Weekly Digest – 2 June 2021

Welcome back to our Weekly Digest. Read on for the latest updates and some ideas to help us all move forward.

No Rush To Reopen The U.S. Border

Canada won’t reopen its border with the US before they’re ready, said Prime Minister Justin Trudeau. The border has been closed to non-essential travel since March 2020 and has been extended on a month-by-month basis, with the current restrictions set to expire in three weeks on 21 June.

Trudeau has insisted that border restrictions need to stay in place until at least 75% of Canadians have at least had their first COVID jab. Currently, only 51% of Canadians have had at least one dose of a COVID-19 vaccine, not far from the US’ 50% of the total population.

Both the Prime Minister and Health Minister Patty Hajdu have said that the government will come up with some sort of certification to permit vaccinated Canadians to travel internationally.

Women Business Enterprises Canada Launches Tools for Growth

The Women Business Enterprises Canada Council announced the launch of ‘Tools For Growth‘ – The Resource Library for Women Owners Ready To Scale Up Their Business. This new initiative is designed to support the growth and success of women-owned businesses in Canada.

This resource is intended to help women-owned businesses prepare and scale up before they apply for certification and start developing connections within supply chains. Around 15.6% of all small- and medium-sized enterprises in Canada are owned by women.

Black Entrepreneurship Loan Fund Launched

Minister of Small Business, Export Promotion and International Trade Mary Ng announced that the Black Entrepreneurship Loan Fund is now accepting loan applications. The loan fund now amounts to $291.3 million, with $33.3 million from the Government of Canada, $130 million from BDC, and a $128-million joint commitment from the Royal Bank of Canada, BMO Financial Group, Scotiabank, CIBC, the National Bank of Canada, TD Bank, Vancity, and Alterna Savings.

Through this loan fund, Black business owners and entrepreneurs can apply for financing of up to $250,000 so they can grow their businesses. Minister Ng also announced the launch of a pilot microloan program for Black business owners in British Columbia and Ontario, which involves microloans between $10,000 and $25,000.

Mortgage Qualification Rules Tightened

Canadian officials have tightened mortgage qualification rules after the central bank issued a warning against buyers who are taking on too much debt.

Borrowers of both uninsured and insured mortgages must show that they can afford loans that are the higher of their current rate plus 200 basis points, or 5.25%.

This replaces the previous benchmark that used banks’ advertised rate, which is currently at 4.79%, to determine the minimum qualifying rate. Canada’s home sales and prices surged in recent months, as demand outweighed supply.

Do you want expert guidance on these new mortgage rules or want to discuss your cash flow? Get in touch to find a time to chat with us.

Assistance for Manitoba COVID-19 Response

Statistics Canada is providing an additional 50 interviewers to Manitoba for a total of up to 120 employees, to help trace people who’ve been in contact with people who tested positive for COVID-19. The Canadian Armed Forces will also continue to support vaccine rollout in up to 23 on-reserve indigenous communities in the province until the end of June.

Skilled Trades Training

The government of Canada announced funding of nearly $890,000 for the College of Carpenters and Allied Trades in order to support the implementation of online learning. This investment is intended to help develop a highly qualified skilled trades workforce, and prepare Canadians to fill available jobs as our economy restarts.

Government Encourages Businesses to Apply for Free Rapid Testing

The government is encouraging businesses and organisations to apply for free rapid tests for workplace screening projects. Rapid tests will be available to employers through:

Shoppers Drug Mart locations in COVID-19 hot spots in Ontario for small- and medium-sized enterprises;
The Canadian Chamber of Commerce will enable local chambers to distribute rapid tests to smaller organizations, based on the successful StaySafe Rapid Testing Program in Waterloo Region;
Non-profit, charitable and Indigenous community organizations can pre-register now to access rapid tests through the Canadian Red Cross;
Since April, larger organizations with close-contact employees have been able to request rapid tests directly through a new federal portal; and
More federal workplaces where workers are at higher risk of exposure to COVID-19 can launch workplace screening programs using rapid tests.

Alberta Expands Financial Support Program to SMEs

Alberta is expanding its Small and Medium Enterprise Relaunch Grant to include another payment of up to $10,000 for eligible businesses. This marks the third time the $10,000 payment has been made available to Alberta organizations. It will also be available to businesses that started operating between 1 March 2020 and 31 March 2021.

The Small and Medium Enterprise Relaunch Grant offers financial assistance to Alberta businesses that experienced at least a 30% decline in revenue because they were ordered to shut down or limit operations due to COVID-19.

Government Extends Access to COVID-19 Benefits

Legislation enacted in March 2021 extends and expands the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB), the Canada Recovery Caregiving Benefit (CRCB) and Employment Insurance (EI) regular benefits.

The amendments include:

Extension of the maximum duration of CRB and the CRCB to 38 weeks (from 26 weeks)
Extension of the CRSB to four weeks (from two weeks)
Extension of the EI regular benefits so they’re available to a maximum of 50 weeks (from 26 weeks) for claims that are made between 27 September 2020 and 25 September 2021.

Self-employed individuals who have opted into the EI program will now be able to use a 2020 earnings threshold of $5,000 (previously $7,555). This change is retroactive for claims as of 3 January 2021 and applies until 25 September 2021.

More information can be found here.

HASCAP Loan Applications Now Open

Loan applications from the Highly Affected Sectors Credit Availability Program (HASCAP) opened February 1.

Loans start at between $25,000 and $1 million for a single business depending on the size of the operation, and run up to $6.25 million for companies with multiple locations like a chain of hotels or restaurants. Interest rates are set at 4% across the board, terms will be up to 10 years, with up to a 12-month postponement of principal payments at the start of the loan.

To be eligible, companies will have to show a year-over-year revenue drop of at least 50% over three months, not necessarily consecutive, in the eight months before the application.

Further details can be found here.

Canada Emergency Business Account Deadline Extended

Eligible businesses facing financial difficulties due to COVID-19 can access a second CEBA loan of up to $60,000 with up to $20,000 of that being forgivable.

CEBA has two streams of eligibility: the Payroll stream and the Non-Deferrable Expense stream. If you previously received a loan of up to $40,000, you can apply for the CEBA expansion to increase your loan by an additional $20,000 ($10,000 of which is forgivable if repaid before Dec 31, 2022).

Applications for CEBA have been extended to June 30, 2021. More information can be found here. Alternatively, if you have any questions or require assistance, simply drop us a message.

Government Support for Businesses

The federal government continues to enact measures to mitigate the financial impact of the pandemic. Here is an overview of the assistance you may be able to take advantage of:

Wage Subsidies

The Canada Emergency Wage Subsidy (CEWS) is intended to help businesses cover a portion of wages and keep employees on payroll. It continues until June 2021.
The work-sharing program allows employees whose hours got reduced by an average of 10% to 60% to claim employment insurance for lost wages. This has been extended to 76 weeks from 38.

Rent Relief

The Canada Emergency Rent Subsidy provides rent and mortgage assistance until June 2021. Businesses can make claims retroactively for the period of Sept. 27 to Oct. 24, 2020.

Business Loans

The Canada Emergency Business Account (CEBA) offers government-guaranteed bank loans of up to $40,000 for small businesses. The deadline for the application has been extended to March 31, 2021.
For mid-sized companies, the Business Development Bank of Canada’s mid-market financing program provides commercial loans between $12.5 million and $60 million.

Debt Management Tips for Entrepreneurs

When building a business from the ground up, you may get to a point where you need to take on some debt in order for your business to take off or grow. This Forbes article differentiates good debt from bad debt, shares some ways to avoid bad debt, and provides some tips to manage debt.

Below is an overview of the effective debt management tips for entrepreneurs shared in this article:

Analyse your budget regularly– Know where your money is going and find ways so debt won’t get accumulated.
Identify the most appropriate sources of financing– Typically, there are two primary sources of funding for small business owners: debt from banks and financial institutions and debt from family and friends.
Consolidate debt payments– Combine short-term loan payments into a more significant debt payment to preserve the business’ credit score. If your debts are piling up, try to negotiate with creditors to set a more reasonable credit limit.
Create a contingency plan– Establish a contingency plan in place and have enough liquid assets to repay huge liabilities.

Financial assessments, proper debt management, and growth plans are important to run a successful business. Need help getting a grip on your business finances? Book a one-on-one consultation with us today!

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