Federal government promises more loans to aid small businesses
The federal government has announced additional loans available to aid small businesses impacted by COVID-19.
Last month the government introduced the Canada Emergency Business Account (“CEBA”), which allows banks to provide government-guaranteed loans of up to $40,000, $10,000 of which is forgivable. The loans are interest-free for one year. Qualifying organizations must demonstrate that they paid between $50,000 to $1 million in total payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25%. Since the launch of the CEBA on April 9, 2020, more than 195,000 loans have been approved by financial institutions, extending more than $7.5 billion in credit to small businesses.
On April 16, the Prime Minister’s office announced that the CEBA will be expanded to businesses that paid between $20,000 and $1.5 million in total payroll in 2019. This new range replaces the above range (between $50,000 and $1 million).
The Prime Minister’s office also announced that the government intends to introduce the Canada Emergency Commercial Rent Assistance (“CECRA”) for small businesses. The program will provide loans, including forgivable loans, to commercial property owners who in turn will lower or forgo the rent of small businesses for the months of April (retroactive), May, and June. Implementation of the program will require a partnership between the federal government and provincial and territorial governments, since property owner-tenant relationships are generally a provincial/territorial matter. More details will be provided soon.