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Loans for small businesses affected by coronavirus

Where to find free or low-interest funding to keep you afloat.

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Graphic: People wearing masks to guard against coronavirus, disease

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.

Business Development Bank of Canada (BDC)

The BDC is the nation’s only financial institution that exists solely to support entrepreneurs. Focusing mainly on small- and medium-sized businesses, the BDC offers advisory services and financing solutions for businesses at every stage of development.

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.

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:

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’s COVID-19 Economic Response Plan: See which benefits you qualify for and how to apply

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.

Compare small business loans

Name Product Interest Rate Min. Loan Amount Max. Loan Amount Loan Term Minimum Revenue Min. Credit Score Filter Values
SharpShooter Funding Business Loan
Fee based, Prime pricing starting at 9.00%
$1,000
$300,000
6 months - 5 years
$4,166 /month
500
SharpShooter Funding offers loans up to $300,000 for small business owners who have been business for at least 100 days and can show a minimum of $4,166 in monthly deposits ($50,000/year).
Loans Canada Business Loan
Prime Pricing from 9.00%, Long term financing from Prime + 2.00%
$2,000
$350,000
3 months - 5 years
$4,166 /month
410
Loans Canada connects Canadian small business owners to lenders offering up to $350,000. Borrowers must have been in business for at least 100 days, have a credit score of 410+ and show a minimum of $4,166 in monthly deposits ($50,000/year).
OnDeck Business Loan
8.00% – 29.00%
$5,000
$300,000
6 - 18 months
$10,000 /month
600
OnDeck offers loans up to $300,000 for small business owners working in approved industries who have been in business for at least 6 months with a minimum monthly revenue of $10,000.
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Fast business loans

Low-interest bank loans

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.

Compare major banks for small business financing solutions

Provincial government support

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:

  • Loans
  • Capital investments
  • Grants
  • Tax credits
  • Internship subsidies
  • Wage subsidies
  • 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:

  1. Maintain physical distancing. The distance should be at least 2 metres or around 6.5 feet.
  2. Stay home if unwell. Encourage employees to monitor their health.
  3. Practice respiratory etiquette. Cough or sneeze into your arm and wear a face mask where social distancing is impossible.
  4. Clean and disinfect regularly.
  5. 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

Closeup image of someone washing handsKeep 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.

A medical doctor’s tips on how to stay protected from coronavirus

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.

You can stay up to date on the latest coronavirus news by regularly visiting the Government of Canada’s COVID-19 landing page.

Bottom line

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.

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