On October 9, 2020, new subsidies were announced for small and mid-sized businesses. These subsidies include the new Canada Emergency Rent Subsidy (CERS), expansion of the Canada Emergency Business Account (CEBA) and extension of the Canada Emergency Wage Subsidy (CEWS).
1.Canada Emergency Rent Subsidy (CERS)
The Canada Emergency Rent Subsidy (CERS) has been announced to replace the Canada Emergency Commercial Rent Assistance Program (CECRA) and will provide support directly to tenants. This rectifies a shortcoming in CECRA which places the burden on the landlords who then have to apply for the subsidy.
The program will provide rent and mortgage support to qualifying businesses, charities and non-profits that have suffered a decrease in revenue and have costs such as rent and mortgage interest payments. It will also be available to businesses with more than $50,000 in monthly rent and $20 Million in annual revenue.
The program, will subsidize a percentage of expenses, on a sliding scale, to a maximum of 65% of eligible expenses until December 19, 2020. A business will qualify for a 65% subsidy if revenues drop by at least 70%. Businesses with a lower drop in revenue will get a smaller subsidy. A business can claim a maximum of $75,000 of eligible expenses per location, but this amount is capped at $300,000 across all of a business’ locations.
Since CECRA expired on September 30, organizations can now make claims for CERS retroactively for the period beginning September 27 and ending October 24, 2020.
An additional subsidy of 25% of eligible expenses will be available for organizations which temporarily shut down because of lock downs.
Applying for the Program
Further details on the program including how and when to apply will be announced at a later date.
2.Expansion of Canada Emergency Business Account (CEBA)
Applications for the Canada Emergency Business Account (CEBA) program have been extended to December 31, 2020. It is also being expanded so that it covers business and not-for-profits, that have been seriously affected by the pandemic, to become eligible for CEBA loans.
In this way, the program will provide these organizations access to an interest-free loan of $20,000 in addition to the original CEBA loan of $40,000. Half of this additional financing would be forgivable if it is repaid by December 31, 2022.
Applying for the Program
Eligible businesses will need to apply for support through their primary financial institutions. Once your institution starts offering the expanded CEBA, you will have to contact them to apply for the loan. Keep in mind that each eligible business can only get one CEBA loan.
3.Extension of Canada Emergency Wage Subsidy (CEWS)
The Canada Emergency Wage Subsidy (CEWS) program has been extended to June 2021. Details of this extension including percentages and maximum subsidy per employee are expected to be released in the coming weeks.
It was also announced that the current maximum subsidy rate of 65% (a maximum of $734 per employee) will continue till December 2020. This is a step back from the previously announced reduction to 40% (a maximum of $508 per employee) for the claim period in November 2020.
Applying for the Program
Technical and eligibility details for the extended program are currently being worked out. Legislation will be introduced in the coming weeks that will implement the program and will give information on how eligible employers can apply for it.
For any questions or queries on these matters, feel free to contact the team at Syed A. Raza Professional Corporation.