Financial Assistance for Self-Employed Canadians

April 10, 2020 | Posted by: Harold Hagen

Financial Assistance for Self-Employed Canadians

Sole proprietors and self-employed business owners are part of a growing list of Canadians who feel left behind by Ottawa’s COVID-19 relief programs, worried that taking on even the smallest sale or project will prevent them from accessing benefits.

In the wake of recently announcing economic relief programs last month by the Government of Canada, business owners have raised concerns that the response lacks support to save their small and medium businesses. A common concern has been that entrepreneurs who still take in small amounts of revenue will be indirectly punished, while incomes that have disappeared for previously employed individuals are more likely to qualify for the 75-per-cent wage subsidy or the CERB.

As a result, the Government of Canada has taken action to help these Canadians facing hardship as a result of the COVID-19 outbreak.

Updates regarding the Emergency response assistance programs for employers, sole proprietors and self-employed business owners include the following;  

  1. Helping Businesses Keep their Workers - The Government of Canada is providing a wage subsidy for eligible small business employers, non-profits and charities who are able to demonstrate at least a 30% decline in revenue because of the coronavirus pandemic, and to encourage employers to rehire recently laid-off employees (pending legislation). 
  • 30% Criteria – Determined by comparing revenues to the same month last year (year over year) for March (15%), April or May.  Employers must reapply each month.
  • Wage subsidy for a period of 3 months which will be equal to 75% of renumeration paid (maximum of $58,700/ year, ~$847/week). 
  • Employers attest they are doing everything they can to pay the remaining 25%.
  • Administered by the Canada Revenue Agency (CRA) through the My Business Account portal on the agency's website.
  • Funds will be available in approximately 6 weeks, available for up to 12 weeks retroactive to March 15, 2020.
  • Severe penalties for those that take advantage of the system.
  1. Flexibility for Business Filing Taxes – Canada Revenue Agency has stated that the payment of any income tax amounts owing on or after March 18, 2019 and before September 2020 will not be owing and will not have interest or penalties until after August 31, 2020.
  1. Canada Emergency Business Account – Financial institutions will be able to provide interest-free loans in the form of lines of credit of up to $40,000 to businesses with payrolls 50,000 - $1 million. 
  • A quarter of this loan (up to $10,000) is eligible for complete forgiveness if fully repaid on or before December 31, 2022.
  • Program is anticipated to be rolled out April 20, 2020. Application are submitted directly to the financial institution that you typically conduct business with.
  1. Ensuring Businesses Have Access to Credit – The Business Credit Availability Program is allowing the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide credit solutions for individual businesses. 
  • Small Business Loan – Up to $100,000 to buy equipment, software, or other business expenses.  Capital payment can be postponed for six months and repaid over five years.  Link
  • Working Capital Loan – Loans of more than $100,000 for working capital, inventory to meet demand, discounts for suppliers.  Link  
  • Purchase order financing – Entrepreneurs can cover up to 90% of the purchase order amount associated with larger sales.  Link
  1. Commercial mortgage deferrals – Please check with your respective banks to see if they will allow a mortgage deferral as most banks are allowing this for approximately up to 6 months. 
  1. Temporary Changes to Canada Summer Jobs Program – Wage subsidy for employers who hire students has now been increased from 50% to 100% of provincial/territorial minimum wage. 
  • Extension of the end date of employment is now February 28, 2021.
  • Part-time staff basis allowable.
  • Job placements as early as May 11, 2020 and end February 28, 2021.

Please refer to the links below for official release from the Department of Finance Canada and the Prime Minister’s Office.

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