If you’re a business owner, you’ve likely made use of one of the various relief and support programs that the government has provided over the past 24-months.
And rightly so; it’s been a tough time for all of us, none more so than for small local businesses.
However, as we slowly progress into the post-pandemic world, these relief and support programs are changing. With the help of those at the Royal Bank of Canada (RBC), we’ve compiled specifics on what, when, and how some of the major programs are set to change.
These changes are essential, as they’ll inform you of any action you may be required to take or any deadlines you need to know about. Hopefully, you’ll also stumble across something that can help your business with a bit of a boost as we look forward to 2022.
Firstly, let’s look at the changes to the Canada Emergency Business Accounts (CEBA):
What is a CEBA?
As per RBC, these accounts were provided to Canadian businesses “adversely affected” by the economic ramifications of the pandemic; they were provided by the Canadian Federal Government and supplied business owners with loans of up to $60,000.
Currently, these loans are funded as “revolving line[s] of credit.”
However, the terms of this loan are set to change in the new year; on the 20th of January 2022, the outstanding balance of your account will convert into a term loan and will no longer be treated as a “revolving line of credit.”
Loan Repayments & Loan Forgiveness
Fortunately for many Canadian Business owners, many organizations can avoid paying their loan back in full via loan forgiveness if they pay back a significant chunk of their loan before the deadline of the 31st of December 2021.
Specifically, businesses with a loan of up to $60,000 may receive loan forgiveness of up to $20,000, providing that $40,000 of their loan is repaid before the 31st of December 2021
Moreover, businesses with a loan of up to $40,000 are eligible for up to 25% loan forgiveness, providing that they had repaid 75% of their outstanding balance before (you guessed it) the 31st of December 2021.
In this instance, it does pay to be early.
For those unable to meet the conditions of the loan forgiveness program, interest will start to apply to your account from the 1st of January 2023. While from the 31st of December 2025, your loan, along with all of its accrued and unpaid interest, is due and repayable in its entirety.
Next, we’ll take a look at the Highly Affected Sectors Credit Availability Program, or HASCAP for short.
What is the HASCAP program?
Similar to CEBA, the purpose of this program is to help Canadian businesses adversely affected by the pandemic. It provided eligible applicants with loans of up to “$1 million to cover operational cash flow needs”.
Applications for this program are still open, and potential applicants have to apply until the 31st of December 2021. However, business owners should plan to finalize their applications before the end of November 2021 to allow their applications to ensure they meet the closing date.
Is my business an eligible applicant?
Successful applicants for this program “must have been financially viable before the 1st of March, 2020” and illustrate a significant subsequent decline in revenue following the onset of the pandemic.
Business owners should note that these loans are fixed rate and should exercise caution in the requested loan size.
Comprehensive details of the eligibility criteria can be found here.
Canada Emergency Rent Subsidy (CERS) and the Canada Emergency Wage Subsidy (CEWS) have closed phase 1 of their programs; however, phase 2 continues to enable businesses within ‘hard-hit sectors, like the hospitality industry, to continue to make use of the subsidy programs.
These programs provide businesses with financial support to subsidize their rent and wage bills, up to $300,000 in CERS, while an employer’s wage bill can be subsidized by up to 75% via the CEWS.
It’s also important to note that the following relief & support programs remain open and accessible to Canadian Organizations:
- Canada Recovery Hiring Program,
- BDC Co-Lending Program,
- BDC Mid-Market Financing Program,
- EDC Business Credit Availability Program (BCAP) Guarantee,
- Large Employer Emergency Financing Facility (LEEFF).
These programs remain open until the end of this calendar year, while the Recovery Hiring Program is in talks to be extended until the 7th of May 2022. Additionally, the LEEFF program is scheduled to remain open indefinitely.