Small-biz loans receive top up of 50 per cent
Barbara Shecter
The Vancouver Sun
The federal government is boosting the size of its interest-free loan program for small businesses by 50 per cent to help them weather the pandemic, with half of the top-up forgivable if the loan is repaid by the end of 2022.
The new loans were announced in Monday’s economic update and are on top of other sector-specific aid for the hardest-hit industries including tourism and hospitality.
The Canadian Emergency Business Account has already provided loans of up to $40,000 to more than 790,000 non-profits and small businesses ranging from dental practices to delicatessens. The $20,000 top-up of loans, provided through financial institutions and Export Development Canada, will be rolled out in December and can be applied for through March 31.
“Small businesses have been hit hard and have worked hard to stay afloat — through the first wave and now second wave,” the government said in its 237-page economic update Monday.
“These enhancements demonstrate the government’s commitment to stand by small businesses to ensure they can continue to support families and communities across the country.”
Up to $10,000 of each tranche of the loan is forgivable if the loan is repaid by the end of 2022.
Small businesses have been particularly hard hit by government-mandated restrictions to help control the spread of the virus that causes COVID-19.
On Monday, the government announced regionally targeted support for businesses and additional funding for innovative businesses to ensure that “intellectual property rich firms have the support they need to face the challenges presented by COVID-19.”
To that end, the Liberal government proposed adding $250 million over five years, beginning next year, to the Strategic Innovation Fund, which supports “large-scale transformative” projects.
The added funds “will help Canada’s most innovative firms and industries weather the pandemic and grow into world leaders that will help drive growth and create jobs in the Canadian economy,” the government said Monday.
Meanwhile, a top-up of up to $500 million is earmarked for the Regional Development Agencies and the Community Futures Network of Canada, bringing total funding to more than $2 billion in this fund. The feds are also proposing up to $3 million for the Canadian Northern Economic Development Agency that would go toward “foundational” economic development projects to support small businesses in Canada’s territories.
Alla Drigola, director of parliamentary affairs and small business policy at the Canadian Chamber of Commerce, said she was pleased to see the Canadian Emergency Business Account loan program extended and expanded alongside other regional supports.
“The CEBA loan program has been one of the government’s most successful support programs for small businesses,” she said, adding that the funds and liquidity targeted at specific regions and hard-hit sectors including tourism and hospitality “will go a long way towards helping these businesses weather the storm.”
Dan Kelly, president of the Canadian Federation of Independent Business, also welcomed the top-ups and extensions for “key COVID-19 support programs for small business” that “will provide a greater ability to plan for the very uncertain next few months.”
However, he said his association is disappointed the federal government did not include fixes for new businesses and self-employed Canadians, “who remain ineligible for nearly all of the key support programs.”
What’s more, the CFIB is asking the government to delay an upcoming Canada Pension Plan premium increase as small businesses “are in no position to take on new costs at the start of 2021,” Kelly said.
On a smaller scale, the economic update recognized that many Canadians are working from home during the pandemic, and the government has pledged to make it easier to claim home-office deductions. Workers are “taking on increased household expenses to do their jobs,” the document said, adding that many may not be familiar with rules to make such claims or want to take on the administrative burden.
The Canada Revenue Agency will allow employees working from home due to the pandemic to claim up to $400, based on the amount of time working from home, without the need to track detailed expenses.”
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