Feds setup a wage subsidy program for businesses
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To help negate some of the impacts Canadians and our economy will face resulting from the effects of the COVID-19 pandemic, the federal government unveiled additional support through a wage subsidy program for businesses on Friday. Earlier in the day, the Bank of Canada lowered its target for the overnight rate to 0.25% in an unscheduled announcement. These measures come on the heels of the new Canada Emergency Response Benefit (CERB), aimed at providing relief for Canadian workers who have lost their income.
Since the emergence of COVID-19, CREA has been in ongoing discussions with government departments and agencies. We have had meaningful conversations about the unique challenges facing REALTORS® and the potentially devastating outcomes of any interruptions to their day-to-day business.
While working to secure financial help for REALTORS®, we also focused on the needs of small businesses. We have and continue to analyze the measures announced by the government, as well as programs implemented in other jurisdictions, to find innovative solutions relevant to our industry. We discussed possibilities with stakeholder groups across the country to align and coordinate on proposed government action that would provide meaningful assistance to struggling businesses.
The federal government responded to calls for significant action by announcing the following measures:
- The Canada Emergency Wage Subsidy, a 75% wage subsidy for non-profit organizations, charities, and businesses both big and small, retroactive to March 15, 2020. Companies whose business revenues have decreased by at least 30% can apply, while their number of employees has no bearing on eligibility. For those employed by companies affected by COVID-19, the government will cover 75% of their salary on the first $58,700, which is up to $847 per week. More information about the eligibility criteria is expected to be announced by Ministers Morneau and Ng tomorrow. We will update members as information becomes available.
- The Bank of Canada lowered its target for the overnight rate to 0.25.
- A deferral of GST and HST remittances and customs duty payments for businesses, including self-employed individuals, to June 30, 2020.
- The launch of the new Canada Emergency Business Account, which will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs. The program will be implemented by eligible financial institutions in cooperation with Export Development Canada (EDC). Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25% (up to $10,000).
- EDC will guarantee new operating credit and cash flow term loans that financial institutions can extend to Canadian small and medium-sized enterprises (SMEs), up to $6.25 million.
- A co-lending program for SMEs where the Business Development Bank of Canada works with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.
Additional details about these measures can be found on the websites for the Prime Minister of Canada, the Department of Finance Canada, and the Bank of Canada.
The new measures announced are expected to complement the CERB, a taxable benefit that will provide $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19 pandemic. It covers Canadians who have lost their job, are sick, quarantined, or taking care of someone who is sick with COVID-19, as well as working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures.
The government has said the CERB will apply to contract workers and self-employed individuals who would not otherwise be eligible for Employment Insurance. The CERB will also be available to workers who are still employed but are not receiving income because of disruptions to their work situation due to COVID-19. The new benefit will be available through an online portal that is set to launch on April 6, with funds expected to flow within 10 days of applying. More information can be found in last week’s News2Me.
CREA is monitoring the implementation of these programs and will continue to advocate on behalf of REALTORS®. Please monitor your inbox for more important information from CREA.