As Canadians continue to work together, apart, to help flatten the curve of COVID-19 (Coronavirus), the federal government has announced several ways they will be supporting businesses through this crisis. We’ve highlighted two Government of Canada Business Relief Programs that could make a meaningful difference for your floral business during this uncertain time: the Canada Emergency Business Account (CEBA), and the Canada Emergency Wage Subsidy Programs.
Canada Emergency Business Account (CEBA)
The Canada Emergency Business Account (CEBA), which was announced by the federal government on March 27th, is an excellent opportunity to access additional funds to help sustain your business.
According to the Royal Bank of Canada (RBC), the CEBA is:
- A $40,000 government guaranteed loan to help eligible businesses pay for operating expenses, payroll and other non deferrable expenses which are critical to sustain business continuity.
- A revolving line of credit of $40,000 until December 30th , 2020. After December 31st, 2020, any outstanding balance on the revolving $40,000 line of credit will be converted into a non-revolving 5 year term loan maturing on December 31st , 2025, at which time the balance must be paid in full.
Other CEBA Details:
- No interest applies until January 1st , 2023. Starting January 1st, 2023, interest accrues on the balance of the term loan at the rate of 5% per annum, payable monthly on the last day of each month.
- If you pay 75% of the balance of the term loan (as of January 1st , 2021), on or before December 31st, 2022, the remaining balance of your term loan will be forgiven. For example, if your balance is $40,000 on January 1, 2021 and you repay $30,000 on or before December 31st, 2022, the remaining $10,000 will be forgiven.
- If you do not repay 75% of the balance of the term loan (as at January 1st , 2021) on or before December 31st, 2022, the full loan balance and all accrued and unpaid interest will be due and payable on December 31st, 2025.
What’s the CEBA eligibility criteria?
- Your business has been a registered and operational business on or before March 1st, 2020.
- The person enrolling for CEBA must have the ability and authority to bind the organization.
- Your payroll expense is between $50,000 and $1 million. To confirm this, you will be required to provide the following information:
- Your employer account number, as reported at the top of your 2019 T4 Summary of Remuneration Paid.
- Your employment income reported in Box 14 of your 2019 T4 Summary of Remuneration Paid.
- A copy of your 2019 T4 Summary of Remuneration Paid, if requested.
- As per the requirements set out by the Government of Canada, you will agree to use funds from this loan to pay for operating costs that cannot be deferred, such as payroll, rent, utilities, insurance, debt payments and property tax.
How and when can I enroll for CEBA?
Banks and the Government are working together to build a fully online CEBA enrollment process for their clients. They were hoping to have the online enrollment process live this week (the week of April 6th). From our understanding, they will only accept online applications.
Businesses must enroll for CEBA with their primary financial institution where they have an existing business banking account, and cannot apply at more than one financial institution.
If you are considering enrolling for CEBA, we recommend visiting your financial institution’s website for further details and updates.
The government initially announced a 10% Wage Subsidy detailing up to $1,375 an employee and a $25,000 maximum per employer. More recently, they’ve announced a separate 75% Wage Subsidy for businesses who are continuing to pay their employees, but have seen declines in revenues as a result of COVID-19.
As outlined in the Government’s official announcement, businesses who have experienced a 30% decline in revenue qualify for the new wage subsidy. For example, declines in revenue for the month of March will cover the wage periods retroactively from March 15th to April 11th.
The original 10% subsidy and the 75% subsidy are separate subsidies. If you don’t qualify for the 75%s subsidy (since revenues may not be down 30%), you can still access the 10% subsidy.
The government uses a floral shop in the following example:
Bruno and Tisha run a floral shop in Burnaby, British Columbia. They have four full time employees, each earning $800 per week, and 6 part-time employees, each earning $400 per week, for a total weekly payroll of $5,600. Bruno and Tisha have closed their shop and are only fulfilling online orders during this challenging period. They are keeping all of their employees on the payroll, paying them their full regular wages, despite their revenues being down by 30 per cent. Bruno and Tisha would be eligible for a weekly wage subsidy of $4,200 ($600 for each of their full-time employees and $300 for each of their part-time employees).
We appreciate the government using this example as it shows their understanding of how florists continue to contribute to the Canadian economy, and bring joy during these challenging times.
The federal government hasn’t yet released how to apply for the newer 75% Wage Subsidy Program, but we will continue to stay attentive to their briefings and share any new information that could be helpful to our floral community.
April 10th, 2020 Update: Since originally publishing this article, the Canadian government has released more information on how to apply for The Canada Emergency Wage Subsidy. You can find new information, including how to apply, on their website.
Thank you for your continued efforts to help #FlattenTheCurve! We’re in this together.