COVID-19 Federal and Insurance Assistance for Businesses

As the COVID-19 crisis continues with no end in sight, many of you will face economic hardship and other obstacles that interfere with your ability to run your business. We have prepared this compilation of many the most impactful government relief measures that may be available for you in this time of uncertainty. It is based on our best current information and hopefully will answer some of your questions and offer guidance for further investigation into the benefits available. We will continue to monitor the news for updated information and will try to communicate any important updates promptly. We recommend that you confirm the current status of the measures we describe and review the websites for any other potential sources of assistance the government agencies might offer. As always, we hope that you and your loved ones are safe and are here for you if you have questions or concerns.

The Canadian Emergency Wage Subsidy (CEWS) - also called the Helping Businesses Keep Their Workers Wage Subsidy

Along with the Canadian Emergency Relief Benefit (CERB) This massive federal initiative is designed to help workers get through the worst of the COVID-19 crisis. The CEWS is a complement to the CERB, which the government hopes will enable employers to maintain some economic viability in the face of grim economic prospects for the immediate future. It originally was offered as a wage incentive for employers of 10%, but as of Wednesday April 1 was increased to 75% for businesses whose revenue has been affected by closures and shutdowns due to the COVID-19 pandemic but want to keep workers on the payroll. The goal is to provide an alternative for employers that can help sustain their business and preserve their existing employment relationships versus having to face greater disruption on both sides after the crisis is over.

It will provide all eligible businesses (regardless of size) with 75% of wages paid between March 15 and June 6, 2020 (to a maximum of $58,700, or $847 per week per employee). The government expects employers to make their best efforts to provide wage earners with top up payments as far as possible.

WHO IS ELIGIBLE?

All businesses that have seen a 30% or greater decline in gross revenue starting from March 15, 2020 and forward until June 6, 2020 currently.

To date, the details of how this subsidy will be paid have not been worked out. It is anticipated that it will be coordinated with the employer’s existing pay cycle wherever possible. It could be 5 to 6 weeks before employers receive initial subsidy amounts.

While the subsidy is offered for the benefit of both parties, employers must apply for the CEWS through the CRA website. Appropriate communication about this subsidy and it potential benefits for employees and employers must be held promptly.

Employers will have to provide records of a 30%+ decline in revenue for each month of eligibility compared to 2019. See CRA for details.

OTHER FEDERAL RELIEF FOR BUSINESSES

Additional federal relief measures for businesses and business owners include:

• Export Development Canada’s (EDC) Business Credit Availability Program (BCAP), which will provide credit solutions for individual businesses in sectors such as oil and gas, air transportation, and tourism - it is targeted at small and medium-sized businesses. See the EDC website for details.
• EDC will also guarantee new operating credit and cash flow term loans that financial institutions extend to small and medium-sized enterprises affected by the impact of COVID-19 up to $6.25 million - this programme targets export sector and domestic companies. See EDC website for details.
• The Business Development Bank of Canada’s co-lending program with financial institutions which will provide incremental credit amounts up to $6.25 million to small and medium enterprises for their operational cash flow requirements. See the Government of Canada news release of March 27, 2020.
• The Canada Emergency Business Account, which will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced. See the Government of Canada news release of March 27, 2020.

IMPORTANT: REGARDING BUSINESS INTERRUPTION INSURANCE

Business interruption insurance might be available to business owners under their commercial insurance policies. It is essential that you review the specific terms of your policy with your advisor or legal representative rather than assuming that coverage will be available for you. Each commercial policy is unique- business interruption coverage is an add-on that can be purchased. Typically, events like a pandemic will not be covered as a matter of routine under a business Interruption or supply chain interruption clause. You may have purchased coverage that will be triggered by COVID-19, or you may be covered for certain portions of your losses.

If you do have coverage, it will typically be for payment of the actual loss of "business income" because of a "necessary suspension" of operations during the "period of restoration". The impact of these terms will need to be evaluated in the claims process. It leads to challenges with documenting and proving the claimed loses of "business income". Make sure that you discuss the insurer’s expectations with your advisor.

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