March 19, 2020

Canada’s Economic Response Plan to COVID-19

Note: This content is shared from a well-written article from the Canadian software company Jane App Blog, original found here: https://jane.app/blog/canadian-clinic-small-business-response-plan

This post addresses:

  • New Income Relief for Self Employed Business Owners
  • New Income Relief for your employed or salaried team in Canada
  • New Government Loans for small businesses affected by COVID-19
  • New Mortgage Payment Relief for Individuals
  • New EI rules for Self Employed Business Owners
  • Additional common questions about income relief due to COVID-19

Basic Response Plan

1. Income relief for small business: Emergency Support Benefit

March 18, Trudeau announced the Emergency Support Benefit. For most of you who are self employed or working as a contractor, the Emergency Support Benefit will cover income replacement even though you are not eligible for typical EI coverage. While the exact application process has not been announced yet, we will continue to provide you with updates on the process as they are released by the government.

The other option that is immediately available for those not usually eligible for EI is that parents staying home to care for children due to school closures are now able to apply for the Emergency Care Benefit. This will cover “Parents with children who require care or supervision due to school closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not.” This benefit “Introducing the Emergency Care Benefit providing up to $900 bi-weekly, for up to 15 weeks. This flat-payment Benefit would be administered through the Canada Revenue Agency (CRA).”

More information from the Government of Canada:

Application for the Benefit will be available in April 2020, and require Canadians to attest that they meet the eligibility requirements. They will need to re-attest every two weeks to reconfirm their eligibility. Canadians will select one of three channels to apply for the Benefit:

  1. by accessing it on their CRA MyAccount secure portal;
  2. by accessing it from their secure My Service Canada Account; or
  3. by calling a toll free number equipped with an automated application process.

Emergency Support Benefit

Emergency Support Benefit delivered through the CRA to provide up to $5.0 billion in support to workers who are not eligible for EI and who are facing unemployment. Details are still to be released.

EI Work Sharing Program

This benefit provides EI benefits to workers who agree to reduce their normal working hour as a result of developments beyond the control of their employers, by extending the eligibility of such agreements to 76 weeks, easing eligibility requirements, and streamlining the application process. This was announced by the Prime Minister on March 11, 2020. Details are still to be released.

More information can be found here: Canada Economic Response Plan

More information on the Work-Sharing program and it’s requirements can be accessed here: Work Sharing Program

Even more here: Employment & Social Development for COVID-19

2. Instruct your staff on applying for EI

Immediately, many self-employed small business owners will be able to encourage their staff to apply for EI under Canada’s current requirements. The government recommends applying as soon as possible because waiting more than 4 weeks past the last day of work means the employee could lose their benefit.

Also keep an eye out for future announcements about a Temporary Wage Subsidy. The Government of Canada has announced the following:

To support businesses that are facing revenue losses and to help prevent lay-offs, the government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.

Read more here: Canada Economic Response Plan

3. Small business loan through BDC

Small businesses are now able to apply for Canada’s commitment to offering more than $10 billion in financial support in the form of loans through the Business Development Bank of Canada (BDC) and Export Development Canada that will help your business remain viable and resilient.

BDC just provided this resource: BDC Relief for COVID-19 with the following details about new relief measures for qualified businesses, effective March 18, 2020:

  • Working capital loans of up to $2 million with flexible terms and payment postponements for up to 6 months,
  • Postponement of payments for up the 6 months, free of charge, for existing BDC clients with total BDC loan commitment of $1 million or less,
  • Reduced rates on new eligible loans,

More details will be released in the coming days.

More information here: BDC Special Support

And here: EDC Relief for COVID-19

4. Mortgage relief from your banks

Canada’s six major banks have announced that they will provide financial relief to Canadians in the midst of financial hardship due to COVID-19.

These banks are:

  1. RBC Royal Bank
  2. Scotiabank
  3. TD Bank
  4. CIBC
  5. National Bank of Canada
  6. Bank of Montreal

Support includes:

  • Up to six months of payment deferral for mortgages
  • Relief on other credit products

Contact your bank directly for information on options that are available to you.

5. EI Sickness Benefit for small-business owners

Many self-employed business owners who qualify for EI sickness benefit can take advantage of Canada’s Temporary Income Support if you cannot work because COVID-19 has you:

  • Sick,
  • Under quarantine, or
  • Required to stay home to care for children.

It’s important to note that certain EI requirements have been waived:

  • The one-week waiting period to apply for EI has been waived if you are under quarantine (effective as of March 15).
  • The requirement to provide a medical certificate to access EI has been waived if you qualify for the EI Sickness Benefit.

In addition to this 5-point Response Plan, we’ve gathered some information based on common questions we’re hearing from small-business owners. Some overlap with our plan, but we’ll address them again, briefly.

Common Questions on COVID-19 Income Relief

How do I access income replacement?

This will depend on which income replacement you qualify for. If you qualify for the EI Sickness Benefit, you can apply now EI Regular Benefit

If you don’t qualify for the EI Sickness Benefit, you may still qualify for some assistance that the Government of Canada is in the process of rolling out. In that case, you’ll want to keep you eye on additional details as they are released. This is a great place to check regularly Economic Response Plan along with the other links we’ve provided throughout this document to specific aid programs.

What resources are available if I don’t qualify for EI?

Self-employed, sick or caring for family who is sick or children out of school, but not qualified for sickness EI – there are still some resources you could qualify for.

As a self-employed worker, you’re going to want to look at the Emergency Care Benefit, which provides up to $900 bi-weekly, for up to 15 weeks. It’s a flat payment through the Canada Revenue Agency. See #1 above in our Canadian Small Business Response Plan.

We would also recommend looking into whether the small business loans for which you can apply could cover some level of income replacement for you while you are off of work.

How do I provide for my team?

  1. The first thing to suggest to your staff is to assess whether they qualify for EI Sickness Benefit. The waiting periods have been waived, and many staff who cannot work because of COVID-19 will qualify to start receiving benefits immediately.
  2. For those that do not qualify for the EI Sickness Benefit, you’ll want to direct them to this website and continue monitoring for rollout of additional income support programs offered by the Government of Canada: Economic Response Plan
  3. If your staff have mortgages, you can also suggest they apply for mortgage relief from their bank. See #4 above under our Small Business Response Plan – the mortgage relief will apply to any Canadian with a home loan through one of those 6 banks.

How do I keep paying my bills, business and personal?

  1. As a small business owner, keep an eye out for Canada’s Emergency Support Benefit application, due out in April.
  2. Encourage your staff to apply for EI.
  3. Apply for mortgage relief from your bank – this cost is usually 50-60% of our income, and getting relief for a little while will allow many small business owners to
  4. Check out BC Hydro’s Customer Crisis Fund BC Hydro Crisis Fund. It does require you are already in default, so this might not be for everyone at this time, but definitely a tool to keep in mind in case you come to need it.

What do I need to know about filing my taxes this year?

The Canada Revenue Agency is offering certain deferments for owed taxes. Here’s what they are currently offering:

The Canada Revenue Agency will allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.

The Canada Revenue Agency will not contact any small or medium (SME) businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks. For the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives.

The Liaison Officer service offers help to owners of small businesses to understand their tax obligations. Traditionally available in-person, this service is now available over the phone and will be customizing information during these challenging times by ensuring small businesses are aware of any changes such as filing and payment deadlines, proactive relief measures, etc.

Full details found here: Economic Response Plan

Are the Facebook Small Business Grants Real? And applicable to Canadian Businesses?

Facebook is offering $100 million in cash grants and ad credits for up to 30,000 eligible small businesses over 30 countries. Stay tuned here for more information:

Facebook Small Business Grants

We hope this information can offer some benefit to you and your team during this difficult time.

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