Giving businesses a hand during troubling times

Government creates new loans for companies struggling during the lockdown forced by coronavirus crisis

Businesses large and small are struggling to get by during the COVID-19 lockdown. Government mandates on social distancing, along with the likes of restrictions on non-essential operations, reduced hours and staffing issues have created hurdles for all companies, some of which have been shuttered completely.

To help businesses that have lost revenue, have had to lay off employees, or are looking at other hardships that will affect their future, the federal government has launched two loan initiatives to help mitigate potential repercussions that may be on the way because of the pandemic.

The Canada Emergency Business Account (CEBA) and the Canada Emergency Commercial Rent Assistance (CECRA) were announced and launched in April to help businesses that were struggling with non-deferrable operating expenses and paying their rent.

“There are a lot of employers that know that we’re going to come through this and they’re working hard to keep people on payroll and the people that are doing that are going to be well positioned when the doors are opened,” said Kitchener-Conestoga MP Tim Louis. “We know that they’re going to need help to do that. In the meantime the fastest way to keep liquidity is to work with your local banks who you know and they know your situation. That allows (them) to get a business loan at zero interest (and) that’ll help carry over.”

Under the CEBA, businesses that had a total 2019 payroll between $20,000 and $1.5-million, would be able to access interest-free loans up to $40,000. This $25-billion program intends to help small businesses and not-for-profits cover the cost of things like payroll, insurance and property taxes. Loans are applied for and disbursed through financial institutions and cannot be used for the refinancing of existing debt, payments of dividends, or the increasing of management compensation. Those who pay back the balance of the loan on or before Dec. 31, 2022 will qualify for loan forgiveness of up to 25 per cent ($10,000).

The CECRA will provide loans to qualifying commercial property owners who cover 50 per cent of three months’ rent payments (April, May and June), for small business tenants affected by the COVID-19 crisis. Loans will be forgiven if the mortgaged property owner agrees to reduce the rent of afflicted small businesses by at least 75 per cent under a rent forgiveness agreement. This will also include an agreement to not evict the tenant while the agreement is in place. The business tenant is expected to pay up to 25 per cent of the monthly rental cost for the three months the CECRA is providing relief.

Julie Kwiecinski, director of provincial affairs for Ontario with the Canadian Federation of Independent Business (CFIB), says these are a good start, but it’s not enough to help businesses that are taking a beating during this time.

“There are still people or businesses that do not qualify in spite of these recent changes, so mainly that would be brand new firms, self-employed and those who pay with dividends (that) are still excluded from this new program,” said Kwiecinski.

She says more problems can arise if a business tenant resides in a building where the landlord does not apply for the CECRA, as they are not going to be getting the relief they need to help them see their way through the crisis.

“It appears that this program is reliant on the landlord applying for it so if the landlord does not apply our understanding right now is that tenants or tenants under that specific landlord will not be able to benefit,” said Kwiecinski. “When the landlord agrees to enter into this arrangement ... they’re agreeing to not evict the tenant. So if that landlord doesn’t enter into that agreement what about the tenants who do not have the eviction protection?”

She and the rest of the CFIB believe that more changes are needed to the program to protect those that fall outside the range of qualification and vow to continue fighting for businesses afflicted by the crisis.

During this time the CFIB has changed the way they usually operate so more businesses are able to get access to information and assistance during this time. If any business is in need of information they can call 1-888-234-2232.