CFIB Statement On Draft Legislation On Wage Subsidy Extension And New Rent Relief Program
BRITISH COLUMBIA – The Canadian Federation of Independent Business (CFIB) welcomes recent legislation on the extension of the Canada Emergency Wage Subsidy (CEWS) and the new rent relief program, the Canada Emergency Rent Subsidy (CERS), for small businesses impacted by COVID-19.
A majority (63 per cent) of small business owners say the new and updated federal relief programs, including CEWS and CERS, offer a lifeline for the survival of their business. CFIB calls on all political parties to move quickly to review, revise and pass the necessary legislation.
Canada Emergency Wage Subsidy (CEWS)
It is good news that the wage subsidy will be extended until June 2021 and that plans to reduce the generosity of the subsidy over the fall have been paused. The wage subsidy formula will be based on 80 per cent of a firm’s revenue loss for most businesses over the fall. Those with losses of over 50 per cent can qualify for a top-up of up to an additional 25 per cent.
“While CFIB welcomes this significant support, we further suggest government consider an additional top-up for businesses that are facing new or ongoing closures/restrictions, especially due to the second wave of COVID-19, says Dan Kelly, President of CFIB. “In addition, ensuring new, seasonal, or micro-sized businesses can access this subsidy and that business owners can use the program to cover some of their previous dividend income will be critical over the fall.”
Canada Emergency Rent Subsidy (CERS)
“We are pleased the government has incorporated CFIB’s three main recommendations into the legislation for the new rent program, including ensuring the program is independent of landlord participation, continues until June 2021 and provides support to businesses with revenue losses on a sliding scale. It is also welcome news that commercial mortgage interest for firms that own their own property will be eligible for a subsidy too,” said Laura Jones, Executive Vice-President of CFIB.
The rent subsidy will provide up to a 65 per cent subsidy of rent, depending on the level of business revenue loss. The government provided the criteria on which firms will be eligible for a rent subsidy top-up to up to 90 per cent. These include restrictions on business activities for a period of at least one week that will reduce revenues by at least 25 per cent. CFIB is encouraged by these details, but will be examining the legislation carefully to ensure all firms subject to ongoing restrictions will qualify.
Rent relief is critical to the survival of many Canadian small businesses, especially with some provinces entering a second lockdown and requiring businesses to close again. CFIB further calls on government to create a retroactive pathway for businesses that were eligible under the previous CECRA program but could not access critical rent relief because their landlord chose not to participate.
Business owners, especially those who have not accessed any rent relief, have been waiting a long time for an improved rent relief program and are eager for the program applications to be made available. Since the first of October and November have already passed, we urge the government to work swiftly to launch the program as soon as possible.
Canada Emergency Business Account (CEBA)
While it is good news to get further details on the wage and rent subsidy, many businesses are desperate to know when they will be able to apply for the promised CEBA loan expansion. Government has agreed to a second round of CEBA financing, with fresh loans of $20,000 available to business owners who have already used the initial $40,000 loan. An additional $10,000 is to be forgivable. Details of the timing of CEBA expansion and ongoing fixes to the eligibility requirements for new and micro-sized businesses are urgently needed. Unfortunately, the recent draft legislation does not include any CEBA news.