UPDATED April 8* & April 15**, 2020
Has COVID-19 impacted your small business? Probably!
If not, you’re in the minority. There are very few industries that haven’t felt the strain caused by the coronavirus. Even “essential” businesses that remain open like grocery stores have needed to make some significant changes, like adjusting for supply chain demands, increasing health and safety precautions, and working long and exhausting hours as people panic shop for food and supplies.
If you own a “non-essential” business, however, you have likely been forced to shut down operations until further notice. The Ontario Government issued a State of Emergency, releasing a list of all non-essential businesses on March 24th. That list is being updated as circumstances change. (To find out if your business is considered non-essential, check this list).
No one knows just how long we’re going to be physically distancing and that’s putting incredible strain on small businesses. Thankfully, the government is offering some ways you can augment your income and help support your small business throughout the crisis.
Federal Support – Canada Emergency Response Benefit
On March 25th, the federal government announced they were streamlining their emergency benefits programs into a single benefit, the Canada Emergency Response Benefit, or CERB. This $24-billion fund will deliver money straight to Canadians who have either lost employment or had their income significantly curtailed because of COVID-19.
The Benefit is available to workers:
- Residing in Canada, who are at least 15 years old;
- Who have stopped working because of reasons related to COVID-19 or are eligible for Employment Insurance regular or sickness benefits or have exhausted their Employment Insurance regular benefits between December 29, 2019 and October 3, 2020;
- Who had employment and/or self-employment income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and,
- Who have not quit their job voluntarily.
- When submitting your first claim, you cannot have earned more than $1,000 in employment and/or self-employment income for 14 or more consecutive days within the four-week benefit period of your claim.
The program will be until October 3rd, 2020.
As of April 6th, you can start to apply for the benefit, but because they’re expecting so much demand, they’ve created a system based on your birth month, so as not to overload their system:
- People born January, February, March – apply on Mondays starting April 6th
- People born April, May, June – apply Tuesdays starting April 7th
- People born July, August, September – apply Wednesdays starting April 8th
- People born October, November, December – apply Thursdays starting April 9th
On Fridays, Saturdays, and Sundays anyone can apply.
You can apply for CERB through either Canada Revenue Agency or Service Canada.
Unlike EI, which has strict requirements, the criteria for applying for the CERB are much broader. If you applied for EI after March 15th, your application will be automatically transferred to the CERB program.
There are other federal measures currently in the works for businesses, including the Canada Emergency Wage Subsidy, which would cover 75% of salaries for qualifying businesses (ones that have lost at least
30% 15%* of their revenue compared to last year) for up to three months. There is also another program currently in place, Temporary Wage Subsidy for Employers, that covers 10% of remuneration, paid from March 18th to before June 20th.
Another way the federal government is helping businesses manage the tax burden is by allowing businesses to defer the payment of any income tax (until August 31st) owing on or after March 18th and before September 2020. There will be no interest or penalties on those amounts between those periods.
There are many other programs the federal government is putting into place to help businesses, industries, and individuals manage throughout the COVID-19 crisis. You can find more about them here.
The Ontario government is also helping small businesses during this time. They’ve announced several measures to help mitigate the impact of the crisis, and there are more on the way.
Currently, there’s a provincial tax deferral on the Employer Health Tax, Tobacco Tax, Fuel Tax, Beer Tax, Mining Tax, and other provincially-administered taxes until August 31st. These deferrals will be without interest or penalty. WSIB premiums will be deferred until August 31st as well. The Employer Health Tax exemption threshold will be increased to $1-million for the next year, and property tax reassessments being conducted for the 2021 tax year have been postponed.
Another support measure that will help individuals, small businesses, and families is a drop in electricity prices, which have been placed at “low peak” for all hours.
An additional COVID-19 measure being planned for the near future is an interest-free loan program offered through Canadian banks for small businesses. Currently, the federal government and banks are still hammering out the details of the program, which will provide small businesses interest-free loans of up to $40,000 until the end of 2022. These loans will be guaranteed and funded by the federal government, up to $25-billion. To be eligible, small businesses must prove they had an annual payroll of $50,000 to $1-million in 2019.
Up to 25% of the loan (up to $10,000) will be forgiven so long as the borrower repays the balance before December 31st, 2022. If a small business is unable to pay back their loan by the end of 2022, the loan will then be converted to a three-year loan at a 5%-interest rate.
While these measures are going to be very helpful to individuals and small businesses all over Canada and Ontario, they will not solve the economic crisis. With record levels of unemployment due to COVID-19 layoffs and an unstable stock market, it’s going to be months at best before we get a firm grip on the full financial implications of the pandemic. However, until that point, we do have these measures to help us navigate the situation and keep our businesses afloat.
If you find yourself confused about how these emergency financial measures will impact your personal and small business bottom line, contact The Number Works today. We can help you understand your numbers so you can weather the storm and come out the other side.