Prime Minister Justin Trudeau moved significantly Friday to provide assistance to Canadian small business owners who are struggling to survive the economic challenges brought on by COVID-19 (coronavirus).
The Prime Minister announced the federal government will be boosting the wage subsidy for small and medium businesses to 75 per cent, which was a substantially higher level than the previously announced 10 per cent.
The initiative is an effort to help employers keep employees on staff during these challenging times.
Also, it was announced that a special emergency business account is being introduced that provides a $40,000 guaranteed-loan for small business that would be interest free in the first year.
“While details are scarce, CFIB (Canadian Federation of Independent Business) thanks Prime Minister Trudeau and Finance Minister Morneau for responding to the calls from small business owners for a more significant wage subsidy package to help small businesses retain workers. The announcement today of a 75 per cent wage subsidy for SMEs affected by the COVID-19 crisis will not help every company or employee, but will help small firms retain hundreds of thousands of workers who would otherwise be laid off,” said Kelly.
“There are thousands of employers who have been making decisions day by day, doing their best to continue to pay their workers with the full knowledge that their resources will soon run out. It is especially encouraging to hear that the new wage subsidy will be backdated to March 15, which will allow some small businesses that have had to lay off staff to rehire them quickly. We have already heard from a few that will do just that.
“Ensuring as many workers as possible remain connected to and paid by their employers will reduce the financial and mental stress on workers and ensure that Canada’s economic recovery will begin the day after the health emergency phase ends.”
But Kelly said it is critical that small business owners get details on the program quickly.
“This level of wage subsidy is the beginning of the scale that Canada needs to be responding to the COVID-19 crisis with, and we encourage the Government of Canada to take further large economic steps to protect people, business and the economy,” said Adam Legge, President of the Business Council of Alberta. “Other nations are responding with economic supports in the range of 10-15 per cent of GDP and Canada should be targeting a similar level of response.
“We also wish to re-iterate our request to the federal government to suspend or delay any cost increases for Canadians and Canadian businesses. That is why we ask the federal government to delay any planned tax increases or burdensome new regulations during this crisis, specifically the planned 50 per cent increase to the carbon tax on April 1st .”
Brian DePratto, Senior Economist with TD Economics, said “the Canadian COVID-19 response is being fleshed out day by day, and to date, the measures have been largely (much needed) stop-gaps.”
“We continue to look for further announcements aimed at sectors such as travel/tourism and energy that are likely to face longer-term challenges even after economic life returns to ‘normal’,” he said.
