CLIENT UPDATE – October 14, 2020 Changes to Wage Subsidy, Rent Subsidy and Forgivable Loan Program

On Friday October 9, 2020, the government announced expansions of the three flagship business support programs being used to provide assistance during COVID-19.  Significant changes are being made to the following programs:

  1. Canada Emergency Wage Subsidy (CEWS)
  2. Canada Emergency Commercial Rent Assistance (CECRA), to be replaced with Canada Emergency Rent Subsidy (CERS)
  3. Canada Emergency Business Account (CEBA) 

The announcement can be found HERE

Canada Emergency Wage Subsidy

The CEWS program currently provides a wage subsidy for employers that have experienced a decline in their revenues.  The rate of the subsidy for each four-week period is set at a maximum and is reduced to the extent the business’s revenues were less than 70%.  

There is a base subsidy rate for any business that experienced a revenue decline and a top up rate for businesses that had revenue reductions of more than 50%.  

The following change are being made for the CEWS program.

  • The wage subsidy is being extended until June 2021;
  • A 65% subsidy rate will apply until December 19, 2020 
    • Although the announcement does not specify this, we assume this means the current base subsidy rate of 40% effective for the September  27 to October  24, 2020 period, plus the 25% top-up subsidy 

The government has not announced what the subsidy rate will be for the newly announced periods ending in 2021.

More information on the existing program can be found in our last update on this subject HERE.

Canada Emergency Commercial Rent Assistance / Canada Emergency Rent Subsidy

The CECRA program provided a rent subsidy to landlords of 50% of their normal rent where they reduced the monthly rent of a commercial tenant by at least 75%.  The program was only available to landlords of tenants that had experienced a decline in revenues of at least 70%. The program was only available to businesses, not-for-profits and charities paying less than $50,000 in rent per location, and with annual revenues of less than $20 million.

The program applied for the months of March to September and must be applied for prior to October 30, 2020.   More details on the previous program can be found HERE.

The new CERS program will pay a subsidy directly to qualifying tenants rather than the landlords.  Similar to the CEWS program, the subsidy rate will be up to 65% and will decline to the extent the tenant’s revenue drop is less than 70%. 

There will be a top-up subsidy of 25% for organizations temporarily shut down by a mandatory public health order in addition to the 65% subsidy.

Canada Emergency Business Account

The CEBA is an emergency loan program of up to $40,000 that businesses can apply for in order to help fund their expenditures during this financially stressful time. Potentially, 25% of the loan is forgivable provided the balance of the loan is repaid on or before December 31, 2022.

The original program was expanded in June to allow more businesses to qualify. Our update on this revision can be found HERE.  Applications for CEBA can be made through your banking institution.

The most recent expansion provides for an additional loan of $20,000, $10,000 of which is forgivable.  As such, the total loans available are now $60,000, $20,000 of which is forgivable if repaid by December 31, 2022.

The additional funds will be available “based on need”.  Businesses will need to attest to losses in revenue due to the pandemic. Details on when and how to access this new funding will be announced in the coming days.

Applications can be made until December 31, 2020.

We are continuously monitoring the nature of any new programs or amendments to the existing programs and will continue to provide updates as they become available. If you have any questions concerning the above, do not hesitate to contact us.

To review any of our previous updates on COVID-19 please see our website.

This summary deals with proposed matters that are complex and may not apply to particular facts and circumstances. As well, the material and the references contained therein reflect laws and practices which are subject to change. For these reasons, this material should not be relied upon as a substitute for specialized professional advice in connection with any particular matter.

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