Businesses urge Ottawa to release wage subsidy details,
Struggling businesses on pause as criteria for wage, rent aid will affect staffing decisions
The next period for the federal rent and wage subsidies starts in two weeks — but businesses relying on the subsidies still have no idea what the eligibility criteria will be, or how much money they’ll be able to get.
Organizations representing small businesses across Canada are asking the government to release the criteria and rates for the upcoming period of these subsidies, which begins March 14, so that businesses can plan ahead as COVID-19 restrictions continue across the country.
If the eligibility criteria don’t change, many businesses could suddenly no longer qualify, as they would find themselves comparing their March 2021 revenues to March 2020, when the pandemic began. This could affect their eligibility, as comparing dropped revenues to the month when revenues first dropped could make it appear as though they haven’t experienced a loss in revenue, thus making them ineligible for the subsidies.
Currently, businesses determine their eligibility for the subsidies by either comparing their revenue in the qualifying period to the same period from the previous year (for example, December 2020 to December 2019), or by comparing it to the average of their eligible revenue in January and February 2020.
However, according to Alla Drigola of the Canadian Chamber of Commerce, beginning in the fifth qualifying period for the wage subsidy, business owners had to choose which way they were going to calculate their eligibility, and stick with it, meaning if the eligibility criteria don’t change, they may be stuck comparing their March 2021 revenues to March 2020. And, whatever comparison option businesses choose for the
wage subsidy must also be used for the rent subsidy, Drigola added.
As well, the ability to compare revenues to January and February 2020 isn’t a fix for many businesses, added Drigola.
“This will remain an issue for many businesses in the hardest hit sectors (tourism, travel, hospitality) that typically see their lowest annual revenues in January and February, while the summer months bring their highest revenues. Leaving the rules (unchanged) will still leave a large segment of the hardest hit with less support from these programs than before,” she said in an email.
The government has given “no signal” as to whether the eligibility criteria for these subsidies — or the amount they provide struggling businesses — will be the same come March 14, when the new period begins, says Corinne Pohlmann, senior vice-president of national affairs for the Canadian Federation of Independent Business (CFIB).
“It’s really the whole thing that is unclear at this time and so it’s kind of keeping some businesses from starting to plan,” she said.
Drigola agreed, adding that while she’s sure the government is aware of the impending deadline, businesses need to be able to plan ahead now more than ever.
This is especially true for the wage subsidy, she said, as many businesses may make important staffing decisions based on how much they can access from the program.
Katherine Cuplinskas, spokesperson for Deputy Prime Minister and Minister of Finance Chrystia Freeland, said the government “continues to actively assess its support measures to ensure workers and businesses have the support they need, and will soon announce the rates for the wage and rent subsidies for March 14 onward.”
“We are not out of the woods yet, and our government will continue to be there for Canadians and businesses,” said Cuplinskas in an email.
As of Feb. 21, the government has spent more than $66.7 billion on the wage subsidy, and almost $1.65 billion on the rent subsidy (not including the previous rent subsidy program).
While Drigola understands these programs need to be nimble as pandemic conditions change, businesses also need some certainty. “There needs to be a balance struck.”
The CFIB wants the government to extend the wage and rent subsidy programs past June, and to ensure that criteria for future periods are released at least a month in advance.
“These subsidies are critical right now,” said Pohlmann, adding that they could help stimulate the economic recovery.
The CFIB is also asking for the application deadline for the Canada Emergency Business Account (CEBA) to be extended, as well as for the amount to be expanded a second time.
In an email, a spokesperson for industry group Restaurants Canada said restaurants are “uniquely situated to help kickstart Canada’s economic recovery with continued support from government — mainly through extensions to the wage and rent subsidies.”
Restaurants Canada has been advocating for both programs to continue through to April 2022, because many restaurants could take that long — or longer — to return to profitability, said spokesperson Marlee Wasser.
The organization is also asking for federal loans, such as those provided by CEBA and the Highly Affected Sectors Credit Availability Program (HASCAP), to be partially forgivable (a portion of the CEBA loans are forgivable, but not the HASCAP loans), Wasser said.
The CFIB also recommends making the HASCAP loans partially forgivable, said Pohlmann. “One of the big reasons a lot of those businesses are not taking it right now is because it means adding more debt.”