Federal Economic Statement – Funding Supports for Businesses & Individuals

 

FYI

 

Below is a listing of the key supports the Federal government will be providing to assist Canadians through the pandemic, as outlined in their economic statement released this afternoon.

 

The Canada Emergency Wage Subsidy

Recognizing that we will face a difficult winter with the second wave, and that public health restrictions pose ongoing challenges to employers, the government wants to make sure businesses and workers have the support they need in the coming months.

 

• Given the ferocity of the second wave and its expected economic impact, the government is proposing to increase the maximum subsidy rate to 75 per cent for the period beginning December 20, 2020 and to extend this rate until March 13, 2021, to provide greater certainty to employers.

 

The government will continue to monitor health and economic conditions to determine details for subsequent periods.

 

Enhancements to Employment Insurance

To ensure Canadians have the support they need, the government announced temporary changes for one year that have made the Employment Insurance (EI) program more simple, flexible and generous. This will not only provide people with the income support to afford the basics, it will also get people ready to re-enter the labour market by giving them access to EI-funded training and employment support.

• Canadians with 120 hours of insurable work or more can now qualify for regular and special benefits, wherever they live in Canada.
• Canadians receiving EI are now eligible for a benefit rate of at least $500 per week, or $300 per week for extended parental benefits.
• Canadians claiming EI benefits for a job loss are now eligible for at least 26 weeks of benefits.
• For self-employed fish harvesters who rely on EI in the off-season, EI fishing benefits are calculated using either their earnings for the current claim or their earnings from their fishing claim for the same season from either of the previous two years, whichever is highest.
• The usual one-week waiting period and the requirement to provide a medical certificate are waived for EI sickness benefit claimants.

 

EI benefits will now be available to more vulnerable Canadians, including many women who would not have had enough insurable hours of work to qualify in the past, supporting an additional 400,000 people through the program.

Canada Recovery Benefits

The Canada Emergency Response Benefit provided emergency income support to millions of Canadians. Since the end of the program, 2 million claimants have applied to the simplified Employment Insurance system but many Canadians were still not eligible for EI. The government launched three new income support benefits for these workers—those who continued to be unable to work for reasons related to COVID-19, such as providing care to a relative. The Canada Recovery Benefits are available to self-employed Canadians and gig workers, as well as workers who have not lost their job but have seen significant income loss due to COVID-19. To date, 1.5 million Canadians have applied to receive one of these benefits. The benefits are available until September 25, 2021.

 

• A Canada Recovery Benefit of $500 per week for up to 26 weeks is supporting Canadians who have not returned to work due to COVID-19 or whose income has dropped by at least 50 per cent. These workers must be available and looking for work and must accept work where it is reasonable to do so. In addition to providing income support to help cover basic expenses, it will also help people stay connected to the job market by allowing them to earn some level of income while receiving the benefit.
• A Canada Recovery Sickness Benefit of $500 per week for up to two weeks is available for workers who are unable to work for at least 50 per cent of the week because they are sick or must self-isolate for reasons related to COVID-19—including those with underlying conditions, who are undergoing treatments or who have contracted other sicknesses that make them more susceptible to COVID-19.
• A Canada Recovery Caregiving Benefit of $500 per week for up to 26 weeks per household is available for workers unable to work for at least 50 per cent of the week because they must care for a child under the age of 12 or a family member who requires supervised care because schools, child care centres or care facilities are closed due to COVID-19, or because the child or family member is sick and/or required to quarantine or is at high risk of serious health implications because of COVID-19. This will particularly benefit women who tend to shoulder the majority of caregiving responsibilities in Canada.

 

The Canada Emergency Rent Subsidy

Business owners have worked hard to adapt to the pandemic—finding ways to offer services online, providing delivery options, reducing store hours, updating factories to make them safer for workers, or investing in PPE. Even so, for many, revenues are still down, while costs like rent and mortgages stay the same. The recently launched Canada Emergency Rent Subsidy provides direct and easy-to-access rent and mortgage support from September 27, 2020 until June 2021 for qualifying organizations affected by COVID-19.

This program lets business owners apply directly, without going through landlords. The rent subsidy is provided to eligible tenants and property owners, supporting businesses, charities, and non-profits that have suffered a revenue drop, by subsidizing eligible expenses. The current rate provides a subsidy, on a sliding scale, up to a maximum of 65 per cent until December 19, 2020.

 

• To provide greater certainty to businesses and other organizations, the government is proposing to extend the current subsidy rates of the Canada Emergency Rent Subsidy for an additional three periods. This means a base subsidy rate of up to 65 per cent will be available on eligible expenses until March 13, 2021. This would ensure that businesses and other organizations continue to have the support they need through the second wave of the pandemic and the winter.

 

Since launching on November 23, applicants have been able to use the rent subsidy towards rent payable. The government will soon introduce legislation to formalize this as an eligible expense.

 

Lockdown Support

Under the new Lockdown Support program, organizations that are subject to a lockdown and must shut their doors or significantly restrict their activities under a public health order are eligible for an additional 25 per cent top-up, in addition to the Canada Emergency Rent Subsidy base subsidy of up to 65 per cent, until December 19, 2020. This means hard-hit businesses can receive up to 90 per cent support for rent.

 

• The government is proposing to extend the rate of 25 per cent for the Lockdown Support for an additional three periods, until March 13, 2021.

 

 

The Canada Emergency Business Account

To date, the Canada Emergency Business Account (CEBA) has provided over 790,000 small businesses and non-profits with interest-free loans, partially forgivable if paid back by December 31, 2022.

Initially providing loans of up to $40,000, with up to $10,000 forgivable, the CEBA program will soon be expanded, allowing qualifying businesses to access an additional interest-free $20,000 loan, in situations where there is need. Half of this additional amount, up to $10,000, would be forgivable if the loan is repaid by December 31, 2022.

 

The government recently extended the availability of the CEBA program to small businesses that have not been operating from a commercial banking account. These small businesses are now able to apply for the CEBA, provided that they have successfully opened a new commercial account and fully meet the eligibility requirements of the program. Loans are provided through financial institutions, such as banks and credit unions, in cooperation with Export Development Canada.

 

The deadline to apply for a CEBA loan has been extended to March 31, 2021.

 

These enhancements demonstrate the government’s commitment to stand by small businesses to ensure they can continue to support families and communities across the country.

 

Support for Highly Affected Sectors

As outlined in the Speech from the Throne, some businesses, particularly those in highly-affected sectors like tourism and hospitality, have struggled to access sufficient financing. To help address this challenge and bridge these businesses through the crisis, the government proposes to work with financial institutions in the near term to offer loans on more generous terms to the hardest hit businesses, to help ensure they remain viable and in place to drive future economic growth:

 

• The government will work with financial institutions in the near term to create the Highly Affected Sectors Credit Availability Program (HASCAP) – a new program for the hardest hit businesses, including those in sectors, like tourism and hospitality, hotels, arts and entertainment. This stream will offer 100 percent government-guaranteed financing for heavily impacted businesses, and provide low-interest loans of up to $1 million over extended terms, up to ten years. Rates will be lower than those offered in BCAP and beneath typical market rates for hard hit sectors.

 

The government will provide details on the Highly Affected Sectors Credit Availability Program soon.

 

Regional Relief and Recovery Fund

Businesses, workers and communities in every corner of Canada have been impacted by COVID-19. To help support those businesses unable to access other federal pandemic support programs, the government announced the $962-million Regional Relief and Recovery Fund on April 17, providing significant funding through Canada’s Regional Development Agencies. The government increased funding on October 2, bringing total support to more than $1.5 billion.

 

• $568 million for Western Economic Development
• $34 million for the Canadian Northern Economic Development Agency
• $72 million for the Federal Economic Development Initiative for Northern Ontario
• $436 million for the Federal Economic Development Agency for Southern Ontario
• $281 million for Canada Economic Development for Quebec Regions
• $170 million for the Atlantic Canada Opportunities Agency

 

To date, this program has protected over 102,000 jobs and supported over 14,700 businesses, including over 8,500 clients in rural areas and 5,100 women-owned businesses.

 

• To better ensure the Regional Relief and Recovery Fund can continue to support small businesses unable to access other federal pandemic support programs, including replicating newly announced Canada Emergency Business Account loan limit increases, the government is proposing a top-up of up to $500 million, on a cash basis, to Regional Development Agencies and the Community Futures Network of Canada, bringing total funding to over $2.0 billion in this fund.
• The government is also proposing to provide up to $3 million to the Canadian Northern Economic Development Agency for foundational economic development projects that will support small businesses in Canada’s Territories.
• To better tailor support to businesses in Western Canada, in recognition of its diverse regional economies, the government proposes to introduce a new approach to regional development in the West by creating separate regional development agencies for British Columbia and the Prairies, adding a new, seventh Regional Development Agency in British Columbia. Additional details and investments will follow.

 

Support for Tourism and Hospitality

Communities across Canada have been hit hard by the decline in tourism. Approximately 750,000 workers and 2 per cent of Canada’s GDP are attributed to tourism. Small and medium sized firms dominate the tourism sector and it employs a higher proportion of youth, women and Indigenous people compared to their share of the workforce. Domestic and international tourism is also a key economic generator and an important source of jobs in many rural and northern regions of the country.

 

Pandemic restrictions have taken a toll on Canada’s tourism industry—on jobs, businesses and communities—and it is expected that the uncertainty will persist into 2021. The recently launched Canada Emergency Rent Subsidy and Lockdown Support, enhanced Canada Emergency Business Account, and Canada Emergency Wage Subsidy at the proposed new maximum subsidy rate of 75 per cent, along with the new Highly Affected Sectors Credit Availability Program, will continue to provide a robust backstop for the sector in the months ahead. These programs have been designed with diverse, hard hit sectors like tourism and hospitality in mind. To date, approximately $9.7 billion is estimated to have flowed to businesses in these sectors through the Canada Emergency Wage Subsidy, Canada Emergency Business Account and the Canada Emergency Commercial Rent Assistance.

 

The Regional Relief and Recovery Fund has provided $202 million in support to 2,830 tourism-related businesses.

 

• Recognizing the importance of the Regional Relief and Recovery Fund in supporting local tourism businesses, the government will earmark a minimum of 25 per cent of all the Fund’s resources to support local tourism businesses, providing more than $500 million in program support through June 2021.

 

The government will continue to work with partners and stakeholders to identify the best ways to support the longer term rebound and recovery of this important sector.

Support for Workers in the Live Events and Arts Sectors

Cultural and recreation industries, which employ hundreds of thousands of Canadians, have been particularly hard hit by the pandemic, being among the first to shut down and likely among the last to return to regular activities. The COVID-19 pandemic has resulted in the near complete suspension of live events and arts presentations, affecting thousands of self-employed and freelance artists and event workers across the country. The pandemic has also has resulted in the drastic reduction of advertising revenues for Canadian broadcasting companies, including local television and radio stations on whom many Canadians rely for their news and entertainment.

 

• To support the planning and presentation of COVID-19-safe events and the arts — including both live and digital — and to provide work opportunities in these sectors, the government will provide $181.5 million in 2021-22 to the Department of Canadian Heritage and the Canada Council for the Arts to expand their funding programs. This includes a one-year renewal of funding provided in Budget 2019 for the Building Communities through Arts and Heritage program, the Canada Arts Presentation Fund and the Canada Music Fund.
• The government will also provide additional COVID-19 relief to local television and radio stations by supporting the waiving of broadcasting Part II licence fees in 2020-21, which are collected annually by the Canadian Radio-television and Telecommunications Commission. Waiving these fees will provide up to $50 million in relief to these companies, helping them to stay afloat and maintain their broadcasting offerings to Canadians.

 

The government understands that certain major live events and festivals will require unique support. The government will work with industry to prevent the closure of unique and irreplaceable flagship events and festivals across Canada, and to ensure the survival of key, globally-recognized assets in this sector.

 

To address the impact of COVID-19 on film and television productions across the country, the government announced a $50 million Short-Term Compensation Fund in September 2020. This initiative is compensating for the lack of insurance coverage for COVID-19–related filming interruptions and production shutdowns, allowing the industry to continue with its operations.

Support for the Air Sector

Canada is a vast country, and we rely more on air travel than others. Carriers have cut routes during the pandemic, leaving Canadians in certain communities with limited mobility and limited access to essential goods and services. Since the beginning of the pandemic, the government has announced $192 million to support essential air services to remote and northern communities. The funding is helping to ensure these communities have continued access to food, medical supplies, and other essential goods and services.

 

Canada’s air travel system directly employs over 100,000 Canadians. However, COVID-19 and related health restrictions have caused Canada’s air sector to suffer a near collapse in passenger travel. This is threatening the viability of our airlines and airports, and most importantly, the people who work there and the communities that rely on them. Since the beginning of the pandemic, air sector workers have received over $1.4 billion in support through the Canada Emergency Wage Subsidy.

 

The government is committed to ensuring that Canada’s air sector continues to connect Canadians and Canadian marketplaces, as part of a dynamic aerospace industry. However, since the beginning of the pandemic, we have heard from many Canadians who had booked travel and ended up stuck with vouchers for trips they could not take instead of getting refunds. The government is establishing a process with major airlines regarding financial assistance. As part of this process, the government will ensure Canadians are refunded for cancelled flights.

 

• To support regional air transportation, including regional air carriers, the government proposes to provide up to $206 million over two years, starting in 2020-21, to the Regional Development Agencies for a new Regional Air Transportation Initiative.
• To support small and regional airports in making critical investments in health and safety infrastructure, the government proposes to provide additional funding of $186 million over two years, starting in 2021-22, for the Airports Capital Assistance Program (ACAP). Small federally-owned airports, which are not currently eligible for ACAP, would also be eligible to access the program for 2021-22 and 2022-23.
• To support large airports in making critical investments in safety, security and transit infrastructure, the government proposes to provide $500 million over six years, starting in 2020-21, to establish a new transfer payment program. Transit projects at large airports, such as the new Réseau express métropolitain station at the Montreal Airport, will be eligible for funding. The government will consider supporting further airport investments to help address the health, safety and economic impacts of COVID-19.
• To continue supporting the operations of Canada’s major airports, the government proposes to extend $229 million in additional rent relief to the 21 airport authorities that pay rent to the federal government, with comparable treatment for Ports Toronto, which operates Billy Bishop Toronto City Airport. This support to airports would be made up of repayable and non-repayable rent relief, with non-repayable support costing $29 million over 4 years, starting 2020-21. Rent relief would be provided as follows:

o    Waiving rent payments for small airports (i.e., those with passenger volumes of less than one million passengers in 2019) for 2021, 2022 and 2023;

o    Waiving rent payments for medium airports (i.e., those with passenger volumes between one million and ten million in 2019) for 2021; and,

o    Deferring rent payments for the largest airports for 2021, with repayment to occur over ten years, starting in 2024.

• To further assist airports to manage the financial implications of reduced air travel, the government proposes to provide $65 million in additional financial support to airport authorities in 2021-22.

Support for Innovative Businesses

• To ensure that innovative, intellectual property-rich firms have the support they need to face the challenges presented by COVID-19, it is proposed that $250 million over 5 years, beginning in 2021-22, be provided to the Strategic Innovation Fund. Through its continued support of large-scale transformative projects, the Strategic Innovation Fund will help Canada’s most innovative firms and industries weather the pandemic and grow into world leaders that will help drive growth and create jobs in the Canadian economy.

Large Employer Emergency Financing Facility

In May 2020, the government launched the Large Employer Emergency Financing Facility (LEEFF) to make bridge credit financing available to large Canadian businesses whose needs during the pandemic are not being met through conventional financing. The objective of this support is to help protect Canadian jobs, help Canadian businesses weather the current economic challenges, and avoid bankruptcies of otherwise viable firms where possible.

 

The government is exploring options to enhance the LEEFF program, to respond to the specific liquidity needs of a greater number of large Canadian businesses.

 

Leanna Karremans, MPPAL

Director – Research, Policy and Communications