2020 has been a challenging year. I’m pretty sure that everyone can relate to that statement. With the pandemic, lockdowns, juggling kids and school closures, and even managing the emotional health of family, friends and employees. In some way, shape or form, both you and your business has likely been impacted by the pandemic. I’ve seen small business owners pivot their business models at rapid speeds and thrive in this new environment, but I’ve also seen business owners close their doors permanently, watching their dream disappear.
No matter where on the spectrum you may fall – a new business just trying to get a foothold, or a business with a long history, it’s likely been a challenge for you.
We are fortunate to live in a country like Canada whose government has put programs in place to help individuals and businesses emerge on the other side of this pandemic. But if you’ve tried to wade through the alphabet soup of subsidies, you might not even know what you can qualify for.
Here’s a simple guide to help you navigate four of the most helpful government programs still available, and perhaps provide yourself and your business the lifeline needed to surface stronger for 2021.
Canada Emergency Response Benefit (CERB)
This was a subsidy for individuals who had no income or earned less than $1000/month as a result of COVID-19. This could be because they lost their job but also if they were needed to stay home to look after children who were sick or home due to the school closures. It was also designed to assist those people who were not eligible for EI but still experienced a loss of income.
CERB provided a benefit of $500/week for up to 28 weeks. For self employed individuals, there was a restriction that earned income must be less than $1000 in a four week period in order to be eligible, but it did allow you to apply, even if you were a business owner.
The program ended on September 26, 2020, however retroactive applications can still be submitted to December 2, 2020.
Something to note – this is a taxable benefit. No income taxes were deducted from the benefits, and so will need to be paid in April 2021 for funds received. Do ensure that you’ve put some of the funds aside for the forthcoming tax bill.
For more information on CERB
Canada Emergency Wage Subsidy (CEWS)
If your business has employees, this subsidy would likely have the biggest impact on your business, as it helped you to pay your employees even when you had no revenue coming through the door. This program provided up to 85% of a wage subsidy for those businesses that suffered revenue losses.
There are 3 phases to this program, each with different calculation methods and revenue decrease requirements as well as different subsidy payouts. Although in the initial phases you required a 15-30% drop in revenue, from Periods 5 and forward, you might still be eligible for a reduced subsidy if your revenue numbers have decreased.
The program has been extended to June 2021 and applications can be made retroactively to the start of the program, which was in March 2020.
For more information on CEWS
Canada Emergency Business Account (CEBA)
This program is for businesses and is an interest free loan that was implemented by the Federal Government but issued through 220 financial institutions across Canada. The program has gone through a couple of iterations. Initially it was only available to those businesses with payroll of at least $20,000 in 2019, however they have waived those initial requirements in order to assist more businesses.
The existing program is an interest free loan of $40,000 to help cover fixed operating costs. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25% or up to $10,000. No principal payments are required prior to December 2022 and if you haven’t already applied, the deadline is December 31, 2020.
In October 2020 an Additional $20,000 CEBA loan is being made available to businesses. Of this additional loan balance 50% or up to $10,000 is forgivable if the balance of the loan is repaid by December 31, 2022. Applications will be accepted through eligible institutions for this second phase starting sometime in December 2020.
With either phase, if you are not able to repay the loan by December 31, 2022, it will be rolled into an interest bearing loan with the financial institution. There are some guidelines around what these funds can be used for, so ensure that you are meeting these requirements to qualify for the loan forgiveness.
For more information on CEBA
Canada Recovery Benefit (CRB)
This is the most recent benefit program which began in September 2020 and replaces the CERB program listed above. Another program for individuals, it is designed to assist those individuals who have lost their income or have had a decrease in income by 50% and do not qualify for EI. Self employed individuals would be able to apply for this subsidy.
The CRB program provides $500/week for up to 26 weeks with the program running to September 2021. This benefit is also taxable, but unlike CERB, 10% tax is withheld. Each application period covers a 2 week period, and you must reapply for subsequent periods.
The other way that this program differs from CERB is that it has a clawback program. If your net income is over $38,000 in the calendar year, you will have to reimburse $0.50 of the benefit for every dollar of net income you earned above $38,000, so definitely something to keep in mind.
For more information on CRB
That’s a quick summary of some of the programs that were introduced to help you or your business weather the COVID-19 storm. Don’t forget about other pre-existing technology innovation programs like SRED or IRAP which may also put some much needed funds in your pocket if you had to pivot your business to stay afloat.
And lastly, many provincial and municipal governments have created regional grants and subsidies to help businesses, especially those which required additional measures for their customers or employees to stay safe. So do remember to check out your local government websites as well.
Regardless of whether you’ve needed to apply for all of the subsidies or none of them, your business has likely changed in 2020. Whether you’ve only experienced a blip in your numbers, or if you’ve undergone major upheaval, the Canadian government programs are there to help you navigate through these difficult times, and help you keep the dream of your business a viable one into 2021. The entrepreneur in you knew that you were on a roller coaster ride when you started down this path, and even though this ride is probably more than you bargained for, just hang on tight and know that we will all emerge on the other side stronger and more resilient.
If you are a Canadian small business and you need assistance sorting through the COVID-19 government programs contact us now. We can help.