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Financing Options for Businesses Impacted by COVID-19

Start by Speaking to Your Lender

Banks and other financial institutions across Canada are closely monitoring developments related to COVID-19 and are keenly aware of the anxiety and challenges it is causing. Effective immediately, Canada’s “Big Six” banks (BMO, CIBC, National Bank of Canada, RBC, Scotiabank and TD Bank), as well as credit unions, have made a commitment to work with small business banking customers on a case-by-case basis to provide flexible solutions for these unique challenges.

Many are offering six-month payment deferral for mortgages, and the opportunity for relief on other credit products. Above all else, entrepreneurs seeking financial assistance are recommended to call their lender, discuss their unique situation, and work together on plotting a mutually beneficial path forward.

Elsewhere, the good news is that financing options, both government backed and provided by financial institutions, are increasing each day. Below, you’ll find a brief rundown of the programs available through Business Development Bank of Canada, the Business Credit Availability Program, and finally, the Government of Canada’s Temporary Wage Subsidy Program.

Support Available Through BDC

The Business Development Bank of Canada, a financial institution devoted exclusively to entrepreneurs, has announced a range of financial products for qualified businesses:

  • Working capital loans of up to $2 million with flexible terms and payment postponements for up to 6 months for qualifying businesses;
  • Postponement of payments for up to six months, free of charge, for existing BDC clients with total BDC loan commitment of $1 million or less
  • Reduced rates on new eligible loans
  • Additional details regarding Business Credit Availability Program (BCAP) measures, including industry specific support, to be announced in the coming days

The Business Credit Availability Program

On March 13, 2020, the Government announced the establishment of a Business Credit Availability Program (BCAP) to help Canadian businesses obtain financing during the current period of significant uncertainty.  The BCAP will support access to financing for Canadian businesses in all sectors and regions.

Through this program, Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) will provide more than $10 billion in direct lending and other types of financial support at market rates to businesses with viable business models whose access to financing would otherwise be restricted.

Businesses seeking support through BCAP should contact the financial institutions with whom they have a pre-existing relationship, so that the financial institutions may assess the client’s financial request. If the needs of the client exceed the level of support the financial institution is able to provide, the financial institution will work alongside BDC or EDC to access additional resources the Government has made available under BCAP.

When is the Business Credit Availability Program Active?

This finance program has been activated and is currently available for businesses needing assistance. Small businesses interested in accessing the BCAP should first contact their financial institution, which will contact BDC and/or EDC where appropriate.

Temporary Wage Subsidy Program

The Temporary Wage Subsidy for Employers is a three-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).

Is my Business Eligible?

The Government of Canada understands businesses across all sectors are impacted by COVID-19 so eligibility extends to most small businesses. You are an eligible employer if you:

  • Are a non-profit organization, registered charity, or a Canadian-controlled private corporation (CCPC);
  • Have an existing business number and payroll program account with the CRA on March 18, 2020; and
  • Pay salary, wages, bonuses, or other remuneration to an employee

How Much is the Subsidy?

The subsidy is equal to 75% of the remuneration you pay between March 18, 2020, and June 20, 2020, up to $1,375 per employee and to a maximum of $25,000 total per employer.

Associated CCPCs will not be required to share the maximum subsidy of $25,000 per employer.

For example, if you have 5 employees, the maximum subsidy you can receive is $6,875 ($1,375 x 5 employees), even though the per employer maximum is $25,000.

How to Receive the Subsidy

Once a business has calculated their subsidy, they can reduce their current remittance of federal and provincial income tax submitted to the CRA by the amount of the subsidy. Please note, you cannot reduce the remittance of Canada Pension Plan contributions or Employment Insurance premiums.

For further details on the Temporary Wage Subsidy Program, the Government of Canada has created a helpful Frequently Asked Questions page.

Find Out More About Financing Options

This Thursday, March 26, Small Business BC is hosting a Digital Meetup where our community can come together and discuss financing options and other ideas for helping ease the financial strain of COVID-19. Join us to find out more.