This morning, the government announced a 75 percent wage subsidy for qualifying small and medium businesses, for up to a maximum of three months, a substantial increase from a 10 percent wage subsidy announced last week. This would be retroactive to March 15, 2020. There was no indication if the $25,000 limit will be increased.
The Canada Emergency Response Benefit for eligible individuals remains unchanged at $2,000 per month.
Storefront businesses will now have access to the newly announced Canadian Emergency Business Account. This will provide up to $40,000 loans to qualified businesses that will be interest-free for a year and may have up to $10,000 forgiven if future conditions are met.
An additional $12.5B will be made available through both Business Development Canada (BDC) and Export Development Canada (EDC) for the Business Credit Availability Program that is targeted to small and medium-sized businesses. This program will continue to be accessed through BDC/EDC and business banking channels.
Another new announcement was a deferral of GST/HST and import duties and taxes until June.
More details on these four initiatives are planned to be released Monday.
Also announced today was the Bank of Canada reducing its benchmark rate by 0.5% to 0.25%. This is in addition to an announced purchasing of $5B of Government of Canada bonds per week
From the desk of Cameron Holmstrom, Consultant
Through this suite of announcements today, the federal government is continuing to respond to the immediate needs of Canadians in these difficult times and altering previously announced initiatives as required. Many small business owners and advocacy groups, like the Canadian Federation of Independent Business (CFIB), had noted that the original 10% subsidy was not sufficient and would not help employers keep their staff. This move today speaks directly to those concerns and meets the requests made by the CFIB and NDP Leader Jagmeet Singh within the past week. The increased wage subsidy now puts Canada in line with many other G-20 nations, who have instituted similar measures to help keep their citizens employed in these difficult times.
The announcement of government-backed, interest-free emergency loans to small businesses and deferral of HST/GST payments are other measures that will help ease the burden on small business owners in these difficult times. These measures will help businesses keep more cash on hand while leveraging the power of the government to help businesses cope.
Given the nature of the current national health crisis, the Federal Government has shown that they are ready to respond and react to not only the circumstances as they occur but to modify and change their responses to those circumstances as required. We should expect to see that approach continue going forward and expect to see the government act in a similar way to respond to needs as they arise.