Q: What is the Canada Emergency Wage Subsidy (CEWS)?
A: It is a program created to help small businesses & employers keep Canadians on the payroll with a 75% wage subsidy from the federal government – for up to $58,700 normally earned by employees. It’s a benefit of up to $847 per week, per employee. Employers of all sizes and sectors would be eligible, but we know small business are hardest hit by the economic impact of COVID-19.
CEWS is proposed to be in place to cover the 12 week period of March 15, 2020 to June 6, 2020.
Q: I heard changes were made to the subsidy. What are they?
A: To help the not-for-profit sector, new businesses and high growth companies access CEWS, the following changes to criteria were announced that add flexibility:
- For March 2020, a 15% revenue loss will be the new benchmark to qualify – recognizing that many businesses did not begin to feel the impact of the COVID-19 crisis until part way through the month. For April and May the revenue reduction test will remain at 30% to qualify for CEWS
- For flexibility, employers will be able to compare their revenue of March, April and May 2020 to the same month in 2019, or to an average of their revenue earned in January and February 2020
- Accrual accounting or cash accounting methods can be used to measure revenue
- The proposed changes make it easier for Registered charities and not-for-profit organizations. They can choose to include or exclude government funding in their revenues for the purposes of applying for CEWS
Q: What is the Canada Emergency Business Account (CEBA)?
A: CEBA provides credit for businesses to pay for immediate operating costs such as payroll, rent, utilities, insurance, property tax, or debt service. It is 100 per cent funded by the Government of Canada.
- It is available to Canadian employers with $50,000 to $1 million in total payroll in 2019, and operating as of March 1, 2020. This includes smaller (i.e., micro) businesses and other eligible employers such as not-for-profits.
- Under CEBA, financial institutions will be able to provide interest-free credit facilities of up to $40,000 to eligible businesses.
- If the loan is repaid by December 31, 2022, 25 per cent (up to $10,000) will be forgiven.
- If the loan is not repaid by December 31, 2022, the remaining balance will be converted to a three-year term loan at 5 per cent interest.
This program is now available at various financial institutions and credit unions
Q: What else is being done to help businesses and non-profits through COVID-19?
A: The following supports are available:
- Businesses and self-employed individuals can defer HST payments until June
- The payment deadline for 2019 taxes owing has been extended to August 31, 2020
- The Small and Medium-sized Enterprise Loan and Guarantee program has been launched to enable up to $40 billion in lending through the Export Development Canada (EDC) and Business Development Bank (BDC). These would be guaranteed loans for small businesses to access if they need greater help than their operational cash flow requirements
More needs to be done to help Small Businesses — the backbone of the economy
Read article: Conservatives Propose to Fast-Track Small Business Wage Subsidy