More Than Wage Subsidies: Additional Aid for Brokerages
CATEGORY: Practice Tips
TAGS: Canada Emergency Response Benefit Canada Revenue Agency Financial Aid
By Anna Jones, CPA, CA (Partner, Church Pickard)
The Canada Emergency Wage Subsidy (CEWS) and Temporary Wage Subsidy (read about them here) are just two financial aid programs available to managing brokers as small business owners. The Work-Sharing Program, Canada Emergency Business Account and recently announced Canada Emergency Commercial Rent Assistance programs can all help managing brokers overcome the COVID-19 crisis. Here's what managing brokers should know.
The Work-Sharing program helps employers and employees avoid layoffs when there is a temporary decrease in business activity beyond the control of the employer. During a Work-Sharing agreement, available work is redistributed through a voluntary reduction in hours by all employees within one or more work units. This allows the employer to retain a full work force on a reduced work week rather than laying off part of the work force.
You can apply for the program through Employment and Social Development Canada (ESDC). On average, employees must experience between 10% and 60% reduction in employment hours of a normal work week over the life of the agreement. If you are approved, Employment Insurance generally pays employees 55% of their average weekly earnings to a maximum of $573 per week (for 2020) for which their hours have been reduced.
To be eligible, your business must be a year-round business in Canada in operation for at least one year, be a private business or publicly held company, and have at least two employees in the WS unit (for example, 2 conveyancing, employees). If you apply for CEWS after joining the WS program, the subsidy you receive from CEWS will be reduced for EI amounts received by employees under the work-sharing benefit.
The Government of Canada recently extended the maximum duration of the program to 76 weeks from 38 weeks as a result of COVID-19. To apply, click here.
Canada Emergency Business Account
The Canada Emergency Business Account (CEBA) is a program offered by the federal government and Canadian banks and credit unions providing interest-free loans of up to $40,000 to small businesses and not-for-profits to help cover their operating costs during COVID-19. To qualify, you will need to demonstrate that you paid between $20,000 to $1.5 million in total payroll in 2019. You can find out more here.
As a business owner, you can apply for CEBA through your bank or credit union. If you repay the balance of the loan on or before December 31, 2022, 25% of the loan (up to $10,000) will be forgiven. Banks have also made a commitment to work with personal and small business banking customers on a case-by-case basis. They would provide:
- Up to a 6-month payment deferral for mortgages
- Opportunity for relief on other credit products
Canada Emergency Commercial Rent Assistance
Announced on April 16, the Canada Emergency Commercial Rent Assistance (CECRA) program for small businesses will offer loans and/or 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. More details on this program and when it will launch will be available soon.
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