Small businesses welcome rent relief, CEBA, and wage subsidy changes
October 9, 2020, 12:22 pm
The Canadian Federation of Independent Business (CFIB) welcomes today’s announcement of a new rent relief program as well as extensions and expansions of the CEBA loan program and the wage subsidy (CEWS) for small businesses impacted by COVID-19.
Rent
The new Canada Emergency Rent Subsidy, would provide rent and mortgage support until June 2021 for qualifying organizations affected by COVID-19.
The rent subsidy would be provided directly to tenants, while also providing support to property owners. The new rent subsidy would support businesses, charities, and non-profits that have suffered a revenue drop, by subsidizing a percentage of their expenses, on a sliding scale, up to a maximum of 65 per cent of eligible expenses until December 19, 2020.
Organizations would be able to make claims retroactively for the period that began September 27 and ends October 24, 2020.
“We are particularly pleased the government has delivered on CFIB’s three major recommendations for rent support, ensuring the program is independent of landlord participation, continues for the months ahead and provides support to businesses with revenue losses on a sliding scale,” said Laura Jones, CFIB’s executive vice-president. “The additional 25 per cent coverage for businesses facing closures due to public health orders is also good news.”
Rent relief is critical to the future of many Canadian small businesses. The government’s original Canada Emergency Commercial Rent Assistance (CECRA) program was deeply flawed and left too many businesses without the help they badly needed. When it ended at the end of September, 47 per cent of small business tenants needed rent relief but were not able to access it. With only 30 per cent of firms back to normal revenues, it is more important than ever than ever that small businesses have support to cover their fixed costs such as rent.
However, CFIB is disappointed that government has not created a retroactive pathway to access funds for businesses that met the 70 per cent CECRA revenue loss criteria from April to September, but whose landlord chose not to apply. “Many businesses have taken on tens of thousands of dollars in new debt to stay afloat during the last six months and they should not be left to deal with it with no help,” Jones concluded.
CEBA
An expanded Canada Emergency Business Account (CEBA),would enable businesses and not-for-profits eligible for CEBA loans to access an interest-free loan of up to $20,000, in addition to the original CEBA loan of $40,000.
Half of this additional financing would be forgivable if repaid by December 31, 2022.
Additionally, the application deadline for CEBA is being extended to December 31, 2020.
Further details, including the launch date and application process will be announced in the coming days.
CFIB said it is pleased government has agreed to expand the CEBA loan program by $20,000 with an additional $10,000 forgivable in the days ahead.
“CEBA has been a critical lifeline to many small firms and offers the benefits of flexibility to be used for several purposes,” said Dan Kelly, CFIB president. “But far too many very small firms have slipped through cracks in the program. Firms without business bank accounts still do not have access to the program despite repeated promises from government. And those without payroll still struggle to have access to the program due to the restrictive conditions and giant administrative delays. This needs to change.”
CEWS
The Canada Emergency Wage Subsidy will be extended until June 2021. The subsidy would remain at the current subsidy rate of up to a maximum of 65 per cent of eligible wages until December 19, 2020.
It is good news that government will maintain the wage subsidy at a maximum of 65 per cent until December 19th, says CFIB
“This will help small firms know how much help this critical program will deliver in the months ahead to allow them to determine how many staff they can afford to hire, retain or call back,” Kelly said.
Small businesses are encouraged by the Finance Minister and Deputy Prime Minister Chrystia Freeland’s willingness to listen carefully to their concerns and openness to their feedback. CFIB looks forward to working with Minister Freeland and the federal government to make sure the program changes meet the needs of as many small businesses as possible.
Additional support for further shut-downs
“With fears of a second wave leading to further business closures, it is absolutely critical that the federal and provincial governments find ways to provide full economic supports for affected firms,” Kelly said. “These new federal measures need to be followed by extended commercial eviction protection and additional provincial supports as the Quebec government has announced in recent days. No firm should be forced into bankruptcy due to an order to close their doors from government.”