Financial Support to Help Canadian SMBs Impacted by the COVID-19 Coronavirus Crisis

Financial Support to Help Canadian SMBs Impacted by the COVID-19 Coronavirus Crisis

During these extraordinary times determined by the Coronavirus Covid-19 outbreak across the globe, the majority of companies faces difficulties and struggles to maintain their cash flow and retain workforce, and this is no easy task. Within the borders of Canada, perhaps SMBs are the most impacted by this unprecedented crisis. But they are not alone, as the Canadian government comes to their help, taking strong action and implementing efficient financial and economic measures.

Through the COVID-19 Economic Response Plan, aside from the much needed support for individuals, a well defined support program for businesses has been established. It includes specific measures:

  • Wage subsidies and extension of the Work-Sharing Program to avoid layoffs
  • A Business Credit Availability Program (BCAP) through Business Development Bank of Canada (BDC) and Export Development Canada (EDC)
  • Additional credit for farmers through Farm Credit Canada
  • A lowering of Domestic Stability Buffer and the launch of an Insured Mortgage Purchase Program as well as other Bank of Canada actions to support financial stability
  • Additional time to pay taxes and Deferral of Sales Tax Remittance and Customs Duty Payments to ensure more flexibility
  • The waving of ground lease rents to support the air transportation sector

Access to COVID-19 special credit and financial support has been simplified, to ensure a rapid response to the growing needs of companies across all sectors, but a few guide lines for business owners on how to access these solutions and what they offer will come in handy, and FundingHQ is glad to help here. We’re going to take a quick look at the immediate funding options available to combat the COVID-19 impact.

SMBs can access new COVID-19 support interest-free loans of up to $40,000 through the Canada Emergency Business Account (loans can be accessed through their financial institutions, if eligible, in cooperation with Export Development Canada). Moreover, up to 25% of the loan will be forgiven if repaid by December 31, 2022. Also, through the Business Credit Availability Program, they have access to loan guarantees as well as co-lending programs with support from Development Bank of Canada.

To avoid layoffs, companies of all sizes, across all industry sectors can access the Canada Emergency Wage Subsidy program, intended to cover 75% of salaries for up to three months. Only qualifying businesses can access this program. At the same time, the Work-Sharing program has been extended from 38 weeks to 76 weeks. This program provides measures for employers affected by the downturn in business for the forestry and steel and aluminum sectors.

Farmers facing cash flow issues can access the Advance Payments Program through Farm Credit Canada, a federal loan guarantee program for COVID-19 affected businesses, through which they can receive up to $1,000,000 per program year in advances. The Canadian Government comes to help by paying the interest on the first $100,000. Funds can be used for various purposes, such as financial obligations, farm input costs, product marketing and other related costs.

Accessing these support measures require a few criteria:

  • Businesses must be impacted directly or indirectly by the COVID-19 disease. This implies employees layoffs, cash flow issues, production difficulties and more
  • Businesses need to be eligible (by industry sector, number of employees, financial viable prior to COVID-19 impact, and so on).
  • Businesses’ primary financial institutions must be part of the support programs

The application process is pretty straight forward: businesses must contact their primary financial institutions and check available options and fill in and send the available online forms found on the official websites. Once they do that, if they qualify, the financial institution will conduct the due diligence process and provide access to the amount of credit that has been approved. Additional info and details can be found on Canada’s COVID-19 Economic Response Plan official webpage.

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