Government Funding Programs in Canada

The types of loans offered for businesses are:

1. CEBA (Canada Emergency Business Account)
2. CEWS 75% (Canada Emergency Wage Subsidy)
3. CEWS 10% (Canada Emergency Wage Subsidy)

Canada Emergency Business Account

This will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced.

Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).

Small businesses and not-for-profits should contact their financial institution to apply for these loans. There is not an online application available for this.

Eligible Borrowers;

• The Borrower is a Canadian operating business in operation as of March 1, 2020.
• The Borrower has a federal tax registration.
• The Borrower’s total employment income paid in the 2019 calendar year was between Cdn.$50,000 and Cdn.$1,000,000.
• The Borrower has an active business chequing/operating account with the Lender, which is its primary financial institution. This account was opened on or prior to March 1, 2020 and was not in arrears on existing borrowing facilities, if applicable, with the Lender by 90 days or more as at March 1, 2020.
• The Borrower has not previously used the Program and will not apply for support under the Program at any other financial institution.
• The Borrower acknowledges its intention to continue to operate its business or to resume operations.
• The Borrower agrees to participate in post-funding surveys conducted by the Government of Canada or any of its agents.

CEWS 75%

This will cover up to 75% of the first $58,700 earned by an employee for up to three months. Canadian businesses will be able to receive up to CAD $847 each week — about $607 USD — per employee to help supplement each employee’s wages. The funds would be sent to businesses within a span of two to five weeks. Businesses can receive funding for up to 12 weeks as long as they can prove they have suffered losses due to COVID-19.

To be eligible to apply for the relief funding, businesses must be able to prove at least a 15% drop in revenue in either March, April, or May 2020 compared with the business’ earnings in the same months in 2019 or in the first two months of 2020. Eligible employers will be able to apply in CRA My Business. CRA My Business is a portal for business owners to file such things like taxes, etc. The merchant will need to create an account if they don’t have one already.

Businesses that are found to have lied about or inflated losses in their earnings will be subject to a fine equal to 25% of the aid they’ve received as part of the relief package. In order to release the funds, an organization will have to show that it has paid its employees

Eligible Employers for CEWs 75%

Eligible employers includes:

• individuals
• taxable corporations
• partnerships consisting of eligible employers, non‑profit organizations and registered charities. Those that see a drop of at least 15% of their revenue in March 2020 and 30% for the following months (see Eligible Periods).

Here is an example:

ABC Inc. is a start-up that started its operations last September.  It reported revenues of $100,000 in January and $140,000 in February, for a monthly average of $120,000. In March, its revenues dropped to $90,000. Because revenues in March are 25%  lower than $120,000, ABC Inc. would be eligible for the CEWS for the first and second claiming period. To be eligible for the third claiming period, ABC Inc. revenues would have to be $84,000 or less for the month of April or May (that is, 30% lower than $120,000)

CEWS 10%

This is a temporary three-month measure that will allow eligible employers to reduce the amount of payroll deduction required to be remitted to the Canada Revenue Agency (CRA).

You are an eligible employer if you:

• are a(n):
  • individual (excluding trusts),
  • partnership.
  • non-profit organization,
  • registered charity, or
  • Canadian-controlled private corporation (including a cooperative corporation) eligible for the small business deduction;
• 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 eligible employee.