for qualifying businesses, for a period of three months.
“This means that people will continue to be paid even though their employer has had to slow down or stop its operations because of COVID-19,” Trudeau told reporters. “We're helping companies keep people on the payroll so that workers are supported and the economy is positioned to recover from this.”
The subsidy will be backdated to Sunday, March 15 for people who have lost their job or are self-employed. The government says more details on eligibility criteria will start with the impact of COVID-19 on sales, and will be shared before the end of the month.
In addition, the government is launching the Canada Emergency Business Account, which will allow banks to offer $40,000 loans in the form of lines of credit, which will be guaranteed by the government, to businesses with payrolls of less than $1 million. The loan will be interest-free for the first year, and $10,000 of it will be forgivable for businesses that meet certain conditions.
The federal government will also provide an additional $12.5 billion through Export Development Canada and the Business Development Bank through the small and medium-sized enterprise loan and guarantee program to help small and medium-sized businesses with their operational cash-flow requirements.
The Emergency Response Benefit: How it works and how to get it
According to a news release from the Prime Minister’s Office (PMO), Export Development Canada will provide guarantees to financial institutions so they can issue new operating credit and cash-flow term loans of up to $6.25 million to small and medium-sized businesses.
These loans will be 80 per cent guaranteed by Export Development Canada, to be repaid within one year.
Small and medium-sized businesses can also get support through a new co-lending program that will bring the Business Development Bank of Canada together with financial institutions to co-lend term loans to these businesses for their operational cash-flow requirements.
Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program, which will be risk-shared at 80 per cent between the Business Development Bank of Canada and the financial institutions.
“This means that businesses will be able to apply for a guaranteed loan when they go to their financial institutions to get help as they weather the impacts of COVID-19,” the PMO news release stated.
Finally, the federal government will defer GST and HST payments as well as duties and taxes owed on imports until June. This measures will take effect immediately.
“This is the equivalent of giving $30 billion in interest-free loans to businesses. So if you're struggling to get by right now and you have a payment due at the end of the quarter, we're going to give you more time,” Trudeau said. “It will also allow you to keep the money that you would have sent to the government and use it instead for your immediate needs.”
Trudeau said the hope is with these new measures, employers who are being pushed toward laying off people because of the COVID-19 pandemic will think again, and those who have already laid off workers will consider rehiring them.
Trudeau also announced Friday that measures to help the most vulnerable — youth, marginalized people and people who live in poverty — will be announced soon.
Multiple measures
These new measures are in addition to measures for employers and individuals that have already been announced, including the Canada Emergency Response Benefit (CERB), a $2,000-per-month flat-rate benefit for individuals that will be paid out to any Canadian, regardless of income, for 16 weeks, whether EI eligible or not, who has made at least $5,000 in the previous year and finds their income interrupted directly or indirectly due to the economic shutdown due to the COVID-19 pandemic.
The CERB will be offered in place of EI, both sickness and regular benefits, for the period between March 15 and April 15 — the government says the decision was made to combine EI and non-EI benefits in order to simplify the process in light of a massive increase in applications and to get money to Canadians sooner.
The new benefit is available to anyone who has lost their stream of income. This could be someone who had a full-time job or a part-time job who has been laid off, cannot work or is not getting paid, someone who is self-employed and has had to close shop, or someone who is a gig worker or contractor. It applies to people who have a child home from school or a sick family member they must care for, who are sick themselves, who feel they must self-isolate due to risk factors, who are experiencing mental-health issues and cannot work as a result of the pandemic, and so on — there will be no supporting documentation from doctors or employers required for eligibility.
Only those with no income, however, will be eligible for the CERB, but employees need not be laid off to be eligible — employers who do not want to or cannot avail of the wage subsidy and want to keep their employees can do so, but without pay.
The application process for that benefit will launch the week of April 6, with payments expected to roll out between two and 10 days later.
The federal government also announced late Thursday it would close all in-person service Canada offices, which led to questions from reporters about access to these new benefits.
“As part of the initiative of encouraging people to stay home and work from home, this is something we realize we can and should be doing,” Trudeau said. “We want to make sure that Service Canada employees are continuing to work extremely hard to serve Canadians, to respond to their needs, and that’s why things are going to be done online and through the phone. We will be making special considerations for people who are particularly vulnerable and have difficulties accessing those services.”
The government said call centres and online processing centres will be staffed to reflect the increase in volume.
