May 2020

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ECONOMIC SUPPORT GETTING SUPPORT The federal government is offering a suite of economic-support measures for businesses BY DANIELLE SCHALK Many changes and additions have been made to the federal government’s COVID-19 Economic Response Plan since it was originally announced in mid-March. “We’re going to continue to consider the next steps we might need to take as this crisis unfolds and will be open to new measures appropriate to the challenges we face,” Minister of Finance, Bill Morneau, said at an April 1 press conference. Support for businesses currently includes access to credit, wage subsidies, an extension of the Work-Sharing program and flexibility on tax remitatance. The BCAP (Business Credit Availability Program) includes the new Canada Emergency Business Account, which provides interest-free, guaranteed loans of up to $40,000 to small businesses and not-for-profits to help cover operating costs. To qualify, organizations must have paid $50,000 to $1.5 million in total payroll in 2019. Full loan repayment by Dec. 31, 2022 will result in a 25-per-cent loan forgiveness. On April 5, the government confirmed restaurants and bars were eligible to apply for the BCAP. The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) have also worked with financial institutions to issue new operating credit and cash-flow term loans of up to $6.25 million to small- and medium-sized enterprises (SMEs) and co-lend term loans to SMEs for their operational cash-flow requirements. The co-lending program will provide incremental credit amounts of up to $6.25 million to eligible businesses. The Canada Emergency Wage Subsidy (CEWS) will cover 75-per-cent of each employee’s wage and is available to all businesses, ISTOCK.COM/NUTHAWUT SOMSUK 16 FOODSERVICE AND HOSPITALITY MAY 2020 FOODSERVICEANDHOSPITALITY.COM
Many industry organizations have been lobbying for increased measures to support the hospitality industry and its workers, particularly as publichealth measures became increasingly restrictive for operators. Restaurants Canada, along with industry associations from across the country, has submitted relief recommendations to government. Groups such as SaveHospitalityCA and One Table have also formed in the midst of the COVID- 19 crisis to boost the voice of the industry. Recommended actions being pushed by the industry include a stay on rent payments and injunction on evictions; flexibility on loans and mortgages; supplemented Employment Insurance (EI) benefits for those in cities with higher costs of living; forgivable loans to restaurants; suspension of federal and provincial taxes; lowered interest rates on credit cards; and extending the temporary-layoff period. “Many in our industry shut down even before it was mandated and we know we’ll likely be among the last of businesses able to reopen — meaning we’ll be incurring costs with zero revenues longer than any other industry,” says John Sinopoli, partner & executive chef of Ascari Hospitality Group and one of SaveHospitalityCA’s co-founders. “The majority of owners will not have the funds to make rent and continue to pay benefits to their laid off employees.” regardless of size, that meet eligibility criteria. To qualify, applicants must provide evidence their business has lost a minimum of 15 per cent of its gross revenue as a result of COVID- 19 for the month of March and a minimum of 30 per cent for April and May. Businesses will have to re-apply on a monthly basis through the Canada Revenue Agency (CRA), calculating revenue loss based on year-over-year revenue comparisons for each month. To address the needs of highgrowth companies and new businesses, losses can also be based on an average of revenue earned in January and February 2020. It has FOODSERVICEANDHOSPITALITY.COM also been proposed that employers be allowed to measure revenues either on the basis of accrual accounting (as they are earned) or cash accounting (as they are received). Based on an April 1 announcement, funds from this subsidy are expected to be available around May 13. The subsidy, which is being backdated to March 15, will cover up to three months and will be on the first $58,700 earned — allowing for up to $847 a week. The originally announced 10-per-cent Temporary Wage Subsidy for Employers, which was introduced as part of the initial federal response, is also available to small businesses, with no requirement to prove a decline in revenues. This three-month measure reduces the amount of payroll deductions required to be remitted to the CRA — up to $1,375 for each eligible employee and to a maximum of $25,000 total per employer. Additional measures include the Work- Sharing program, the maximum duration for which has been extended from 38 to 76 weeks, for workers who agree to reduce their normal working hours. And, GST/HST payments, duties and taxes on imports have been deferred for businesses until the end of June in an effort to ensure businesses have more liquidity. FH MAY 2020 FOODSERVICE AND HOSPITALITY 17
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May 2020

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