April 1, 2020
The Government of Canada made several announcements today and clarified aspects of the COVID-19 Economic Response Plan designed to help businesses and laid off employees in the coming weeks and months.
The Plan is broken into 3 elements:
- COVID-19 Emergency Wage Subsidy (CEWS)
- COVID-19 Emergency Response Benefit (CERB)
- Small and Medium-sized Enterprise Loan and Guarantee program
I have summarized the main points of the three elements below. I hope you will find it informative. I will keep you apprised of any updates in regards to this plan or any other programs.
COVID-19 Emergency Wage Subsidy (CEWS)
This measure is intended to ensure that workers are able to count on a source of income through this difficult time. It will enable employers to re-hire workers previously laid off, and to keep those who are already on payroll, so that Canada’s workforce and supply chains are able to return from this crisis in a strong position.
CEWS
- Applies to eligible employers who suffer a drop in gross revenues of at least 30 per cent in March, April or May, when compared to the same month in 2019
- Eligible employers include employers of all sizes and across all sectors of the economy, with the exception of public sector entities.
- CEWS will apply at a rate of 75 per cent of the first $58,700 normally earned by employees – representing a benefit of up to $847 per week.
- The program will be in place for a 12-week period, from March 15 to June 6, 2020.
- An eligible employer’s entitlement to this wage subsidy will be based entirely on the salary or wages actually paid to employees.
- All employers will be expected to at least make best efforts to top up salaries to 100% of the maximum wages covered. Employers will have to attest to doing everything they can to pay the remaining 25%
- Severe penalties for companies trying to take advantage
CEWS for Non-Profit companies and Registered Charities
- For non-profit organizations and registered charities similarly affected by a loss of revenue, the government will continue to work with the sector to ensure the definition of revenue is appropriate to their circumstances.
- The government is also considering additional support for non-profits and charities, particularly those involved in the front line response to COVID-19. Further details will be announced in the near term.
CEWS application
- Eligible employers will be able to access the Canada Emergency Wage Subsidy by applying through a Canada Revenue Agency online portal.
- More details regarding how to apply for the program will follow.
Organizations that do NOT qualify for CEWS
- Those organizations that do NOT qualify for the Canada Emergency Wage Subsidy may continue to qualify for the previously announced wage subsidy of 10 per cent of remuneration paid from March 18 to before June 20, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
More information can be found at: https://www.canada.ca/en/department-finance/news/2020/04/government-announces-details-of-the-canada-emergency-wage-subsidy-to-help-businesses-keep-canadians-in-their-jobs.html
COVID-19 Emergency Response Benefit (CERB)
The CERB will provide $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19 pandemic as well as contract workers, freelance workers and self-employed individuals.
The CERB is available to:
- wage earners who have lost their job, are sick, quarantined, or taking care of someone who is sick with COVID-19
- working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures.
- Freelance and laid off employees
- Applications open beginning April 6 online at Canada.ca. Details will be announced
- Applicants can choose to have payments by mail (will receive payment in 10 days) or direct deposit (will receive payment in 3-5 days)
- Persons receiving CERB will be required to confirm every month that they are still out of work
Employees receiving CEWS are not eligible for CERB.
Employees who have already applied for EI do NOT need to register on April 6.
More information can be found at: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/covid-19-benefits-credits-support-payments.html
Small and Medium-sized Enterprise Loan and Guarantee program
The new Small and Medium-sized Enterprise Loan and Guarantee program is intended for small and medium-sized companies that require greater help to meet their operational cash flow requirements.
It will enable up to $40 billion in lending, supported through Export Development Canada (EDC) and Business Development Bank (BDC), for guaranteed loans when small businesses go to their financial institutions to help weather the impacts of COVID-19.
In order to be eligible, businesses must have been impacted directly or indirectly by recent events and have been financially viable prior to the impact from COVID-19.
Small and Medium-sized Enterprise Loan and Guarantee program will operate as follows:
- Small and medium-sized businesses can get support through a new Co-Lending Program that will bring the BDC together with financial institutions to co-lend term loans to these businesses for their operational cash flow requirements
- Eligible businesses may obtain incremental credit amounts up to $6.25 million, 80 per cent of which would be provided by BDC, with the remaining 20% by a financial institution
- EDC will also provide funding to financial institutions so that they can issue new operating credit and cash flow term loans of up to $6.25 million to small and medium-sized businesses, as a result of a new domestic mandate enhancing EDC’s role in supporting Canadian businesses through COVID-19 crisis.
- These loans will be 80 per cent guaranteed by EDC, to be repaid within one year.
- Eligible companies could obtain up to $12.5 million through these two lending streams.
More information can be found at: https://www.bdc.ca/en/pages/special-support.aspx