Question Period Note: SME SUPPORT DURING COVID-19

What is the Government of Canada doing to support small and medium-sized businesses during the COVID-19 pandemic?

• Budget 2021 is a historic investment to address the specific wounds of the COVID-19 recession; it puts people first, creates jobs, grows the middle class, and sets businesses on a track for long-term growth.

• The Government of Canada said it will have Canadians’ backs – and the government will extend business and income support measures through to the fall.

• The government will make investments to create jobs and help businesses across the economy come roaring back.

• The Budget will support almost 500,000 new training and work opportunities, including 215,000 opportunities for youth, support businesses in the most affected sectors, and accelerate investment in digital transformation of small and medium-sized businesses.

SUPPLEMENTARY MESSAGES

• Small businesses are the heart of Canada’s communities and the engine of Canada’s economy.

• COVID-19 has caused businesses across the country, both large and small, to rethink their approaches. Entrepreneurs and owners are looking at more digital options, more creative solutions, and more climate-friendly investments.

Main Street
The government is proposing up to $46.5 million over two years to support main street businesses through shop local initiatives across the country. While $12 million has been announced as part of the Canada United Small Business Relief Fund, $33 million in funding is proposed to support provincial and territorial chambers of commerce to collaborate with key stakeholders in their communities to support the development or enhancement of awareness building campaigns that promote main street businesses in their communities. The remaining funding will support the administration of this initiative by departmental officials.

Canada Digital Adoption Program
Budget 2021 proposes to launch the Canada Digital Adoption Program, a $1.4 billion investment over four years to help as many as 160,000 small businesses move into the digital era. The program will provide micro-grants to smaller, main street businesses to support the cost of technology adoption. It will create training and work opportunities for as many as 28,000 young people to help small businesses adopt new technology.

Canada Recovery Benefit (CRB)
The CRB provides $500 per week to self-employed Canadians, as well as workers who have not lost their job but have seen significant income loss due to COVID-19. The government proposes to provide up to 12 additional weeks of CRB to a maximum of 50 weeks. The first four of these additional 12 weeks will be paid at $500 per week. As the economy reopens over the coming months, the government intends that the remaining 8 weeks of this extension will be paid at a lower amount of $300 per week claimed. To date, 14.4 million Canadians have been approved to receive this benefit. The benefits are available until September 25, 2021.

Canada Recovery Caregiving Benefit (CRCB)
The new CRCB gives income support to employed and self-employed individuals who are unable to work because they must care for their child under 12 years old or a family member who needs supervised care. Budget 2021 also proposes to extend the CRCB an additional 4 weeks, to a maximum of 42 weeks, at $500 per week, in the event that caregiving options, particularly for those supporting children, are not sufficiently available in the interim as the economy begins to safely reopen. Budget 2021 proposes legislative amendments to provide authority for additional potential extensions of the CRB and its associated suite of sickness and caregiving benefits, as well as regular EI benefits until no later than November 20, 2021, should they be needed.

New Canada Emergency Rent Subsidy (CERS) and Lockdown Support
On November 19, 2020, Bill C-9, An Act to Amend the Income Tax Act (CERS and CEWS) received Royal Assent. It includes the new CERS, which will cover up to 65 percent of eligible rent and mortgage-interest support for tenants and property owners and the new Lockdown Support, which will provide an additional 25 per cent through the CERS for qualifying organizations that are subject to a lockdown or partial shutdown. Budget 2021 proposes to extend the rent subsidy and lockdown support until September 25, 20221. It also proposes to gradually decrease the rate of the rent subsidy, beginning July 4, 2021. To date, these measures have provided $2.6 billion in support to Canadian businesses.

Canada Emergency Wage Subsidy (CEWS)
The CEWS was introduced to prevent further job losses, encourage employers to rehire workers previously laid off due to COVID-19, and help better position Canadian companies and other employers to more easily resume normal operations following the crisis. On November 19, 2020, Bill C-9, received Royal Assent and included the extension of the CEWS until June 2021. The maximum wage subsidy rate was raised to 75 per cent for the period beginning December 20, 2020. Budget 2021 proposes to extend the subsidy until September 25, 2021. It also proposes to gradually decrease the subsidy rate, beginning July 4, 2021.

Canada Recovery Hiring Program
Budget 2021 proposes to introduce the new Canada Recovery Hiring Program for eligible employers that continue to experience qualifying declines in revenues relative to before the pandemic. The proposed subsidy would offset a portion of the extra costs employers take on as they reopen, either by increasing wages or hours worked, or hiring more staff. This support would only be available for active employees and will be available from June 6 to November 20, 2021. Eligible employers would claim the
higher of the CEWS or the new proposed subsidy.

Canada Emergency Business Account (CEBA)
The CEBA provides interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced. As of December 4th, 2020, eligible businesses can now access a second CEBA loan of up to $20,000. Half of this additional financing, up to $10,000, will be forgivable if the loan is repaid by December 31, 2022. As of April 15, 2021, more than 864,188 CEBA loans have been approved, representing a total of $46 billion in funds. This includes about 530,473 approved loans for the $20,000 expansion. Announced on October 26, 2020, CEBA is also open to businesses using personal banking accounts. All applicants now have until June 30, 2021, to apply for CEBA.

Business Credit Availability Program (BCAP)
Through the Business Development Bank of Canada’s co-lending program for SMEs, the bank supports financial institutions to offer businesses term loans of up to $12.5 million to assist with operational cash flow requirements. These loans are interest-free for the first year and provided on commercial terms with a 10-year repayment period. In total, 80 percent of each loan will be financed by BDC. As of early February, 753 loans worth $936 million were provided. Additionally, BDC’s mid-market financing program extends loans ranging from $12.5 million to $60 million. As of early February, seven transactions had been completed worth over $200 million.

Through Export Development Canada’s new loan guarantee for SMEs, financial institutions can issue new credit for up to $6.25 million to help companies satisfy cash flow requirements, with 80 percent of each loan being guaranteed by EDC.

Regional Relief and Recovery Fund (RRRF)
The government is increasing the RRRF by $500 million, bringing total funding to over $2 billion, 25 percent of which is earmarked for the tourism sector. This new funding increases the contribution limit from $40,000 to $60,000, based on eligibility. Eligible applicants can get funding up to $40,000, with 25 percent (up to $10,000) forgivable if the non-forgivable portion is repaid by December 31, 2022. Eligible applicants can apply for an additional funding over $40,000 and up to $60,000, with 50 percent (up to $10,000) forgivable if the non-forgivable portion is repaid by December 31, 2022.

Budget 2021 proposes to extend the application deadline for RRRF to June 30, 2021. It also proposes to provide up to $80 million in 2021-21, on cash basis, for the Community Futures Network of Canada and regional development agencies.

Highly Affected Sectors Credit Availability Program (HASCAP)
As part of the HASCAP, the government, through financial institutions, is offering guarantees on low-interest loans of 4 per cent, between $25,000 and $1 million, to help businesses heavily affected by COVID-19 with their day-to-day business operating costs. Hard-hit businesses with multiple entities under related ownership, could be eligible for up to $6.25 million. Qualifying businesses will benefit from repayment terms of up to 10 years, and may postpone principal payments for up to the first 12 months of the loan.

CanExport SME program
On November 3, 2020, Minister Ng announced that with international travel restricted due to COVID-19, the CanExport SMEs program is pivoting to now help small businesses.

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