On Friday October 9th 2020, the Federal Government announced several new subsidies available to small to mid-size businesses and organizations affected by Covid-19, including a new Commercial Emergency Rent Subsidy (“CERS”) program, expanding the Canadian Emergency Benefit Account (“CEBA”) loan program and extending the Canadian Emergency Wage Subsidy (“CEWS”) program to June of 2021.
Detailed legislation and information on how the new subsidies will work and be administered have not yet been released. We will post a link once these are released.
1. New Canadian Emergency Rent Subsidy (CERS) Program – NEW
The government announced the new CERS program that now bypasses landlords and provides direct support to small businesses which are either qualifying tenants or property owners affected by Covid-19 until June of 2021.
This program will subsidize businesses, charities and non-profits who have experienced a revenue drop of at least 70% of up to 65% of commercial rents and interest on commercial mortgages from September 27th 2020 to December 19th 2020.
Qualifying organizations that have had a revenue decline of less than 70% will receive a decreasing level of subsidy in line with their drop in revenues. The details of the program after December 19th 2020 have yet to be announced.
In addition, organizations that have to temporarily shut down due to mandatory public health orders issued by qualifying public health authorities will also be entitled to an additional 25% subsidy of commercial rents and interest on commercial mortgages.
Eligible organizations will be able to apply for this new subsidy on a retroactive basis for periods from September 27th 2020.
2. Expansion of the Canada Emergency Business Account (CEBA) Loan Program
The government also expanded the CEBA loan program to provide eligible businesses and not-for-profits with an additional interest free loan of up to $20,000 (in addition to the original CEBA loan of $40,000).
50% of this additional loan or $10,000 will also be forgivable if the additional loan is repaid by December 31st 2022.
The government has extended the CEBA application deadline from October 31st 2020 to December 31st 2020. As part of the application, a qualifying organization will have to provide an attestation on how they have been affected by Covid-19. We are waiting on further details including clarity on who qualifies for this additional loan and required use of funds.
3. Expansion to the Canadian Emergency Wage Subsidy (CEWS) Program
The government also announced that the current maximum wage subsidy rate of 65% (to a maximum of $734 per employee per week) under the CEWS program will be maintained until December 19th 2020 overriding the previously announced reduction to 40% (to a maximum of $508 per employee per week) for the November claim period and yet to be announced percentage for the December claim period.
The government confirmed that they will maintain the wage subsidy until June of 2021; although the details of the extension, including percentages and maximum subsidy per employee have not yet been announced.
If you have any questions with respect to these announcements, please contact your DMCL Business and Tax Advisor.