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COVID-19 Programs and Subsidies for Public Companies

June 01, 2020

COVID-19 Programs and Subsidies for Public Companies

Synopsis
8 Minute Read

How public companies can benefit from the $250 billion in federal stimulus measures and what’s required to qualify.

The federal government has invested upwards of $250 billion to help Canadian organizations navigate the ongoing COVID-19 crisis. Do you know which programs and subsidies you qualify for and how they can help you navigate this unprecedented period?

Below is a summary of seven key initiatives — along with qualifying criteria, caveats and how MNP can help you access them.

Summary of COVID-19 programs and subsidies for public companies

The financial impacts of COVID-19 on Canadian businesses and individuals has been, and will continue to be, substantial. The Canadian government has reacted by introducing more than $250 billion in stimulus measures

to alleviate the hardship and help Canadians get through this difficult time. Below is an overview of some of the measures that are relevant for your business, current as of May 20, 2020.

 

Program Overview

Key Criteria

Canada Emergency Wage Subsidy (CEWS)

Weekly subsidy of up to $847 per employee, per week to eligible employers from March 15 through June 6, 2020.

 

  • Employer has suffered a drop in gross revenues of at least 15 percent in March, 30 percent in April or 30 percent in May compared to the gross revenues of the same month in 2019 or the average revenue earned in January and February 2020.
  • Employers may calculate their revenues under the accrual or cash methods, but not a combination of both.
  • Open to employers of all sizes and across all sectors except public sector.
  • Eligibility is based on the salary or wages paid to employees.
  • Employers are expected to make best efforts to top up salaries to 100 per-cent of maximum wages covered.

Canada Emergency Commercial Rent Assistance (CECRA)

Forgivable loans to qualifying commercial property owners covering 50 percent of three monthly rent payments of eligible small business tenants experiencing financial hardship during April, May, and June. More details pending on an additional rent forgiveness program for large busi-ness tenants — presumably who pay more than $50,000 per month in rent.

 

  • Impacted tenants must pay less than $50,000 per month in rent and have temporarily ceased operations or have experienced at least a 70 percent drop in pre-COVID-19 revenues.
  • Loans will be forgiven if:
    • The mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75 percent for the three corresponding months under a rent forgiveness agreement ­– the small business tenant would cover the remainder of the rent, up to 25 percent.
    • The rent forgiveness agreement includes a term to not evict the tenant while in place.
  • This support will also be available to non-profit and charitable organizations.

Tax Filing and Payment Deadline Extensions

The Canada Revenue Agency (CRA) has extended the filing deadline for person-al income tax returns until June 1, 2020. Additional deferrals available include:

  • Returns, forms, elections and designations that were due after March 18, 2020 [until June 1, 2020]
  • Any income tax amounts that become owing on or after March 18, 2020 and before September 2020 [until August 31, 2020]
  • GST / HST payments [until June 30, 2020]

 

  • Payment relief applies to tax balances due and instalments under Part I of the Income Tax Act.
  • No interest or penalties will accumulate on these amounts during the deferral period.
  • Payroll deductions and related activities must continue to be remitted on time.

 

 

Program Overview

Key Criteria

Canada Emergency Business Account (CEBA)

Businesses can apply for a $40,000 loan from a financial institution that will be interest-free until the end of 2022. The federal government will guarantee these loans and approximately $10,000 of a loan may be forgiven if the balance is repaid before the end of 2022.

 

  • Organizations must demonstrate they paid between $20,000 to $1 million in total payroll in 2019.
  • The business must use the loan funds to cover operating costs.

BDC Working Capital Loans

Working capital loans of up to $2 million with flexible terms and payment postponements for up to 6 months. Postponement of payments up to 6 months, free of charge, for existing BDC clients with a total BDC loan commitment of $1 million or less. Reduced rates on new eligible loans.

• Companies must have been commercially active prior to the COVID-19 impact and demonstrated revenue — though not necessarily have been profitable if there was a strong growth trend.

EDC Business Credit Availability Program (BCAP) Guarantee Conduit

Provides organizations with a AAA-rated EDC guarantee on new loans in response to COVID-19 funding needs.

  • Loans are available up to $6.25 million CAD.
  • Terms and conditions are determined on a transactional basis as per the underwriting process

 

  • Applies to Canadian businesses in need of short-term liquidity to sustain operations through the pandemic — including those with no export sales.
  • Funds must be used to finance operations (rent, payroll, etc.)
  • Funds may not be used to repay or refinance debt, dividend payouts, shareholder loans, bonuses, stock buybacks, option issuance or to increase executive compensation.

BDC Business Credit Availability Program (BCAP) Co-Lending Program

Provides organizations with loans up to $6.25 million CAD.

  • Qualified applicants can apply for both the EDC and BDC Co-Lending Program.
  • Loans are interest-only for the first 12 months. Terms are maximum 10 years and maximum amortization of 20 years.

 

  • Applies to Canadian businesses in need of short-term liquidity to sustain operations through the pandemic.
  • Funds must be used to finance operations (rent, payroll, etc.)
  • Funds may not be used to repay or refinance debt, dividend payouts, shareholder loans, bonuses, stock buybacks, option issuance or to increase executive compensation.

MNP continues to support businesses and individuals negatively impacted by COVID-19 and has helped numerous businesses successfully apply for these programs. Our experienced team of Public Companies and Corporate Finance professionals can:

  • Advise on structuring
  • Prepare and submit applications
  • Prepare a five to eight-page mini-Confidential Informational Memorandum (CIM)
  • Prepare a two-year, forward-looking forecast linked to the loan underwriting process only
  • Assist with negotiations
  • Assist with closings
For more information about any of these programs and how to access them, contact:

David Danziger, CPA, CA
National Leader, Public Companies
416.515.3923
[email protected]

Dan Porter
Managing Director, MNP Corporate Finance
416.515.3877
[email protected]

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