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The Canada Emergency Wage Subsidy – What does it mean to you?

Here are the highlights of the Wage Subsidy as released by Finance Minister Bill Morneau on April 1, 2020.

No draft legislation has been released yet, but you can expect that the details of the program will be refined.

Here is the summary.

Canada Emergency Wage Subsidy (CEWS)

  1. Equal to 75 percent of eligible payroll costs on the first $58,700 per employee, maxing out at $847 per week.
  2. Applies to businesses of all sizes, including individuals, partnerships and corporations.
  3. Requires at least a 30% decrease in revenues, comparing the current month to the same month in the previous year.
  4. Retroactive to March 15, 2020.
  5. Currently available for the months of March, April and May, with employers required to reapply each month.
  6. Employers must pay the employee wages first, then apply for the CEWS through a CRA portal. Payment will be received through direct deposit, if possible.
  7. It is estimated that the portal will be available in 3-6 weeks
  8. Employers will be asked to attest they are doing “everything they can” to pay the other 25% of employee wages. However, it is not required.
  9. There will be serious consequences for businesses that try to “game” the system.
  10. Funds for the program are expected to be available in 6 weeks.
  11. CEWS is a separate measure from the previously announced 10% wage subsidy.

Canada Emergency Business Account (CEBA)

  1. Up to $40,000 interest-free loan for small businesses and not-for-profit organizations. (“Small business” is not yet defined)
  2. If repaid by Dec 31, 2022, up to 25% is forgivable (up to $10,000).
  3. Organizations that paid between $50,000 and $1 million in payroll for 2019.
  4. Organizations that have had their revenues temporarily reduced. (It does not say by how much)
  5. Loans obtained through your financial institution, in cooperation with Export Development Canada.

Loans to businesses through BDC

  1. Canadian businesses can obtain incremental credit amounts up to $6.25M. (Which businesses would qualify?)
  2. Loans would be obtained through the business’s financial institution (What are the loans and repayment terms?)
  3. Loans are provided through a co-lending program between the business’s financial institution and BDC (When will the programs become available?)
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