Appearance before the COVID-19 Committee of the Whole by the Minister of Small Business, Export Promotion and International Trade – April 11, 2020

11 April 2020

Helping SMEs secure funding during COVID-19

Question:

How is the Government of Canada helping small and medium-sized businesses secure funding to continue to operate?

Key messages:

  • The Government of Canada is making additional investments to provide support to small businesses, allowing them to quickly access funds through financial institutions.
  • The Government established the Business Credit Availability Program (BCAP). Through this program, Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) will provide $65 billion in direct lending and other types of financial support to businesses.
  • EDC is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to small and medium size businesses.
  • BDC is working with financial institutions to co-lend incremental credit amounts of up to $6.25 million through the program.
  • Further, the new Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and non-profits to help recover lost revenue.
  • These measures will help businesses struggling with cash flow right now bridge to better times.

Background:

Business Credit Availability Program (BCAP)

The program will provide more than $65.0 billion of additional support for businesses through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). The program includes:

Canada Emergency Business Account

  • The new Canada Emergency Business Account 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 $50,000 and $1 million in total payroll in 2019.

Loan Guarantee for Small and Medium-Sized Enterprises

  • EDC is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million (80% guaranteed by EDC) to SMEs.
  • These loans have a 1-year term with automatic renewal.

Co-Lending Program for Small and Medium-Sized Enterprises

  • BDC is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.
  • Eligible businesses may obtain incremental credit amounts of up to $6.25 million (80% guaranteed by BDC) through the program.

Keeping business costs low during COVID-19

Question:

How is the Government of Canada keeping costs low for small and medium-sized businesses?

Key messages:

  • The Government of Canada has taken measures to keep operating costs low for small and medium-sized businesses.
  • The Government previously announced the 10% wage subsidy for employers — that amounts up to $1,375 per employee and $25,000 per employer.
  • The Government is also allowing businesses, including self-employed individuals, to defer their GST and HST payments until June 30, 2020. Additionally, income tax payments may be deferred until August 31, 2020.

Background:

10% Temporary Wage Subsidy for Employers

Those organizations that do not qualify for the Canada Emergency Wage Subsidy (CEWS) may continue to qualify for the 10% Temporary Wage Subsidy for Employers, a three-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).

The subsidy is equal to 10% of the remuneration paid from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee to a maximum of $25,000 total per employer.

  • The CRA will allow all businesses to defer, until 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.
  • The CRA will also allow businesses, including self-employed individuals, to defer until June 30, 2020 payments of the Goods and Services Tax / Harmonized Sales Tax (GST/HST), as well as customs duties owing on their imports.

SME support during COVID-19

Question:

What is the Government of Canada doing to support small and medium-sized businesses during the COVID-19 pandemic?

Key messages:

  • The Government of Canada is focused on helping Canadians and businesses through this tough economic time.
  • We will continue to protect the health and safety of Canadians, while supporting families and businesses and keeping our economy strong in the face of uncertainty.
  • In addition to the $107 billion announced so far, this new legislation adds to these measures — ensuring that businesses across Canada are supported during these unprecedented times.

SME support for employees during COVID-19

Question:

How is the Government of Canada helping small and medium-sized businesses support their employees?

Key messages:

  • The Government of Canada understands that many small businesses have seen their sales plummet, and have had to make extremely hard decisions to cut staff, or even close their doors temporarily.
  • The Government of Canada Emergency Wage Subsidy covers up to 75% of an employee's wages — this amounts to up to $847 per week. Employers will also be eligible for a subsidy of up to 75% of salaries and wages paid to new employees.
  • Additionally, the Canada Emergency Response Benefit (CERB) will provide up to $2,000 a month for four months for those who have lost their job as a result of COVID-19.
  • Further, the Government has put $263 million toward the Canada Summer Jobs program to help employers hire summer staff — creating up to 70,000 jobs for youth.
  • The EI Work Sharing Program has changed from 38 to 76 weeks, which provides benefits to workers who agree to reduce their normal working hours due to the pandemic.
  • Through these measures, the Government is helping companies keep people on the payroll, while also ensuring that businesses are able to recover once this crisis is over.

Background:

Canada Emergency Wage Subsidy

The Canada Emergency Wage Subsidy (CEWS) will provide eligible employers a temporary wage subsidy for a 12 week period (from March 15, 2020 to June 6, 2020). The subsidy will be available to businesses of all sizes, as well as non-profit organizations and charities, whose revenues have decreased by at least 30% due to COVID-19 (for the month of March, the Government proposes to make the CEWS more accessible by reducing the 30% benchmark to 15%). It will cover up to 75% of wages on the first $58,700 that an employee earns, up to $847 per week.

Extending EI Work Sharing

The EI Work Sharing program, which provides benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their employers, will be extended from 38 weeks to 76 weeks.

Temporary changes to the Canada Summer Jobs program

The Canada Summer Jobs program provides opportunities for youth to develop and improve their skills within the not-for-profit, small business, and public sectors, and supports the delivery of key community services. Changes will be introduced to the program, including: an increase to the wage subsidy (up to 100% of applicable minimum hourly wage), an extension to the end date for employment to February 28, 2021, and allowing employers to hire staff on a part-time basis.

Canada Emergency Response Benefit (CERB)

The Canada Emergency Response Benefit (CERB) will provide financial support to employed and self-employed Canadians who have lost their income as a result of COVID-19. Eligibility periods for the CERB are fixed in 4-week periods ($2,000 per period), with Canadians having the ability to re-apply for the CERB for multiple 4-week periods, to a maximum of 16 weeks.

Preparation and approvals:
SCMS contact: Riyadh Nazerally, Communications Advisor, SCMS, 343-548-9038
SCMS approval (Exec/ADM-level): Jason Bett, Director General, SCMS, 343-291-3722; Vicky Eatrides, ADM, SCMS, 343-291-1652
Sector approval (ADM/DG-level): Frances McRae, ADM, SBMS, 343-291-1800