BOYNECLARKE LLP frequently works with businesses in Atlantic Canada. During the COVID-19 crisis, we are focused on ensuring we do our part in keeping your business running smoothly. This article addresses some frequently asked questions by small and medium businesses during this time, including an overview of the current programs available to businesses.
This information is changing rapidly. The following has been prepared for information only, it is not intended to be legal advice. To discuss your unique situation and explore your options, please contact a member of our team to request a consultation.
I am worried about paying rent for my business
The Federal Government announced the Canada Emergency Commercial Rent Assistance Program (CECRA) on Friday, April 24th. The program can reduce commercial rent by 75% for small businesses (including non-profit and charitable organizations) affected by COVID-19 for April (retroactive), May and June.
To qualify, the business must have had revenue decline by at least 70% of pre-COVID-19 levels, or have been forced to close by pandemic restrictions, and the rents must be less than or equal to $50,000 monthly. The landlords may then be approved for CECRA, and the government arrange with the landlord to pay 50% of the rent due.1 You as the small business will be responsible for 25% of the rent, with the other 25% being covered by the landlord.2
It is expected that this program will be operational by mid-May. The program requires landlords to participate. We recommend reaching out to your landlord directly if you anticipate issues in paying rent.
Alternatively, you may qualify for some of the funding supports outlined below which are offered by both the provincial and federal governments.
My clients/customers are not paying my bills
Many businesses have been affected in some way by COVID-19. If your invoices are not being paid in the usual manner, we would recommend reaching out to the payee directly to see if a payment plan can be arranged.
If the situation escalates, our team of Business Litigation Lawyers are experienced and can assist you in moving forward to collect money owed to your company.
I may have to lay off employees. What do I do?
We have addressed some options for businesses that are facing these questions in our recent post, which can be found here. If you have specific questions, our team of Employment Law Lawyers can assist you with your specific situation.
I am struggling to meet my obligations (loans, suppliers, etc.)
If you are struggling to pay bills for your business, review your contract governing the relationship to see if there is a clause regarding extreme circumstances. If there is nothing in the contract, you can still try to negotiate an agreement with the other party to reduce or delay your payments. Make sure you keep a record of all your negotiations.
You may want to reach out to your bank or other loan provider to discuss options for relief during these trying times. The Federal Government announced support via the Business Credit Availability Program (BCAP) to provide additional support to businesses through the Business Development Bank of Canada and Export Development Canada.
Check your business insurance to see if you have pandemic insurance. Also check to see if you have business interruption insurance, which may apply. Every commercial insurance policy is different, so you may wish to contact your insurer to find out whether you are covered in these unusual circumstances.
There are also several provincial and federal programs to assist businesses during this time. These programs are all in their early stages and new details are being released frequently. This information is intended as a road map to assist in reviewing your options.
The most common supports are discussed below. To access the federal interactive tool to see more supports that may be available to your business, click here.
Canada Emergency Wage Subsidy (CEWS)
This subsidy will generally cover 75% of an employee’s wages (up to $847/week) for qualifying businesses where the company’s gross revenue has dropped at least 15% in March, and 30% in April and May.
The program will be in place for a 12-week period, from March 15 to June 6, 2020. Employers that are eligible are also entitled to receive a refund for certain mandated employment contributions.
The application for this opened on Monday, April 27th.
If an employer qualifies for both the CEWS and the 10% Temporary Wage Subsidy – which allows eligible employers to reduce the amount of payroll deduction for March, April, and May – the CEWS payment will be reduced by the amount received under the Temporary Wage Subsidy.
The Canada Emergency Business Account (CEBA)
The CEBA will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during this crisis. To qualify, these organizations need to demonstrate they paid between $20,000 to $1.5 million in total payroll in 2019.
Business owners can apply for support from the Canada Emergency Business Account through their banks and credit unions.
All businesses, including self-employed individuals, are permitted to defer income tax amounts that become owing on or after March 18 and before September 2020. This relief applies to tax balances due, as well as instalments, under Part I of the Income Tax Act. The payments can be deferred until after August 31, 2020.
No interest or penalties will accumulate on these amounts during the deferral period.
Businesses, including self-employed individuals, are additionally permitted to defer payments of GST/HST (from March 27 until May 31, 2020) and customs duty owing (for March, April, and May) on their imports until June 30, 2020.3
Nova Scotia COVID-19 Small Business Credit and Support Program
This program was announced on April 24, 2020. Eligible small businesses in Nova Scotia can get a loan of up to $25,000 through participating provincial credit unions. The loan application will be available from April 29th to June 30, 2020. If your business is approved for the loan, you are also eligible for a one-time grant of up to $1,500, and business continuity support.
To be eligible, small businesses must have a payroll less than $20,000 in the previous fiscal year and have experienced a decline in revenue from sales of at least 15 per cent in March or at least 30 per cent in April, May or June.
The program will be available starting Wednesday, April 29, 2020.4 You can check your eligibility and start your application here.
Nova Scotia Worker Emergency Bridge Fund
This fund was announced to support people who are self-employed or otherwise did not qualify for Employment Insurance. If you think this may apply to you, you can access more information here.
Nova Scotia Small Business Impact Grant
This grant was announced by the Nova Scotia government to assist small businesses who had greatly reduced operations or were ordered to close because of COVID-19.
Applications for the Small Business Impact Grant are now closed. The province is currently assessing applications that were received by the 25 April deadline.
Although the above gives a general overview of the more frequently accessed programs, there are some programs that we did not discuss. If you wish to review and analyse your unique situation and the options available to you and your business, please reach out to a member of our team to request a consultation.
1 This may be a loan, or a forgivable loan to the landlord. Details are yet to be released as of this writing.
2 Prime Minister Justin Trudeau’s official website; News. Accessed on April 28, 2020. https://pm.gc.ca/en/news/news-releases/2020/04/24/prime-minister-announces-partnerships-provinces-and-territories
3 Government of Canada Website, Canada’s COVID-19 Economic Response Plan, accessed April 27, 2020. https://www.canada.ca/en/department-finance/economic-response-plan.html#businesses
4Government of Nova Scotia Website: News release, April 24, 2020. https://novascotia.ca/news/release/?id=20200424007