We’ll continue updating this page with resources and information as new details emerge on how Canadian leaders and businesses are responding to COVID-19.
With canceled events, few customers and supply chain disruptions, small businesses are expected to take a hit during the coronavirus outbreak. Thankfully, the government has decided to give the economy a helping hand by providing billions of dollars in extra loan money to Canadian business owners. Your business could also qualify for other sources of financing like private loans and business lines of credit.
Where to find a loan during the coronavirus outbreak
In light of the coronavirus pandemic, the federal government has given the BDC and EDC $10 billion to increase loans to Canadian businesses. The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) will be coordinating with private lenders to strengthen available financing and credit solutions for Canadian businesses.
Additionally, more businesses will qualify for loans because of actions taken by the Office of the Superintendent of Financial Institutions (OSFI) to lower the Domestic Stability Buffer to just 1.00% of total risk-weighted assets (as of July 1, 2020) – this means that the government is allowing banks to make riskier loan decisions so that more businesses can meet basic lending criteria for financing.
See what funding your business could qualify to receive using Canada Startups’ Funding Calculator Tool, which searches over 1,500 government and private financial opportunities currently available in Canada.
With a small business loan from the BDC, you can get up to $100,000.00 online to fund any business expense. There are no application fees, and no personal assets are used to secure the loan (but you will have to provide a personal guarantee). Repayment terms are 5 years, and you can postpone capital payments for 6 months. There are no penalties for paying off your loan early. Eligibility requirements include:
You must be a Canadian citizen or permanent resident
You must have a Canadian-based business
Your business must be generating revenues for at least 24 months
You must have a good credit history
You must be at least the age of majority in the province or territory where you live (either 18 or 19 years old)
The BDC offers a very competitive rate on small business loans. The interest rate is normally the BDC’s Floating Base Rate of 4.55% plus a variable rate of 1%-12%. However, as of March 31, 2020, the BDC has temporarily lowered the interest rate to 2.80% in light of COVID-19. (The interest rate is subject to change without notice).
If you need more than $100,000.00 in the short run (to cover expenses like payroll or debt payment or to take advantage of suppliers’ discounts), the BDC offers a working capital term loan. A working capital loan is also a good compliment to an existing business line of credit. Repayments can be postponed and are set to match your business’s cashflow pattern. No personal assets are used to secure the loan.
Have unpaid, but verified purchase orders? Use these to back a short-term loan to get funds faster. Purchase order financing can give you the security to take on larger contracts, grow into larger markets and preserve your working capital.
Get financing worth up to 90% of the value of your purchases orders, and enjoy interest-only payments with a larger balloon payment towards the end of the term. Repayment plans are set to the terms of your POs. Additionally, purchase order financing through BDC allows you to remain discrete – your customers will still pay for their orders by sending funds directly to you, not BDC.
Export Development Canada (EDC)
The EDC is an export credit agency that helps Canadian businesses meet demands from international buyers. The EDC offers small business solutions including insurance and financial services for Canadian exporters, investors and their international customers. EDC financing is not suitable if you need support for business dealings with domestic customers.
EDC provides flexible lending solutions including:
Bilateral loans. Funds issued by one lender.
Syndicated loans. Funds issued by a group of lenders.
Club deals. Multiple private equity firms pool resources to purchase equity ownership in a business.
Whether or not your business is approved is generally based on the financial health of your business, your business plan and other reports. (Remember, though, that government initiatives in light of coronavirus will make it easier than usual for businesses to get these types of loans.) The cost of your loan is based on the risk level and the market involved.
Buyer financing makes it easier for international customers to buy from Canadian businesses by providing them with loans to pay for their orders. Under this arrangement, you (the business owner) send EDC an export contract and credit information on your buyer. If EDC approves the loan, it issues funds to your buyer and remains responsible for collecting payment from the buyer and sending it back to your business.
This protects your business from much of the risk of trading internationally, and helps your enterprise to expand into new markets around the world.
EDC structured and project financing provides a recourse when limited financing options are available for massive, complex projects that involve multiple parties and large amounts of capital. This option is suitable if:
Your project generates revenues of more than $50 million.
You have export activities outside of Canada.
You need structured financing in order to execute a large-scale global project in the extractive, power, utilities, infrastructure or industrial sector.
Your project clearly demonstrates economic benefits to Canada.
EDC provides highly-experienced guidance through each phase of the lending process including advising, arranging and underwriting financing.
Business Credit Availability Program (BCAP)
The government will provide the BDC and EDC with funds to partner with private financial institutions and cooperatively provide loans to small and medium-sized businesses that have been impacted by COVID-19. The BCAP has 5 individual components:
Until September 30, 2020, eligible businesses can get loans of up to $12.5 million from the BDC, 80% of which is covered by the BDC, while the other 20% is covered by lending financial institutions.
Until September 30, 3030, the EDC is working with lending financial institutions to guarantee 80% of loans as high as $6.25 million.
Medium-sized businesses with annual revenues of approximately $100 million (not a strict rule) may be able to get loans of $12.5 million to $60 million to remain liquid and continue operating. Loans are offered in partnership with the BDC and private financial institutions. Details on when these funds will become available have not yet been released.
The federal government is guaranteeing up to $25 billion in interest-free loans to eligible small businesses (this includes sole business owners and operators, contractor-reliant business, farms and family-owned businesses that pay employees in the form of dividends). This will help such companies cover costs in the coming months as the economic impact of COVID-19 continues to unfold. Lines of credit up to $40,000 will be available with a 0% interest rate to businesses that spent between $20,000 and $1,500,000 total on payroll in 2019.
Once approved, businesses should be able to receive funds within a few days. If your loan is repaid by the end of 2022, then 25% of it will be forgiven. Applications are now available through your financial institution.
Canadian-based businesses that produce oil and gas, oilfield service companies and midstream providers may qualify for loans ranging from $12.5 million to $60 million to cashflow and remain operational. Details on how and when to apply have not yet been announced.
To qualify for financing, businesses have to have been financially viable prior to the coronavirus outbreak and must be directly or indirectly hurt by it now. Business owners should contact their financial institutions, which will oversee the application and approval process for available loan programs, administer loans and supervise repayment.
Large Employer Emergency Financing Facility
Large Canadian businesses that (1) have a significant impact on the economy, (2) make at least $300 in annual revenue, (3) need at least $60 million in financing and (4) are not in the financial sector can get term loans of $60 million or more from the government to cover cashflow needs for the next 12 months. To qualify, businesses must have significant operations in Canada and support a significant workforce in Canada.
Funds are meant to address needs arising as a result of COVID-19, not previously existing insolvencies or restructurings. No maximum loan amount is specified on the government’s website. Applications became available May 20 – visit the Canada Development Investment Corporation (CDIV) website for more details.
Canada Emergency Wage Subsidy (for small & large businesses, nonprofits & charities)
As of April 27, 2020, eligible small and large businesses as well as nonprofits and charities can apply to receive a 75% wage subsidy until the end of August, retroactively applied from March 15, 2020.
This means that employees of subsidized businesses can expect to have 75% of their incomes covered up to a maximum of $58,700 (up to $847/week).
The following information regarding eligibility has been provided:
Business revenues must have decreased by at least 30% as a result of coronavirus. Business owners can use sales figures from January and February (2020) to demonstrate their losses. Additionally, they only need to show a 15% drop in revenue during March, given that most businesses didn’t feel the effects of COVID-19 until half-way through the month.
The number of employees businesses have is irrelevant. This subsidy is to help both large and small businesses.
Businesses are expected to utilize this benefit on a good-faith basis. If business owners have the funds to cover employees’ incomes, they should provide this. The Prime Minister also encourages subsidized businesses to use funds to hire back employees that have been laid off over the past few weeks due to coronavirus.
Besides helping to prevent layoffs and work reductions, this aggressive financial measure will also spare employers from having to withhold and remit income tax on their employees’ wages.
The Bank of Canada has lowered the prime interest rate several times to help stave off economic downturn as a result of coronavirus. Some banks have similarly lowered prime lending rates to make it more affordable for business owners to afford financing for their enterprises. Such institutions include the Royal Bank, TD, Scotiabank, Bank of Montreal, CIBC and Desjardins.
Additionally, the OSFI has lowered the amount of cash major banks are required to hold back for emergencies, thereby freeing up more funds for banks to lend out. It may therefore be a good time to speak to your local bank representative about credit solutions for your business.
As the impact of coronavirus has unfolded, provincial leaders have come up with ways to mitigate the economic impact of the crisis. This involves rolling out financial support plans to aid businesses that are struggling and people who can’t work.
The Quebec government is offering hundreds of dollars a week to workers in quarantine and is planning to stimulate the economy through infrastructure projects that will increase the capacity of the health care network, create jobs and (ideally) encourage spending.
In Ontario, businesses don’t have to file and make payments for the majority of provincially-administered taxes for 5 months, between April 1, 2020 and August 31, 2020. Additionally, workplaces can defer payments to the Workplace Safety and Insurance Board (WSIB) for up to 6 months. Many businesses have also received a discount rate on electricity.
The government in British Columbia is allowing businesses to defer electric, gas and hydro bills for up to 3 months without penalty. The school property tax rate has also been reduced for commercial property owners and tenants, lowering commercial property tax bills by 25% on average. Tax filing and payment deadlines for many taxes have also been moved to September 30, 2020 to compliment the federal government’s extended tax deadlines.
Check out your provincial government’s website to learn more about extra support opportunities that may be available.
Regional Relief and Recovery Fund
The government is providing $1 billion to help regional businesses such as those in the tourism sector and in seasonal industries. Funds will be offered flow through the Atlantic Canada Opportunities Agency, Canada Economic Development for Quebec Regions, FedDev Ontario, FedNor, Western Economic Diversification Canada, and CanNor. Check with the regional agency in your area to learn more.
Are lenders offering assistance during the outbreak?
Financial officials from the Canadian government have been in direct contact with representatives from some of the nation’s biggest banks (BMO, CIBC, National Bank of Canada, RBC, Scotiabank and TD) and have been assured that these banks will be flexible with making arrangements to help individuals affected by coronavirus. Requests will reportedly be evaluated on a case-by-case basis. Manulife Bank has similarly announced it will be offering solutions for its customers who’ve been impacted by coronavirus.
If coronavirus has made it difficult for you to make payments to your bank, speak to a bank representative to find out what options may be available to you. You could end up getting credit relief or even deferred mortgage payments for up to 6 months. Solutions will vary between financial institutions and are based on individual circumstances.
Business grants (and other financial opportunities)
Innovation Canada has a website has a large database of programs and services – including grants – available to businesses from private and public sources. Use the search tool to find opportunities that could suit your business. Resources include:
Partnerships and collaboration opportunities
Advice and expertise
Additionally, businesses – including nonprofits and charities – can get a 75% rent decrease from April-August (2020) under the Canada Emergency Commercial Rent Assistance plan. The cost of this plan is being split 75/25 between the government and property owners and is available in every province and territory. To be eligible, your business must be paying $50,000 per month or less on rent and you must have temporarily closed or have had revenues decrease by at least 70% compared to your pre-coronavirus earnings. Applications are now available on the Canada Mortgage and Housing Corporation website.
How can the POST Promise program help my business re-open after the lockdown?
On June 9, 2020, Prime Minister Justin Trudeau announced the POST Promise program to help businesses and customers stay safe during the initial phases of reopening. The program consists of a declaration that participating businesses will commit to implementing and practicing 5 key steps to keep workplaces safe:
Maintain physical distancing. The distance should be at least 2 metres or around 6.5 feet.
Stay home if unwell. Encourage employees to monitor their health.
Practice respiratory etiquette. Cough or sneeze into your arm and wear a face mask where social distancing is impossible.
Clean and disinfect regularly.
Wash and sanitize hands. Hands should be washed for at least 20 seconds.
The program is voluntary. Businesses that choose to commit can display the POST Promise logo to show customers that best practices are being followed to keep everyone safe.
The program is NOT a certification or official seal of approval from any regulatory body – it’s merely meant to provide a signal by which businesses and customers can comfortably interact. Visit postpromise.com to learn more.
6 ways to protect your business and employees during the outbreak
Keep your bottom line and employees safe by taking these precautions, as recommended by public health experts:
Ask employees to stay home. Health experts advise businesses to require sick employees to stay home. You may want to invest in protective face masks for your employees to prevent the spread of infected respiratory droplets. Allowing employees to work from home is a good way to prevent the virus from spreading and keeping your workforce operational.
Improve office cleaning standards. Have your cleaning crew do a deep clean with alcohol-based disinfectants, making sure they wipe down frequently touched surfaces like door handles, bathroom fixtures, desks and keyboards.
Leave reminders of hygienic best practices. Hang posters reminding employees of best practices for staying clean, like frequently washing hands, using hand sanitizer, coughing and sneezing into tissues, and avoiding touching their faces.
Bend company etiquette rules. Consider holding meetings via video calls instead of in person, encouraging employees to avoid handshakes and loosening up work-from-home policies if at all possible. Check out our guide to learn more about transitioning your business to a work-from-home model during coronavirus.
Encourage direct deposit. Ask employees who receive paper pay cheques or cash to sign up to have their salary electronically deposited into their bank accounts.
Apply for financing now. Even if you’re not totally sure you’ll need it. You’ll have an easier time getting approved for financing before your business has been affected. Consider taking out a line of credit, which you can draw from as needed to cover expenses.
How long is the coronavirus outbreak expected to last?
It’s still unclear how long the coronavirus is expected to last. Many viruses decrease during warmer months, but this may not always the case. And even if the rate of COVID-19 cases decrease in the summer, there’s a chance it’ll come back in the fall.
Look to your local, provincial and federal government if your business has already been hurt by the coronavirus and needs funds. If you’re afraid your business might be impacted, now is the time to apply for financing. Get started on your search with our guide to business loans.
Frequently asked questions
Businesses including self-employed people are allowed to defer GST/HST payments and customs duties for imports until June.
The deadline for filing individual taxes has been moved to June 1, 2020. The deadline for paying any amounts that become owing between March 18, 2020 and September 1, 2020 has been moved to September 1, 2020 – during this time period, no interest or penalty fees will be applied to taxes (including installments) that you owe the CRA. The deadlines for filing T2 Corporate Income Tax Returns or T3 Trust Income Tax Returns have been moved to September 1, 2020.
Where there is difficulty in making payments, the CRA is very flexible in arranging payment plans. Affected taxpayers may also be eligible to receive relief by submitting Form RC4288 Request for Taxpayer Relief – Cancel or Waive Penalties or Interest; requests are evaluated on a case-by-case basis.
If you’re infected with coronavirus…
The government is prioritizing processing EI applications for people with coronavirus. If you become infected with coronavirus and get quarantined, the usual 1-week waiting period on receiving your first EI payment will be waived. Essentially, this means you don’t have to pay a deductible and will receive an extra week’s worth of EI benefits. If you’re in quarantine, call the government’s toll-free number to learn more.
If your business has experienced a financial downturn…
If you aren’t infected but can’t work because of the impact coronavirus has had on your business, you and your employees may be eligible for income support under the government’s Work-Sharing program. This program is available to help employers avoid layoffs when their normal level of business activity is temporarily reduced in a way that is beyond the employer’s control.
To apply, employers and employees must sign and submit a Work-Sharing agreement at least 30 days before the requested start date. In light of coronavirus, the government has extended the maximum duration of Work-Sharing agreements for certain businesses from 38 weeks up to 76 weeks.
Business eligible for extended funding include those experiencing a financial downturn due to coronavirus as well as those in the forestry, steel and aluminum sector. See the Employment and Social Development Canada website for more information and to apply.
Yes. If you have to stay at home, can’t work (and don’t have access to paid sick leave), had regular EI benefits that have recently ended or are a seasonal worker whose employment has been cancelled due to the virus, you may be eligible to receive the new Canada Emergency Response Benefit which will provide a taxable benefit of $2,000 a month for up to 4 months.
People who don’t make more than $1,000 per month can apply. Applications are available as of April 6th 2020, and you’ll need to attest that you meet the eligibility requirements. You’ll need to re-attest every 2 weeks after that to reconfirm your eligibility.
You can apply through your CRA MyAccount or by calling 1-800-959-2019 or 1-800-959-2041. You’ll need your Social Insurance Number (SIN) and postal code to verify your identity over the phone. Funds will be delivered 10 days after your application by cheque or through direct deposit.
Increased government support has enabled banks and other financial institutions to lend to a wider range of borrowers – not just those with perfect credit or that present the least risk to lenders. More businesses than ever can qualify for financing, but each lender will still have its own eligibility requirements that you’ll need to check before applying.
Vulnerable small businesses, entrepreneurs, charities and non-profits can phone the Business Resilience Service (operated by the Canadian Chamber of Commerce) at 1‑866‑989-1080 any day of the week to get help from an accountant or financial advisor. Visit the Business Resilience Service website to learn more.
Stacie Hurst is an editor at Finder, specializing in loans, banking products and money transfers. She has a Bachelor of Arts in Psychology and Writing, and she completed one year of law school in the United States before deciding to pursue a career in the publishing industry. When not working, she can usually be found messing around with games, photography or floral arrangements in memory of her former days as a flower shop assistant.
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