Last updated: Oct. 8, 2021
Originally published on March 27, 2020.
The following is archived material. Please refer to the federal government for more information.
The government’s measures for business are clearly still taking shape and more detail is expected in the days to come. Nonetheless, the government has outlined in broad strokes how it intends to approach the task of helping large enterprises as well as SMEs.
We’re reviewed the federal support programs and have provided a summary below.
Support for small businesses
The government has established the Business Credit Availability Program (BCAP), which will allow the Business Development Bank of Canada (BDC) and Export Development Corporation (EDC) to provide $10 billion of additional support. Both organizations are working with private sector lenders to improve access to financing for SMEs. This includes finding solutions for dependable business clients who would otherwise have insufficient access to credit. And ensuring the extension of credit is an increase for Canadian businesses and doesn’t displace or substitute private credit.
The near-term credit available to farmers and the agri-food sector will also be increased through Farm Credit Canada.
In addition, to help small businesses avoid lay-offs the government will provide eligible employers with a temporary wage subsidy for a period of three months. The subsidy will be equal to 75% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
Prime Minster Trudeau announced the government will also be offering a new Canada Emergency Business Account to provide loans of up to $40,000 to SMEs that will be interest-free for one year.
Supporting Canadian business through the Canada account
Minister Morneau signalled the government’s intention to draw down on the “Canada Account” that has been historically used to extend financial support to large enterprises on non-commercial terms through EDC (when these kinds of supports align with the national interest). The Minister of Finance is being given the authority to increase the limit of the Canada Account in order to allow the government to provide additional support to Canadian companies through loans, guarantees or insurance policies. We should anticipate the Canada Account to become an integral vehicle for extending this kind of direct government support to large enterprises.
The Minister also mentioned sectors such as oil and gas, air transport and tourism during his press conference. The government’s backgrounder indicates that BDC and EDC will be working with private sector lenders to coordinate credit for individual businesses in some of the most distressed sectors. These measures may include also using the BCAP to supplement private sector lending.
Contact FBC
Have questions about this or other COVID-19 programs for Canadian businesses? Unlimited consultation related to tax matters is a key benefit of FBC Membership. We’re offering a free consult where we get to know your business and determine next steps on saving you time and money. Request a consultation online.
You can also visit our COVID-19 Resource Centre for the latest information for Canadian business owners
Disclaimer: The material above is provided for educational and informational purposes only.