Feds to Extend Wage Subsidy Program Until December

On July 13, Prime Minister Justin Trudeau announced that the Liberal government will extend the wage subsidy program until December. This marks the second extension of the Canada Emergency Wage Subsidy (CEWS). On May 15, the government added an additional 12 weeks to the program, extending eligibility to August 29.

“For the last three months, you’ve seen me come out to talk with Canadians about what we’re doing to help you and your family, your employer, your local businesses deal with this pandemic. We’re going to continue to do that vital work,” said Trudeau during a press briefing.

Announced on March 27, the CEWS provides qualifying businesses and non-profits funding for 75% of employee wages, retroactive from March 15.The objective of the program is to keep employees on the payroll so businesses can rebound more quickly when restrictions are lifted and the economy restarts. The CEWS had a slow uptake, but has increased in popularity as more Canadians transition off of the Canada Emergency Response Benefit.

In an interview on CTV’s Question Period in May, Employment Minister Carla Qualtrough attributed the program’s rocky start to barriers in the application process.”It’s been slower than expected. I think businesses are having to put a lot of time and effort into their applications because you have to dig into your payroll – who earned what and when,” she said.

Since then, the government has been consulting with the business community and promoting its benefit amid calls from opposition that the Liberal’s are disincentivizing Canadians from returning to work as CERB application numbers balloon. As of July 5, just under 19 million Canadians had applied for the benefit and more than $54 billion had been paid out.

The new $82. 3 billion CEWS projection, outlined in the fiscal snapshot on July 8, is a stark increase from the original $45 billion estimate. As of July 6, 581,800 out of a total of 587, 060 submissions had been approved. This equates to slightly more than $18 billion.

Canada Emergency Wage Subsidy (CEWS)

Source: CTV News

July Added to COVID-19 Commercial Rent-Relief Program

Federal and provincial governments have agreed to extend a commercial rent-relief program to help cover July costs for eligible small businesses. The move comes with a few changes to the subsidy, as the COVID-19-related aid faces questions about whether it is delivering as expected. The amended program had doled out $152 million in forgivable loans to landlords that had agreed to give rent breaks to more than 20,000 tenants as of June 21.

The Canadian Federation of Independent Business said the rent help should run through to September at least, and that the program needs other changes to ease access. The business group continues to hear stories of small-business tenants aren’t being helped because their landlords have not applied. Landlords have to seek support from the program and agree to cut their tenants’ rents in exchange.

CFIB’s Alberta director Annie Dormuth said an extension to the fall would help companies still recovering from COVID-19 closures and trying to find their footing as public health restrictions are slowly rolled back.

Still, through the last few weeks of June, business consultant Jenifer Bartman has seen emails from companies announcing closures, including some deciding to not renew their leases because it no longer makes financial sense to do so. “We’re going to see more of that. We’re going to see more wind-ups and people might say, ‘Oh well, small business doesn’t matter much,’ but it could be 10 jobs, it could be 20 jobs, it starts to snowball … and that’s permanent.” 

She said part of the problem in the rent-relief program may be that asking landlords to shave down rents doesn’t address that they too have loans to pay off. The program provides forgivable loans that cover half of rent for eligible small businesses, and also requires landlords to waive a further one-quarter of what they’d otherwise be owed. “So they have financial institutions that are calling them to say, ‘Where is this month’s mortgage payment?’” Bartman said. “Perhaps part of the disconnect is there.”

Among the changes included in the extension of the program is that insurance payments for missed rents and provincial rent supports won’t be clawed back from the rent-support loans. Previous amounts clawed back under the program will be returned to landlords that previously received loans through the program. As well, those who qualified for loans by showing revenue declines of 70% in April, May or June will qualify anew without being reassessed on whether their earnings have dropped by that much in July.

The Canadian Association of Insolvency and Restructuring Professionals said in its own statement on July 2 that without the rent-relief program and others, many Canadian businesses would likely already be insolvent. Board member David Lewis said he hadn’t heard of companies filing for bankruptcy because they couldn’t get access to the rent-relief program. He cautioned that not everyone formally files. He added that it’s too early to tell if the aid measures will mean companies come out in good positions once the crisis passes.

Dormuth from the CFIB said the situation is particularly acute at the moment for private-sector health professionals, such as dentists, optometrists and naturopaths, who have to meet safety requirements to reopen after months of little, if any, income. Among the new costs they have to manage, along with rent, is personal protective equipment like surgical-grade masks that may not be readily available.

“Not only are they recovering from a complete mandated closure of no revenues for a couple of months, now they’re coming to an office environment where things are just completely changed,” Dormuth said. It’s why the CFIB is asking provincial governments to give these companies access to provincial supply chains. CFIB is also asking the federal government to release revised eligibility rules for a $45-billion federal wage subsidy program that has been extended through the summer.

Canada Emergency Commercial Rent Assistance (CECRA)

Source: Toronto Star