What happened: Federal government unveils new supports for small businesses, including significant boost to wage subsidy
Why it matters: The government says measures will be more effective at keeping workers on the payroll
Ottawa’s previously announced wage subsidy for small businesses is getting a massive boost from 10% to 75%.
Prime Minister Justin Trudeau acknowledged Friday (March 27) the government needed to do “much more” to help small businesses keep workers on the payroll.
“We’re helping companies keep people on the payroll so workers are supported and the economy is positioned to recover from this,” he said during his daily briefing outside his home in Ottawa.
Critics had taken aim at the previous 10% subsidy, noting it paled in comparison to parallel subsidies in European nations, and would not be nearly enough to support workers and small businesses as the economy grinds to a halt amid the pandemic.
Changes to the subsidy will be backdated to March 15.
Trudeau also announced a Canada Emergency Business Account, allowing banks to offer $40,000 loans guaranteed by government to eligible businesses that will come interest-free for the first year.
Under certain conditions, $10,000 of the loan will be forgivable.
Export Development Canada and the Business Development Bank of Canada will be receiving $12.5 billion in additional funding to help SMBs with cashflow, the prime minister said.
Trudeau also revealed government would defer GST and HST payments as well as duties and taxes owed on imports until June.
“This is the equivalent of giving $30 billion in interest-free loans to businesses,” he said.
More details, such as the number of businesses and workers that could benefit from the new measures, will be forthcoming “hopefully” by Monday, Trudeau said.
The announcements from the prime minister come hours after the Bank of Canada unexpectedly cut its overnight rate to 0.25% — the lowest level in a decade.