WELLINGTON COUNTY – The flurry of financial relief programs for businesses announced in March and extended through the summer, are starting to wind down.
Tax deferment deadlines are approaching. And intake for most of the loan programs have ended as well.
The biggest program was the Canada Emergency Wage Subsidy, or CEWS and that is wrapping up in November.
“Quite a few businesses accessed the CEWS program,” said Bud Arnold, a professional accountant, tax specialist and partner with Baker Tilly Canada who operates from Elora and Guelph.
“For a payroll-intensive business, this helped keep people on the payroll.”
Through CEWS, the federal government paid 75 per cent of salaries and wages for eligible employees while a company paid the remaining 25%.
“That’s been revamped,” Arnold said. “Now, rather than the fixed percentage, there’s a sliding scale. If revenue has dropped a little, you get a little; if revenue has dropped a lot, you get a lot. Through the next few months the percentage of wages covered is declining. The government is trying to wean business off the program.”
The Canada Emergency Response Benefit (CERB) program is also winding down although it was recently extended another four weeks, until the end of September.
This is the program that saw employees receive $2,000 a month if they were laid off due to the pandemic.
After September, people who have not returned to work will transition to Employment Insurance benefits.
There have been a number of loan programs for businesses as well, the most popular being the Canada Emergency Business Account (CEBA).
The government website explains this program best:
“Originally launched on April 9, 2020, CEBA is intended to support businesses by providing financing for their expenses that cannot be avoided or deferred as they take steps to safely navigate a period of shutdown, thereby helping to position businesses for successful relaunch when the economy reopens.
“This $55 billion program provides interest-free loans of up to $40,000 to small businesses and not-for-profits.
“Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).
“As of June 26, 2020, businesses eligible for CEBA now include owner-operated small businesses that do not have a payroll, sole proprietors receiving business income directly, as well as family-owned corporations remunerating in the form of dividends rather than payroll. This means that more small businesses can access it.”
Tax deadline extensions are also reaching the end.
“The grace period is over at the end of September. Going forward, the government will look for payments to be made on time,” Arnold said.
“That will be a big hit for businesses who deferred their payments.”
Yet businesses seem to be finding their way forward and some are even returning to normal revenues, Arnold said.
“It seems as though a lot of businesses are finding ways to carry on,” he said. “But certain businesses will continue to have a hard time – tourism, restaurants, and personal care providers will continue to struggle.”
He said the agricultural sector “has largely been able to continue, so they are not hard hit yet. That is good news for our geography and demography.
“Tech companies have also benefitted. A lot of businesses have expanded their bandwidth, held Zoom or video conferences and have made investments in technology. Several businesses have been able to pivot and have done well.”
But the impact of COVID-19 on the economy has been profound and different from depressions and recessions in the past.
“It’s very different from what we’ve seen before. That’s because the driver isn’t an economic problem – it’s a health problem. So, how we get out of it will have to be different as well,” he said.
“What I’d like to see coming out of this is more restraint and discipline in fiscal planning. [Before the pandemic] the economy had been growing, but we were still spending more than we were taking in.”
For the personal budget and the business budget as well, “it’s back to basics,” he said. Avoid debt, manage your spending, and reign in expenses as much as possible.