On Friday, October 9, 2020, the federal government announced that it will, in the coming weeks, introduce legislation to implement new supports geared toward helping struggling Canadian businesses manage the effects of the COVID-19 pandemic. We have outlined details of the new supports below.
Creation of the Canada Emergency Rent Subsidy (“CERS”)
The federal government will create the CERS, a new rent and mortgage assistance program that will serve as the successor program to the Canada Emergency Commercial Rent Assistance (“CECRA”). The CECRA ended at the end of September.
The CERS will support eligible businesses and organizations by subsidizing a percentage of their expenses, on a sliding scale, up to a maximum of 65% of eligible expenses, until December 19, 2020. In contrast to CECRA, which required landlords to agree to participate and to apply, the CERS will provide support directly to tenants on application to the CRA.
Businesses that are temporarily shut down by a mandatory second wave public health order may qualify for an additional “top-up” of 25%, such that they will be eligible for a subsidy of up to a maximum of 90% of eligible expenses.
Businesses will also be able to make claims retroactively for the period that began September 27, 2020 and ends October 24, 2020.
Extension of the Canada Emergency Wage Subsidy (“CEWS”)
The CEWS is a wage subsidy program provided by the federal government to assist qualifying employers who have seen drops in revenue due to COVID-19, primarily by way of a subsidy which covers a percentage of eligible employee wages.
The CEWS will be extended until June 2021 – the latest extension in a series for the program. Previously, the program was set to end in December 2020. The subsidy will remain at the current subsidy rate of up to a maximum of 65% of eligible wages until December 19, 2020.
For more information about the CEWS, take a look at our FAQ Video for background information on the subsidy and our previous blog post about proposed changes to the CEWS that have since come into effect.
Expansion of the Canada Emergency Business Account (“CEBA”)
The CEBA is a program which has, up until now, provided $40,000 in interest-free financing to qualifying small and medium-sized businesses to help cover operating costs. Further, 25% of each loan is forgivable if repaid by December 31, 2022.
The government has expanded the CEBA by providing for an additional interest-free loan of up to $20,000 in addition to the original CEBA loan of $40,000. Half of this additional financing will be forgivable if repaid by December 31, 2022.
Additionally, the application deadline for the CEBA will be extended to December 31, 2020.
The program had already been expanded once, to cover more qualifying businesses, in April 2020 (see our blog post for further details).
Takeaways for Employers
These augmented supports to Canadian businesses will be welcome news to employers.
The new CERS seemingly improves upon the CECRA in substantive ways, including by removing the requirement of a landlord’s application and thereby improving accessibility to rent assistance, as well as providing relief against the consequences of mandatory business closures during the second wave.
Meanwhile, enhancements to existing programs will allow employers more time to make important decisions about how to address the future of their businesses in the ever-changing times of the pandemic. The extension of the CEWS, which has helped employers to prevent layoffs and recall employees, will be beneficial to employers who have struggled to maintain a steady workforce. The expansion of the CEBA will provide relief to employers who operate small- and medium-sized businesses and need additional funds to bridge them to better times.
The government plans to release further details of these new supports in the coming weeks. As always, we will monitor the progression of these developments and post further updates as they become available to keep you In the Know.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.