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COVID-19 Small Business Financial Aid Options Experiences

*Updated April 9, 2020*

With so much news coming out about ways both the government, banks and other organizations can help, we’ve tried to consolidate some information so you can navigate the best options for your small business. As the information is changing quickly, we will try to update as it becomes available. We are including personal accounts from us as we receive them of how these processes were. If you have questions, please leave a comment on this blog and we will get back to you.

For some context, our marketing agency supports a small team salaried employees, full time contractors, practicum students and some freelancers. On the week of March 16, we lost about half of our regular marketing clients overnight as their businesses closed. Other projects have been put on hold. Since then, old clients have come back to us wanting to adapt to the new normal and get their businesses online. As of April 9, we have been approved for a loan from the BDC as well as the work sharing. We are monitoring the other aid options as they become available. Below in quotes are our experiences with each financial measure.

Support for your employees

While businesses are cut off from business cashflow or shut down, employee wages become most at risk at a difficult time when additional resources are needed by individuals and families. There are lots of measures in place that can help support.

Temporary wage subsidy – Details TBA

Timeline: Parliament is in discussion, with expectations of applications opening sometime in April.
Criteria:

  • Eligible employers that see a drop of at least 15 per cent of their revenue in March 2020 and 30 per cent for the following months (see Eligible Periods). In applying for the subsidy, employers would be required to attest to the decline in revenue.
  • Any number of employees is allowed

Duration: For a 12 week period from March 15 to June 6, 2020

First announced on March 18, 2020, this temporary wage subsidy is meant to help employers avoid temporary lay offs by offsetting wages. It will be 10% of remuneration in a period of three months, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. This is remitted through many payroll softwares automatically. 

*Update – April 9, 2020*

The subsidy amount for a given employee on eligible remuneration paid for the period between March 15 and June 6, 2020 would be the greater of:

  • 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
  • the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.

No application links available yet.

Service Canada Work Sharing – Available now

Timeline: 30 Days after Application
Criteria:

  • In business 2 years
  • Recent decrease in business activity of approximately 10% (or more)
  • Eligible employees must be permanent full-time or part-time employees, willing to take a reduction in working hours and have paid into Employment Insurance (EI)

Duration: Min 6 weeks – Max 76 weeks with possible extension

*Update – March 27, 2020* Work sharing allowance has been extended to 76 weeks to combat economic downturn. 

This program seems to have existed before any crisis efforts were made available, but all the criteria that it suggests are applicable to the current situation most disrupted businesses have found themselves in. There seem to have been extensions made in response. It is as described: “Work-Sharing (WS) is an adjustment program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer.”

The process requests the following documents:

  1. Application for a Work-Sharing Agreement
  2. Employee list with signatures (available in PDF (8 KB) and Excel (36 KB) format)
  3. Recovery plan template
  4. Two of the following financial documents:
    1. Demonstrates a decrease of the employees’ normal working hours: There has been a decrease in employees’ normal weekly hours from ## hours a week to ## hours a week.
    2. Demonstrate a decrease in demand/orders: There has been a ##% decrease in demand/orders during the last # months in comparison to the same period last year.
    3. Projected sales and/or production figures demonstrating a decrease: The projected sales is forecasted to decrease ##% for the next # months in comparison to the same period last year.

Apply Here

Contact email: EDSC.DGOP.TP.REP-RES.WS.POB.ESDC@servicecanada.gc.ca

What to expect:

This application process was a big different, and required faxing. I used an online fax program to send it through (as I’m not sure who just has a fax machine around anymore). 3 days later, I got an email confirmation that it had gone through and to expect a reply in 15 days. If you have questions, just get an application in through fax, then you will get an account manager who will answer your questions through email or phone. For the 2 financial documents, we submitted a reduced timesheet and an excel sheet with projected sales over the next few months, with declined percentages compared to last year. We have been approved as of March 29th, the process was expedited. We have not yet received a reply on how to create an employer account, but our employees have begun creating their EI accounts. We are expected to submit a weekly hours utilization report through a portal. 

Loans & Credit

Business Credit Availability Program (BCAP) – Available Now

Timeline: ~1 week
Criteria: Eligible credit, in business 2 years, sound financial history
Duration: Term to be determined with BDC

Through the Business Development Bank of Canada (BDC), “Working capital loans of up to $2 million with flexible terms and payment postponements for up to 6 months for qualifying businesses”. Combined with the Export Development Canada (EDC), the government has injected 10 billion worth of loans through the programs to be made available to businesses ASAP.

*Update* March 27, 2020

“The new Small and Medium-sized Enterprise Loan and Guarantee program that will enable up to $40 billion in lending, supported through Export Development Canada and Business Development Bank, for guaranteed loans when small businesses go to their financial institutions to help weather the impacts of COVID-19. This is intended for small and medium-sized companies that require greater help to meet their operational cash flow requirements.”

The process requests the following documents:

  1. BDC Online application by hand
  2. Valid and current government photo identification (passport, driver’s license)
  3. GST number and the business name
  4. Void cheque
  5. Business financial statements (past 2 years), prepared by an external accredited accountant (CA, CGA, CMA, CPA or RPA); OR Income tax returns with the Notice of Assessment, (T1 including the statement of business activities, or T2 including schedules 100 & 125) for the past 2 years for the business.

Apply here

What to expect:

I have applied for this through the BDC portal and got a receipt of submission from an account manager, who apologized for the delay as they usually respond in a few days but are getting an influx as of late. I received an offer letter within 7 days. Please note most forms require a real signature, so a home printer is needed.

Canada Emergency Business Account

*Updated April 9, 2020*

Timeline: Applications available as of April 9, 2020
Criteria:

  • You have an existing business deposit account, with an eligible financial institution (so far, CIBC and RBC have been announced), and your account was opened prior to March 1, 2020.
  • Your business has been a registered and operational business on or before March 1, 2020.
  • The person enrolling for the Canada Emergency Business Account must have the ability and authority to bind the organization.
  • Your payroll expense is between $50,000 and $1 million. To confirm this, you will be required to provide the following information:
    • Your employer account number, as reported at the top of your 2019 T4 Summary of Remuneration Paid.
    • Your employment income reported in Box 14 of your 2019 T4 Summary of Remuneration Paid.
    • A copy of your 2019 T4 Summary of Remuneration Paid, if requested.
  • As per the requirements set out by the Government of Canada, you will agree to use funds from this loan to pay for operating costs that cannot be deferred, such as payroll, rent, utilities, insurance, debt payments and property tax.

Duration:5 year loan, no interest until December 31, 2020

This will include “$25 billion to eligible financial institutions so they can provide interest-free loans to small businesses. These loans – guaranteed and funded by the Government of Canada – will ensure that small businesses have access to the capital they need, at a zero per cent interest rate, so they can pay for rent and other important costs over the next number of months.” 

In his announcement, Trudeau mentioned a loan of $40k would be offered to small business, interest free for 1 year and 10k would be forgivable. Details on this have not been made otherwise available. 

Information from RBC: 

  • A $40,000 government‑guaranteed loan to help eligible businesses pay for operating expenses, payroll and other non-deferrable expenses which are critical to sustain business continuity.
  • Until December 31, 20‍20, the Canada Emergency Business Account will be funded as a revolving line of credit for $40,000.
  • After December 31, 2020, any outstanding balance on the revolving $40,000 line of credit will be converted into a non-revolving 5‑year term loan maturing on December 31, 2025, at which time the balance must be paid in full.
  • No interest applies until January 1, 2023.
  • Commencing on January 1, 2023, interest accrues on the balance of the term loan at the rate of 5% per annum, payable monthly on the last day of each month.
  • If you pay 75% of the balance of the term loan (as at January 1, 2021), on or before December 31, 2022, the remaining balance of your term loan will be forgiven. For example, if your balance is $40,000 on January 1, 2021 and you repay $30,000 on or before December 31, 2022, the remaining $10,000 will be forgiven.
  • If you do not repay 75% of the balance of the term loan (as at January 1, 2021) on or before December 31, 2022, the full loan balance and all accrued and unpaid interest will be due and payable on December 31, 2025.

To prepare:

  • Be enrolled in online banking
  • Your organization’s 2019 T4 Summary of Remuneration Paid
  • Your organization’s employment income, reported in Box 14, and your organization’s employer account number, as reported at the top of the form

Information from other banks: 

  1. CIBC
  2. TD
  3. NBC
  4. Scotiabank
  5. BMO

What to expect:

We have applied for this on April 9, 2020. The process was super simple on RBC’s online banking system. It’s about a 4 page form of acknowledgements and T4 Employer Summary information. Waiting now for a response.

Pay Bills by Credit Card – Available Now

A few recent startups have proposed the idea of paying rent using credit cards to take advantage of valuable point systems offered by many major banks. In these circumstances, this concept might come in handy if your landlord is not able to be lenient in liquidity low situations. Here are two options:

  • Get digs – Free for RBC clients, 1% for other banks, sends your landlord an E-transfer
  • Plastiq – 2.5% fee, available for ANY bill, snail mail cheque

This idea is so smart you might want to even use it crisis-free, you collect points for purchases you can pay off right away!

Grants

Facebook Small Business Grant – TBA

Timeline: TBA
Criteria: TBA
Duration: TBA

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