There were some good sounding announcements today for small businesses.
Here are some of the key details of today’s announcements as they apply to small businesses.
Short answer seems to be that for any new funds, the federal government will get your local bank to assist in the assessment and application then the government will provide the funds (or fund quarantee) as the case may be.
GST/HST Remittance Deferral
The GST/HST applies to sales of most goods and services in Canada and at each stage of the supply chain.
The GST/HST amounts collected are generally due by the end of the month following the vendor’s reporting period: e.g., for a monthly filer, the GST/HST amounts collected on its February sales are due by the end of March.
To support Canadian businesses in the current extraordinary circumstances, the Minister of National Revenue will extend until June 30, 2020 the time that:
Monthly filers have to remit amounts collected for the February, March and April 2020 reporting periods;
Quarterly filers have to remit amounts collected for the January 1, 2020 through March 31, 2020 reporting period; and
Annual filers, whose GST/HST return or instalment are due in March, April or May 2020, have to remit amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.
New Loan Programs for Businesses
Canada Emergency Business Account
The Government of Canada is launching the new Canada Emergency Business Account, which will be implemented by eligible financial institutions in cooperation with Export Development Canada (EDC).
This program will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced, due to the economic impacts of the COVID-19 virus.
Small businesses and not-for-profits should contact their financial institution to apply for these loans.
To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).
A New Loan Guarantee for Small and Medium Enterprises
EDC will guarantee new operating credit and cash flow term loans that financial institutions extend to SMEs, up to $6.25 million.
A New Co-Lending Program for Small and Medium Enterprises
To provide additional liquidity for Canadian businesses, 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.
Eligible businesses may obtain incremental credit amounts up to $6.25 million BDC’s portion of this program is up to $5 million maximum per loan. Eligible financial institutions will conduct the underwriting and manage the interface with their customers. The potential for lending for this program will be $20 billion.