Last Updated: April 21, 2020
In light of the current COVID-19 situation, we recognize that individual businesses are facing unprecedented challenges. We believe it is vital to ongoing operational success to have access to accurate and reliable information with respect to COVID-19 and its relevance to commercial business operations. Accordingly, to help navigate the challenges posed by the COVID-19 outbreak, we have centralized related materials and information in our COVID-19 Knowledge Centre. As the situation is rapidly evolving, this information hub will be updated regularly.
As of March 18, 2020, the Alberta and federal governments have taken steps to assist Canadian businesses during this time, through a number of different initiatives. We have compiled the following announcements which we believe to be relevant to your business. However, we encourage you to visit both the Alberta and federal homepage for the most up to date information.
Federal Assistance
The Government of Canada’s COVID-19 Economic Response Plan will provide up to $27 billion in direct support to Canadian workers and businesses, plus $55 billion to meet liquidity needs of Canadian businesses and households through tax deferrals. This support includes:
● Canada Emergency Business Account: provides up to $25 billion to eligible financial institutions so they can provide interest-free loans of up to $40,000 to small businesses.
○ Who can apply: Small businesses or not-for-profits that paid between $20,000 to $1,500,000 in total payroll in 2019 are eligible, replacing the previously announced threshold of $50,000 to $1,000,000.
○ How to apply: Contact your financial institution to apply for the loan.
● Canada Emergency Wage Subsidy: a three-month measure in which the government will cover up to 75% of a salary on the first $58,700, up to a maximum of $847 a week, retroactive to March 15, 2020.
○ Note: Employers/businesses who are eligible for both the Canada Emergency Wage Subsidy and the Temporary Wage Subsidy, may only claim a subsidy under one or the other. Further, an employer cannot claim the Emergency Wage Subsidy for an employee for a week that the employee is eligible for the Canadian Emergency Response Benefit.
○ Who can apply: Eligible businesses of all sizes and from all sectors of the economy, regardless of the number of workers they employ, that suffer a drop of at least 15% in revenues due to COVID-19 in March, and 30% for the following months.
○ How to apply: Through Canada Revenue Agency’s My Business Account portal as well as a web-based application. More details on how to apply will follow soon.
○ Additional Information: For more information, click here.
● 10% Temporary Wage Subsidy: a three-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (“CRA”). The subsidy is equal to 10% of the remuneration you pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per employer.
○ Who can apply: Individuals, partnerships, non-profit organizations, registered charities, or Canadian-controlled private corporations who are eligible for the small business deduction, who have an existing business number and payroll account with the CRA on March 18, 2020 and pay remuneration to an employee.
○ How to apply: No application needed, employers can simply calculate the subsidy amount and reduce their current payroll remittance by that amount.
● Canada Emergency Commercial Rent Assistance: a new program aimed at small and medium sized businesses to provide loans, including 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. As this program was announced on April 16, 2020, an update with more details will follow in the coming days.
● Regional Relief and Recovery Fund (RRRF): a new program to give financing support to small and medium-sized businesses that are unable to access the government’s existing COVID-19 support measures, through Canada’s Regional Development Agencies.
○ Who can apply: Tourism operators or small or medium sized business or organizations that have been affected by COVID-19, and have received RDA funding previously.
○ How to apply: Contact your local RDA office.
● NRC IRAP Innovation Assistance Program: a new program to assist innovative, early-stage companies that are unable to access existing COVID-19 business support, through the National Research Council of Canada’s Industrial Research Assistance Program.
○ How to apply: Applications are set to open on April 22, 2020 at 5 am MDT. More details regarding the application and eligibility for this program will be updated here.
● New Loan Guarantee For Small and Medium Enterprises: Export Development Canada (“EDC”) will guarantee new operating credit and cash flow term loans that financial institutions extend to small and medium-sized enterprises (“SMEs”), up to $6.25 million.
○ How to apply: Contact your financial institution to apply for the loan.
○ Additional Information: For more information, click here.
● Co-Lending Program for Small and Medium Enterprises: The Co-Lending Program will bring the Business Development Bank of Canada (“BDC”) together with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.
○ Who can apply: SMEs that have been impacted directly or indirectly by recent events and have been financially viable prior to the impact from COVID-19.
○ How to apply: Contact your financial institution to apply for the loan.
○ Additional Information: For more information, click here.
● Canada Emergency Response Benefit:provides a taxable benefit of $2,000 a month for up to 4 months to support workers and entrepreneurs who have lost their income due to COVID-19.
○ Who can apply: This benefit is open to individuals:
● residing in Canada, who are at least 15 years old;
● who have stopped working because of COVID-19 or are eligible for Employment Insurance regular or sickness benefits;
● who had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and
● who are or expect to be without employment or self-employment income for at least 14 consecutive days in the initial four-week period.
○ How to apply: Applications can be completed: (1) by accessing your CRA MyAccount secure portal; or (2) by calling 1-800-959-2019 or 1-800-959-2041.
● Benefits are expected to be delivered 10 days after you submit your application form.
● Business Credit Availability Program: provides more than $10 billion of additional support to businesses through BDC and EDC.
○ How to apply: Contact your financial institution, which will contact BDC and/or EDC where appropriate.
● Corporate income tax changes: allowing businesses to defer, until after August 31, 2020, the that become owing on or after March 18, 2020 and before September 2020.
● Deferred payments of taxes: allowing businesses to defer until June 30, 2020 payments of the Goods and Services Tax/Harmonized Sales Tax, as well as customs duties owing on imports.
● Work-Sharing temporary special measures: an extension of work-sharing agreements by an additional 38 weeks, for a total of 76 weeks.
Federal Relief for the Oil and Gas Industry
On April 17, 2020, the federal government announced details of measures to help the oil and gas industry specifically, with the goals of addressing the short-term liquidity needs of energy companies while simultaneously assisting energy companies to reduce their emissions. These measures include:
● Investing $1.7 billion to clean up orphan well sites in Alberta, British Columbia and Saskatchewan with the goal of creating immediate jobs, while helping oil and gas companies avoid bankruptcy.
● Establishing a $750 million Emission Reduction Fund (“ERF”), provided by Natural Resources Canada. The ERF will primarily provide repayable contributions to firms to make them more competitive, while creating and maintaining jobs through pollution reduction efforts. The ERF will primarily focus on pollution caused by methane and is aimed to assist companies in meeting their methane reduction targets.
○ The ERF will include $75 million to help the offshore industry cut emissions in Newfoundland and Labrador.
● Expanding eligibility for the Business Credit Availability Program to support at-risk medium-sized energy companies and help them maintain operations and keep their employees on the job.
More details on the oil and gas relief measures can be found here.
Additional information on resources for Canadian businesses can be found here. Further announcements issued by the Department of Finance Canada will be posted on their website.
Provincial Assistance
Financial assistance programs are targeted to Albertans generally, as well as to employers and employees. Financial measures to support businesses include:
● Corporate income tax changes: corporate income tax balances and installment payments will be deferred until August 31, 2020.
● Education property tax deferral: education property tax rates will be frozen at last year’s level.
● WCB premium payment deferral: small, medium and large private sector employers can defer WCB premium payments until 2021.
● Utility payment deferral: residential, farm and small commercial customers can defer electricity and natural gas bill payments for the next 90 days to ensure no one will be cut off, regardless of the service provider. Call your utility provider directly to arrange for a 90-day deferral on all payments.
● Tourism levy deferral: hotels and other lodging providers can delay paying the tourism levy until August 31, 2020 for amounts that become due to government on or after March 27, 2020.
In addition, seven banks in Canada (ATB, BMO, CIBC, National Bank, RBC, Scotiabank and TD Canada Trust) have offered specific financial relief programs for their clients, including up to a six-month payment deferral for mortgages, and the opportunity for relief on other credit products.
Canadian Securities Administrators
The COVID-19 situation has also impacted a number of market participants. The Canadian Securities Administrators have recently published an article providing guidance on conducting annual general meetings for reporting issuers during this period. We have also discussed the issue of providing relief from certain regulatory filings as well as certain risk factors and disclosure during this time period. Our updates regarding commentary on issues in M&A, corporate finance and capital markets can be found here.
At Fasken, our team of lawyers are available to guide you through these turbulent times. We have a great deal of experience in dealing with commercial uncertainty and are available to assist you in overcoming these extraordinary economic conditions. Please do not hesitate to reach out to us with any inquiries you may have.
BDC Capital - Bridge Financing Program
Last week, BDC Capital soft launched its new Bridge Financing Program. With this new co-investment program, BDC will match investments made by qualified venture firms in startups on a 1:1 basis, with a minimum of $250,00, using convertible notes. The convertible notes will be secured, have no cap, a discount of 20% and a maturity date of 36 months. Investments will be subject to satisfactory due diligence review by BDC, agreement on terms of the investment and approval by a BDC investment committee.
To be eligible, a company must:
1. be a Canadian corporation;
2. be backed by a qualified venture capital firm;
3. have raised at least $500,000 in external capital before applying for the program; and
4. have been specifically impacted by COVID-19.
How to Apply
Qualified investors will be the transmission channels between BDC and the startups to apply for the Bridge Financing Program. Investors should get in touch with BDC to take the necessary steps. BDC will want to review the impact of COVID-19 on a business and its plan demonstrating that its financing round will allow it to operate for the next 18 months.
Useful Links
General Information on Support Programs
● COVID-19 Information for Albertans
● COVID -19 Information for Businesses and Employees
● Canada's COVID-19 Economic Response Plan
● Government introduces Canada Emergency Response Benefit to help workers and businesses
● Department of Finance Canada - Latest Announcements
Active Government Programs Available to Support Businesses
● Additional Benefits and Services offered by the Government of Canada
● Application for Canada Emergency Response Benefit through CRA My Account
● Business Credit Availability Program
● Business Development Bank of Canada Small Business Loan
● Business Development Bank of Canada Working Capital Loan
● Business Development Bank of Canada – Venture Capital
● Canada Emergency Response Benefit
● CRA: Helping Canadians with the economic impact of the COVID-19 Pandemic
● EDC-BDC Purchase Order Financing
● Employment Insurance Benefits
● How the Business Development Bank of Canada Plans to Support Entrepreneurs
● How the Export Development Canada Plans to Help Businesses
● Resources for Canadian Businesses
● Support for Employers and Employees
● What Canada's Regional Development Agencies are doing to help businesses
● Work-Sharing Program – Temporary Special Measures
● Work-Sharing - Income Support to Avoid Layoffs
● Labour, Employment & Human Rights Bulletin
Impact on Market Participants
● Guidance on Conducting Annual General Meetings during COVID-19
● Canadian Securities Regulators Will Provide Blanket Relief to Market Participants due to COVID-19
● Risk Factors and Disclosure in the Time of COVID-19
● Proposed Tax Measures to Stabilize the Economy during COVID-19 (Canada)
● TSX Venture Exchange Provides Temporary Relief from the $0.05 Minimum Pricing Requirement
● CSA Provides Guidance on Previously Announced Blanket Orders in Response to COVID-19
Fasken Information Hub
● Fasken COVID-19 Knowledge Centre
