Prime Minister Justin Trudeau announced on Friday a major increase to the federal emergency package for Canadian businesses, boosting the wage subsidy for small and medium-sized companies to 75 per cent, up from the 10 per cent promised last week.
The measure, which Ottawa hopes will help qualifying businesses keep employees on staff and even rehire those who had been laid off, is being back-dated to March 15, with more information expected by Monday, Trudeau said during his daily press conference in Ottawa.
“This means that people will continue to be paid even though their employer has had to slow down or stop its operations because of COVID-19,” Trudeau said. “We’re helping companies keep people on the payroll so that workers are supported and the economy is positioned to recover from this.”
The federal government is also launching a new Canada Emergency Business Account to provide loans of up to $40,000 to small and medium-sized businesses that will be interest-free for one year. These loans provided by private banks will be guaranteed by the federal government. If certain conditions are met, the first $10,000 will be forgiven, Trudeau said.
The federal government will also provide an additional $12.5 billion through Export Development Canada and the Business Development Bank to help small and medium-sized businesses with their operational cash flow requirements, Trudeau said.
“This means that businesses will be able to apply for a guaranteed loan when they go to their financial institutions to get help as they weather the impacts of COVID-19,” Trudeau said.
In addition, the federal government will defer federal sales taxes and harmonized sales taxes (GST and HST), as well as duties and taxes owed on imports until June, the prime minister said.
“This is the equivalent of giving $30 billion in interest-free loans to businesses,” he said.
“So if you’re struggling to get by right now or you have a payment due at the end of the quarter, we’re going to give you more time.”
Trudeau said the government was still working out how much these new announcements will cost the treasury, but said it was important to get the news of these new economic support measures to struggling businesses as soon as possible.
‘Exactly what the doctor ordered’
The Canadian Chamber of Commerce praised the new measures, calling it “exactly what the doctor ordered, and what business groups have been asking for.”
75% wage subsidy is exactly what the doctor ordered, and what business groups have been asking for. Very good news for small businesses and their workers, increasing their ability to keep staff on the payroll.
— Canadian Chamber of Commerce (@CdnChamberofCom) March 27, 2020
“It provides hope for hundreds of thousands of businesses and millions of their employees who had been facing a bleak future,” said in a statement Perrin Beatty, president and CEO of the Chamber. “It will help ensure that, when this pandemic passes, Canadian businesses and their employees will be there to restart our economy.”
Trudeau could not say precisely how long Canadians will have to stay home and practise physical distancing.
“We are looking at all possible scenarios. Some scenarios are more serious and last longer than others, and this really depends on the choices Canadians make today,” he said. “We know that we’re talking about weeks, and perhaps months, but we will see if we are flattening the curve.”