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COVID-19: GOVERNMENT PROGRAMS

What relief programs are available? Several. But which is right for you? This depends on the type of company you have:

Looking for something specific?

We had compiled a list of our bulletins issued throughout the pandemic (March – July 2020). Note: information was compiled as at the date indicated on each bulletin. Some information may have been updated since. It’s best to consult a Richter professional for accurate information.

Small and Medium-sized Enterprise (SME) Loan and Guarantee Programs – two lending streams which could provide eligible companies with up to $12.5M in loans.

  • Eligible businesses are those that were financially viable prior to COVID-19 but have since been adversely impacted by the pandemic.
  • Access to the programs will be available until or before September 30, 2020.
  • To access these loans, business owners must contact their primary financial institution.
    1. Loan Guarantee – Export Development Canada (EDC) will provide funding to financial institutions for issuance of new operating credit and cash flow term loans to SMEs.
      • Eligible companies may obtain loans of up to $6.25M, which will be 80% guaranteed by EDC and to be repaid within one year.
    2. Co-Lending Program – BDC and financial institutions to co-lend term loans, of up to 10 years, to SMEs for their operational cash flow requirements (which could include principal and interest payments on existing debt).
      • Eligible businesses may obtain incremental credit amounts up to $6.25M, 80% of which would be provided by BDC, with the remaining 20% by their financial institution.

Mid-Market Financing and Guarantee Programs – focused on providing capital to medium-sized businesses. More details will be made available soon.

  • Eligible businesses are those that were financially viable prior to the COVID-19 outbreak.
  • To access these loans, business owners must contact their primary financial institution.
    1. EDC Mid-Market Guarantee & Financing Program – EDC will provide funding to financial institutions for issuance of new operating credit and cash flow term loans to medium-sized businesses.
      • Eligible companies may obtain loans ranging from $16.75M up to $80M, which will be 75% guaranteed by EDC.
      • The program will bring liquidity to companies that tend to have revenues between $50M to $300M.
    2. BDC Mid-Market Financing Program – BDC will provide operational loans ranging between $12.5M and $60M to businesses whose credit needs exceed what is already available through other programs.
      • It is anticipated that qualifying companies will have annual revenues in excess of $100M.

Large Employer Emergency Financing Facility (LEEFF) – Bridge financing program which caters to Canada’s largest employers (except those in the financial sector) to avoid bankruptcies of otherwise viable firms. Eligible businesses are those seeking financing of at least $60M and have:

  • Annual revenues exceeding $300M.
  • Significant operations or a large workforce in Canada.

The program is administered by Canada Development Investment Corporation. Borrowers should familiarize themselves with the program’s stringent terms and conditions.

Other BDC Programs – Administered by BDC to coordinate financing for SMEs.

  • Working Capital Loan: Up to $2M with a 24-month term following a 12-month principal postponement period.
  • Small Business Loan: Up to $100K of financing with the ability to postpone capital payments for the first six months and repay the loan over five years.

Canada Emergency Business Account – Implemented by eligible financial institutions in part with EDC.

  • Interest-free loans up to $60,000 to cover operating expenses.
  • Available to small businesses that paid $20,000 to $1.5M of payroll in 2019.
    • If a business has less than $20,000 in payroll, the program is also available to businesses with eligible “non-deferrable expenses” (i.e. rent, property taxes, utilities) of $40,000 to $1.5M in 2019, if said business has a business operating bank account or is currently operating through a personal bank account at a participating financial institution, has a CRA business number and had filed a 2018 or 2019 tax return.
  • Loans repaid on or before December 31, 2022 will result in loan forgiveness of up to $20,000.
  • Clients should contact their financial institution to apply for these loans.
  • Applicants now have until December 31, 2020 to apply for CEBA.

PACTE – Investissement Québec (IQ) has introduced an emergency funding measure:

  • A loan guarantee is the preferred form of financing and the minimal amount of the financial assistance is $50,000, although IQ may also offer direct loans.
  • Eligible businesses must show that their operations offer realistic prospects for profitability.
  • Businesses should contact IQ for more information regarding loan type and amount.
  • Assistance for Businesses in Regions under Maximum Alert (“ABRUMA”) – Subject to certain conditions, businesses whose operations have partially or completely ceased since they are located in a maximum alert zone (red zone), can obtain a forgivable loan in order to finance certain operating costs. The loan forgiveness will cover up to 80% of certain operating costs, up to a maximum of $15,000 per month of closure.

RENT, UTILITIES AND PROPERTY TAX RELIEF 

  • Canada Emergency Rent Subsidy (“CERS”)

The framework of the CERS mirrors the framework of the Canada Emergency Wage Subsidy. We have prepared a table to assist you in navigating these rules.Due to its complex nature, readers are urged to seek out their Richter professionals so that their impact on you can be properly evaluated.

The highlights of the program are as follows:

    • The CERS will be available retroactively to September 27, 2020 and will last until June 30, 2021. Program details have only been released up until December 21, 2020.
    • Under the CERS, commercial property owners and tenants can receive a subsidy of up to 65% of $75,000 of qualifying expenses per period. The CERS rate is determined based on the revenue decline as detailed in the table. The maximum qualifying expenses that can be claimed by members of an “affiliated group” is $300,000 per period. Please note that an “affiliated group” has a specific definition for tax purposes.
    • Commercial property owners and tenants subject to a “public health restriction” can receive an additional subsidy of up to 25% of $75,000 of qualifying expenses per period. Please note that a “public health restriction” also has a specific definition for tax purposes.
    • For a tenant, qualifying expenses include gross rent paid but excludes various ancillary or extraordinary items such as sales taxes, interest, penalties and damages.
    • For a commercial property owner, who is not a landlord to third parties, qualifying expenses include mortgage interest, insurance and property taxes.
    • Employers can apply for the subsidy through the Canada Revenue Agency My Business Account or Represent a Client. Additional details can be found here.
  • Canada Emergency Commercial Rent Assistance (“CECRA”)
    • Under the CECRA, commercial property owners can receive forgivable loans equal to 50% of their gross rents for April, May and June 2020.
    • To qualify, a commercial property owner must enter into an agreement with an eligible small business tenant that grants a minimum 75% rent reduction for each of April, May and June 2020, as well as an eviction moratorium during that same period.
    • An eligible small business tenant is described as a business that:
      • pays no more than $50,000 of monthly gross rent per location (pursuant to a valid and enforceable lease agreement),
      • has no more than $20M in gross annual revenues (on a consolidated basis, at the ultimate parent level), and
      • has temporarily ceased operations (generating no revenues) or has experienced a 70% revenue decline in April, May and June 2020, compared to the same months in 2019 or an average of revenues earned in January and February 2020.
    • The amount of the forgivable loan will be payable directly to a commercial property owner’s mortgage lender.
    • The commercial real property must be in Canada and occupied by one or more eligible small business tenants (or subtenants). The property owner must have a mortgage loan secured by the commercial real property and have reported rental income on its 2018 and/or 2019 tax return(s).
    • An alternative mechanism is expected to be implemented for unmortgaged property owners. It is also our understanding that measures may be announced in favor of larger business tenants. Additional details will be provided as they become known.
    • Applications can be made retroactively to April 2020. If any rent was collected during the duration of the program in excess of the agreed upon reduction, commercial property owners must either refund the amounts received or, agree on a credit toward rents for July, August or September 2020.
    • The deadline to apply is August 31, 2020, although details regarding the application process have not yet been communicated, they will be provided as they become known.
  • Ivanhoe Cambridge (IC) Tenant Relief – IC has granted its Quebec retail tenants a deferral of rent payable, until a later date, according to their respective situation. The deferral period has yet to be established.
  • Municipalities: The City of Montreal has postponed second due date for annual municipal property taxes to September 1, 2020. The City of Toronto has postponed the due date for annual property tax by one month, has given property owners a 60-day grace period on paying their property tax otherwise due between March 16 to May 15, 2020 and is waiving all late payment penalties during this period. Hydro-Quebec has announced the suspension of fees for unpaid invoices until further notice starting March 23, 2020. This measure will automatically apply to all customers, although those who anticipate payment issues are encouraged to contact Hydro-Quebec to enter into a deferred payment arrangement.

 

US MEASURES

The Coronavirus Aid, Relief, and Economic Security (CARES) Act for US Businesses

As at March 31, 2020, the US President signed into law the CARES Act, which provides corporations and individuals special tax relief to help during the pandemic. Richter has gone through the new Act and we believe these provisions would be of most interest to you.

 

FINANCING – PAYMENT DEFERRALS OF EXISTING LOANS

The following measures do not automatically take effect. Clients must contact relevant institutions to discuss.

Major Canadian Banks – Will work with business banking customers on a case-by-case basis.

BDC – Offering postponement of payments for up to 6 months, for existing qualifying BDC clients with loan commitments of $1M or less.

Fonds de Solidarité FTQ – Offering postponement of payments for up to 6 months for all of its clients.

Fondaction – Offering postponement of payments for up to 3 months for all of its clients.

 

QUÉBEC

Le panier bleu

  • Quebec has launched an online database to support and highlight Quebec businesses that offer online services.

Programme actions concertées pour le maintien en emploi (PACME)

  • Quebec announced a new program, retroactive to March 15, 2020, aimed at businesses whose operations have been affected by COVID-19 and who undertake new training initiatives favoring the development of their employees as well as human resource management activities.
  • The PACME will reimburse 100% of the first $100,000 of eligible expenses and 50% of the next $400,000 of eligible expenses. Such eligible expenses will include salaries for those employees in training as well as training and human resource management expenses (such as consultants, materials and other specific directs and indirect costs).
  • To be eligible, a training project must be approved in advance.
  • PACME can be combined and is complementary to other programs such as the CEWS.
  • The program was expected to last until September 30, 2020; however, it is our understanding that the program funds have been exhausted and applicants submitted after May 27, 2020 will be referred to a PACME training program that has already been accepted.

PAUPME

  • The Government of Quebec will provide a loan or loan guarantee of up to $50,000 for small and medium sized eligible businesses who have been subject to financial or operational hardship as a result of the COVID-19 pandemic.
  • Businesses should contact their regional county municipality (RCM), municipal office or the authority that manages the Local Investment Fund of their RCM for more information regarding loan type and amount.
  • Assistance for Businesses in Regions under Maximum Alert (“ABRUMA”) – Subject to certain conditions, businesses whose operations have partially or completely ceased since they are located in a maximum alert zone (red zone), can obtain a forgivable loan in order to finance certain operating costs. The loan forgiveness will cover up to 80% of certain operating costs, up to a maximum of $15,000 per month of closure.

 

STUDENTS

Canada Emergency Student Benefit

  • The federal government is providing a grant of $1,250 per month, throughout the months of May to August 2020, in favor of post-secondary students who will experience financial hardship over the Summer due to COVID-19 and who are not eligible to receive the Canada Emergency Response Benefit or Employment Insurance. The amount of the grant will be equal to $1,750 for students with dependents and those with permanent disabilities.

 

See also:

COVID-19: MANAGING YOUR BUSINESS

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