Today, the Prime Minister announced several positive measures to help Canadian businesses in the face of the COVID-19 health crisis. First and foremost, we are pleased that the federal government is responding to measures put forward in our joint proposal with Restaurants Canada and the Hotel Association of Canada over the past week and following our many discussions with government officials and politicians calling for immediate action. Our key recommendations were included in the announcement with some modifications. The measures include deferred GST/HST payments until June, increased liquidity access and a 75% wage subsidy. While more details are forthcoming on Monday and next week, it is important to note that these measures are on par with relief packages from other countries.
While we continue to work together through the details of these announcements with our partners over the weekend, at this time, the measures as announced mean the following for tourism businesses:
Deferred GST & HST payments, duties and taxes on imports until June 2020
- A measure equivalent of providing up to $30 billion in interest-free loans to Canadian businesses.
- Deferred payments to allow businesses to have more liquidity on hand to survive the financial impact of COVID-19.
Canada Emergency Business Account
- Banks will offer $40,000 loans, guaranteed by the government to qualifying small businesses and loans will be interest-free for the first year. Qualifying businesses must have payrolls of less than $1 million.
- Full loan repayment by December 31, 2022, will result in a 25% loan forgiveness up to $10,000.
- Loans will be available through eligible financial institutions and will be fully guaranteed and funded by the Government of Canada.
Increased Wage Subsidy to 75% for qualifying businesses
- The government’s previously announced wage subsidy of 10% will be replaced by a wage subsidy of 75%, helping tourism businesses keep employees on payroll and position the industry for recovery once this health crisis is over.
- Eligibility criteria will start with the impact of COVID-19 on sales. Further details regarding eligibility will be shared by the government shortly.
- This subsidy will be available to small and medium businesses for up to three months and retroactive until March 15, 2020, allowing tourism businesses to potentially re-hire laid off staff.
New Access to Credit through Small and Medium-sized Enterprise Loan and Guarantee program
- The government announced $12.5 billion of additional support and access to credit through EDC and BDC to help small and medium-sized enterprises with cashflow requirements through the new Small and Medium-sized Enterprise Loan and Guarantee program.
- Businesses can apply for a guaranteed loan through their banking institution to access this additional financial support.
- Loans of up to $6.25 million will be made available to small and medium-sized businesses in Canada directly through their financial institutions.
We are now turning our attention to the critical task of working with officials at the Minister of Finance’s office through the weekend to establish what will constitute a “qualifying business.”
For more information regarding today’s announcement, click here.