What is the COVID-19 Economic Response Plan?
The COVID-19 Economic Response Plan offers extensive benefit programs for individuals, businesses and industries in Canada that have been impacted economically by the COVID-19 pandemic. The Plan will allocate an estimated $105 billion in direct aid to households and firms, including wage subsidies, payments to workers without sick leave and access to employment insurance. There are elements to the Plan that may be of immediate interest to companies and workers in the promotional products industry.
Canada Emergency Response Benefit (CERB)
The CERB is a taxable benefit of $2,000 every four weeks for up to 16 weeks for eligible workers who have lost their income due to COVID-19.What are the requirements?
To be eligible, you must:
- Live in Canada and be at least 15 years old
- Have stopped working because of COVID-19 or be eligible for EI regular or sickness benefits
- Have not voluntarily quit your job
- Have had income of at least $5,000 in 2019 or in the 12 months prior to the date of your application.
What eligibility extensions have been made?
- You’re now allowed to earn up to $1,000 per month while collecting the CERB.
- The CERB is now extended to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19.
- It’s also been extended to workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19.
How can I apply?
- You should apply through either Service Canada or the Canada Revenue Agency (CRA), which are jointly offering the benefit, but not both. You also should not apply for the CERB if you’ve already applied for EI.
- Log in to your CRA My Account at canada.ca or call (800) 959-2019. Before calling, have your social insurance number (SIN) and postal code ready.
- Both services are open at any time except between 3 a.m. and 6 a.m. EST each day.
How will I receive funds?
- If you qualify for the CERB, you will receive your funds either by mail or direct deposit, depending on the payment method you have on file with the CRA.
- Your payment should arrive in three business days if you signed up for direct deposit, and about 10 business days by mail.
Can I return or repay the CERB funds I receive?
- Yes, if you return to work earlier than expected or applied but realize you’re not eligible. Instructions can be found at canada.ca.
Where can I find more information?
- Go to canada.ca or call (833) 966-2099 to speak with an agent.
Canada Emergency Wage Subsidy (CEWS)
How do I know if my company is eligible?
You must:
- Be an eligible employer
- Have experienced an eligible reduction in revenue
- Have had a CRA payroll account on March 15, 2020.
What is an eligible revenue reduction?
- Calculate the decrease by comparing your eligible revenue for the starting month of the claim period with your baseline revenue, which is either:
- The revenue you earned in the corresponding month in 2019, or
- The average of the revenue you earned in January and February 2020.
Who is an eligible employer?
Eligible employers include:
- Individuals (including trusts)
- Taxable corporations
- Persons that are exempt from corporate tax (Part I of the Income Tax Act), other than public institutions:
- Nonprofit organizations
- Agricultural organizations
- Boards of trade
- Chambers of commerce
- Nonprofit corporations for scientific research and experimental development
- Labour organizations or societies
- Benevolent or fraternal benefit societies or orders
- Registered charities
- Partnerships consisting of eligible employers.
Public institutions are not eligible for the subsidy.
Use the chart below to calculate your reduction. NOTE: You must choose ONE of these baseline revenue options for your method of comparison and will not be able to change it for your subsequent calculations for the other two periods.
Who are eligible employees?
- Eligible employees are individuals employed in Canada by eligible employers during the claim periods listed above, except if there was a period of 14 or more consecutive days in that period where they did not receive any pay by the employer.
- Employee eligibility is based on whether the person is employed in Canada, not where they live.
Can laid-off employees be eligible?
- Yes, laid-off or furloughed employees can become eligible retroactively, as long as employers rehire them and their retroactive pay and status meet the eligibility criteria for the claim period.
- Employees must be rehired and paid before they’re included in the revenue reduction calculation.
How long will the program last?
It will last for 24 weeks, backdated from March 15 to August 29, 2020.
Are there additional refunds for eligible employers?
Yes, eligible employers are also entitled to receive a 100% refund for employer contributions to:
- Employment Insurance
- Canada Pension Plan
- Quebec Pension Plan
- Quebec Parental Insurance Plan
What is the 10% Temporary Wage Subsidy?
This three-month measure for eligible employers allows them to reduce the amount of payroll deduction required for remittance to the CRA.
You are an eligible employer if you are a(n):
- Individual (excluding trusts)
- Partnership
- Nonprofit organization
- Registered charity
- Canadian-controlled private corporation (including a cooperative corporation) eligible for the small-business deduction.
You must also have:
- Had an existing business number and payroll program account with the CRA on March 18, 2020
- Paid salary, wages, bonuses or other remuneration to an eligible employee.
How can I apply for the subsidies for my employees?
Most businesses can apply using My Business Account at canada.ca. There’s also a separate online application form.
Where can I find more information?
- The CEWS information page at canada.ca
- Sign in to your CRA My Business Account
- Call (833) 966-2099
Business Credit Availability Program (BCAP)
The BCAP provides additional business loan support through private lenders and credit unions, as well as the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).
The program includes:
1) The Canada Emergency Business Account (CEBA)
- Financial institutions (banks and credit unions) can provide interest-free loans of up to $40,000 to eligible businesses.
- If the loan is repaid by December 31, 2022, 25% (up to $10,000) will be forgiven.
- If it’s not repaid, the remaining balance will become a three-year term loan at 5% interest.
- Loans are 100% funded by the Government of Canada.
What are the loans meant to be used for?
Small businesses can use the funds to shore up their operations by paying for immediate operating costs, i.e., payroll, rent, utilities, insurance, property tax or debt service.
How can I apply?
The program is now available at financial institutions and credit unions. The Government of Canada recommends that business owners speak to their primary lenders with whom they have a pre-existing relationship.
Who’s eligible for the loans?
- Canadian employers with $20,000 to $1.5 million in total payroll in 2019 that were operating as of March 1, 2020.
- Businesses without a minimum of $20,000 in payroll are eligible if they:
- Have a business operating account at a participating financial institution and a CRA business number.
- Filed a 2018 or 2019 tax return.
- Have eligible non-deferrable expenses (including rent, property taxes, utilities and insurance) between $40,000 and $1.5 million.
- Businesses without a minimum of $20,000 in payroll are eligible if they:
- Sole proprietors that receive income directly from their businesses.
- Businesses that rely on contractors.
- Family-owned corporations that pay employees through dividends rather than payroll.
- Smaller (i.e., micro) businesses and not-for-profits.
2) EDC 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 to SMEs, with 80% guaranteed by EDC.
How can the funds be used?
They are to be used for operational expenses to shore up impacted business, not for dividend payouts, shareholder loans, bonuses, stock buyback, option issuance, increases to executive compensation or repayment/refinancing of other debt.
Who’s eligible for this program?
All Canadian companies in any sector that were financially viable and generating revenue before the COVID-19 pandemic.
How can I apply?
The program is now available at financial institutions and credit unions. The Government of Canada recommends that business owners speak to their primary lenders with whom they have a pre-existing relationship.
3) BDC Co-Lending Program for SMEs:
- BDC is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements and liquidity needs, including interest payments on existing debt.
- Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program.
Who’s eligible for the program?
All Canadian companies in any sector that were financially viable and generating revenue before the COVID-19 pandemic.What are the different program tiers?
- 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
What are the loan terms?
Loans are interest-only for the first 12 months, with a 10-year repayment period.
Where can I find more information?
- The BCAP information page at canada.ca
- Call or email your primary lender
- Call BDC at (877) 232-2269
- Call EDC at (800) 229-0575