COVID RESOURCE CENTRE
The impact of COVID-19 is being felt across Canada and the world. Our goal at Shajani LLP is to provide you with information that supports you in building a plan that helps your organization make decisions, and respond quickly. The team at Shajani LLP are standing by and are ready to help! There is no question too small.
A: Establish both a Response Plan and a Business Continuity Plan and designate a team to guide and respond to your business disruption. Your response should consider (at a high level):
Establishing a Response Team (representing key business functions and jurisdictions) to assess potential disruptions, as well as develop and implement response strategies. This team will also be responsible for monitoring daily COVID-19 updates, meeting regularly (e.g. daily) and adapting response strategies as new information emerges.
Develop a Response Plan for classifying and responding to the disruption caused by COVID-19 that is aligned with the potential impact to the business. Actions taken should be contingent on the level of COVID-19 infection and spread within office(s) (and surrounding communities) and should establish escalation levels with commensurate action plans. For example, a level one response may be triggered by an employee having come into contact with someone having the virus and result in that individual’s self-quarantine with limited impact to the broader business. In contrast, a level five response (of a five-point scale) would occur where there is rampant infection of multiple employees across one or many business units and locations resulting in self-quarantine or hospitalization of greater 30 percent of the workforce.
Develop a Business Continuity Plan to manage the broader business disruption.
This involves thinking through what could go wrong and developing strategies to address disruptions and associated impacts. Disruptions and potential response strategies may include:
Disruption to Leadership
Establish a senior management team succession plan to ensure roles, responsibilities and decision-making authority are clear in the event that one or more leaders is unavailable. This may include, for example, providing signing authority for payments or access to third-party payroll providers to additional leaders to minimize disruption.
Develop a protocol for quickly escalating urgent matters and a process for making key decisions, especially in the absence of key leaders.
Establish a communication plan for sharing of critical messages to key stakeholders regarding the impacts to your business (e.g. disruption in the provision of your goods/services, closure of office locations, etc.) and how you are addressing them. This should include who has responsibility for sharing those key messages and should consider the broad range of stakeholders such as customers, employees, vendors, key service providers, unions, contractors, government, regulators.
Leveraging your Response Plan, establish protocols for both closing and re-opening physical office locations including communications to appropriate stakeholders. Consideration should be given for how operations will be redirected during the interim closure and how stakeholders will be notified when operations resume and office locations re-open.
Disruption to Workforce
Ensure contact information of employees, as well as their emergency contact information is up to date and circulated across the leadership team.
Establish a process to report employee illness and infections to the senior management team, including requirements to report (via phone or email) any confirmed COVID-19 cases and how to address increased absenteeism or a refusal to work.
Consider whether team events, meetings or travel should be postponed or cancelled to avoid the spread of the virus, with a view to restricting anything that is not “mission critical.” International travel imposes an additional consideration for developing strategies to deal with employees that may be abandoned in a foreign country due to travel restrictions or quarantined upon their return.
Consider key activities that must be performed onsite and take appropriate precautions to ensure a safe worksite, including more regular cleaning and sanitization, protective gear, etc. For businesses with more than one location, opportunities exist to share / redirect work to alternate locations and team members.
Where possible, consider implementing work at home practices and prioritize the work that needs to be done.
Ensure employees can continue to be paid. For smaller enterprises, this may include having a copy of the most recent payroll register and cheque stock off-site so that they may make payments consistent with the value of the most recent payroll run. Consideration should also be given to how or whether income support is offered to employees who cannot endure an extended interruption to their pay.
Establish a protocol for determining when employees can return to work and the communication of the “return to work” message.
Consider the impact to contractors in relation to any of the above considerations and plan accordingly.
Work with unions to develop appropriate team member response strategies.
Evaluate the need for workforce reductions, or decentralization of your workforce by conducting operations in multiple locations, to lessen the financial impact of the business disruption.
Disruption to Information Technology
Ensure IT infrastructure can support higher volume of work at home arrangements, while also ensuring overall system security.
Maintain system back-ups in the event of an IT system outage.
Disruption to Operations
Consider the impact to the business of a disruption in the supply of goods or services the organization depends upon and determine response strategies (e.g. alternate suppliers, leveraging existing inventories, etc.).
Evaluate the organization’s distribution network for goods and determine whether other / additional distribution channels should be established.
Ensure key vendors and partners (e.g. suppliers, distributors, etc.) have a continuity plan in place for the provision of their goods / services and ensure they address your organization’s key requirements / dependencies.
Anticipate reduced business volumes and plan for the impact to your finances and cash flows. Consider:
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- whether there are opportunities to invoice for goods / services earlier
- regularly monitoring collections and staying abreast of ageing receivables and sales to customers that are struggling to pay on a timely basis
- doing a projection / modeling of what happens if your customers pay you 30 days later than normal but you need to still pay your team members
- working capital needs if inventory is harder to purchase and receivables are more difficult to collect
- reaching out to your bank / lender and discussing your concerns, identifying short-term solutions and potential interim financing options.
Consult with your insurance broker to review your coverage. Evaluate how your operations are impacted and consider whether existing insurance policies potentially provide coverage for losses. Ensure there is a clear understanding of how your loss is connected to your insurance policy wording. It is also prudent to know your insurer’s requirements for documentation when submitting a claim for a covered loss
Ensure security protocols are developed in the event your organization must vacate the premises for an extended period of time.
Where the Business Continuity Plan leverages alternate team members or sites, document and share process and procedure information as a training tool.
In making the decision, companies should first refer to travel advisories from the Public Health Agency of Canada website. Organizations should also consider the impact of either having to quarantine employees upon their return or the chance that they may be stranded in a foreign country. Is the associated longer term business disruption related to that employee’s
potential absence an appropriate trade-off for the benefit of the business travel?
The answer depends on your policy and the circumstances of the loss. Businesses should be proactively reviewing their policies, including any endorsements and exclusions, with their brokers and claims consultants to discuss anticipated loss exposures and relevant coverages. For example, policies may contain contamination exclusions, but may also include extensions that can cover losses or costs related to decontamination. There are likely specific conditions related to coverage triggers.
Possible areas of coverage could include:
- Business interruption: Disruption at insured location causing loss of income
- Contingent business interruption: Disruption to customers or suppliers causing loss of income
- Extra expense: Loss mitigation costs related to disruption (e.g. Increased telecommuting costs)
- Civil authority: Civil authorities prohibit access to insured location causing loss of income
- Ingress/egress: Denial of access to insured location causing loss of income.
For more information, contact your regular Shajani LLP Contact or Email Shajani@shajani.ca
DEFINING THE NEW NORM - BUSINESS RECOVERY
COVID-19 has been an unprecedented challenge for business owners in Canada and around the world.
There is uncertainty in our world, and many around us feel lost as we try to make sense of all that is happening. We know that with new information coming at us daily, all of us, our governments and our communities, are struggling to make the right decisions quickly and prudently. As a result of all of this, there is a real sense of stress and concern weighing on all of us.
But you are not alone. We will face these challenges together, and we will work together to take care of one another. Shajani is committed to providing our clients with sound, well researched professional advice during this pandemic. We will endeavor to communicate government benefits and best practices to help you navigate your businesses through this
- How your business has changed and how must you adapt your internal processes and practices to both generate and deliver goods and services under a new business model.
- Evaluate your markets and identify new customer segments. Then establish a plan for entering those markets and interacting with those customers.
- Assess your workforce and if there is a need to bring on new and different skill sets or leverage other resourcing models such as contractors.
- Understand the technology requirements associated with your new / evolving business. These include as e-commerce platforms, collaboration technologies to support virtual customer or team interaction, etc.
- Determine compliance with changing government legislation and guidance related to COVID-19 and the impacts to your business (e.g. social distancing, limits on capacity and group sizes, etc.).
- As you adapt, determine your financial needs, available government support programs or any (interim) financing you might require. Reach out to your trusted advisors to help you in making decisions to support the sustainability of your business.
- Risk-proof your organization on an ongoing basis by regularly identifying emerging risks and developing strategies to manage those risk – you will continue to experience change and new risks so be ready to respond quickly.
Building on these considerations, define the vision for your evolving business and begin to chart a course of action to implement the necessary changes to your people, processes and technology to achieve that vision.
Separating fact from fiction, and the news from the noise can be a significant challenge.
During a crisis, it is critical to ensure you are receiving your information from official sources such as local, provincial and federal authorities. When in doubt, wait. News agencies can err as they seek to get information out quickly.
Staying abreast of the latest official announcements can help you assess what they mean for your business, who can help, and how to act. Information changes rapidly during times of crisis. If you are unsure of how a government announcement will impact you, consult with your business advisor to ensure the information is accurate, complete, and considered in the right context.
The decisions you make today can have long-term implications: due diligence is critical in determining your next steps.
The road to recovery will be uncharted territory for most businesses. Seek advice where you need it.
The first two actions help define a clear vision for the future of your business, understanding the world within which you are operating. Once that is defined, it is prudent to identify and build a team of specialists to support you and your business.
CANADA’S COVID-19 ECONOMIC RESPONSE PLAN
KEY POINTS FOR BUSINESSES AND INDIVIDUALS
Since the beginning of March, restrictions and measures related to COVID-19 have rapidly escalated. While the first stages focused on public health and safety, in very short order, businesses and personal finances began to be affected. It is clear that these challenges will become worse before they get better. In an effort to combat these effects, the Government of Canada released a series of financial measures in mid-March.
Below is a summary of selected government comments:
Tax Return Due Date Deferral: The personal tax filing due date will be deferred until June 1, 2020. However, those expecting refunds or benefits (such as the GST/HST credit, Guaranteed Income Supplement and Canada Child Benefit) should file as early as possible. The government release encourages Canadians not to delay their filings in order to ensure their income-tested benefits are accurately computed.
Tax Payment Deferral: Taxpayers may defer, until after August 31, 2020, the payment of income tax amounts that become owing on or after March 18, 2020 (also including installments) and before September 2020. The government documents indicate that payment will be deferred “until after August 31, 2020”, which seems to imply payment will be due on September 1. No interest or penalties will accumulate on these amounts during this period.
- Individuals Without Paid Sick Leave: For Canadians without paid sick leave (or similar workplace accommodation) who are sick, quarantined or forced to stay home to care for children, the government is:
- Waiving the one-week waiting period for those in imposed quarantine that claim Employment Insurance (EI) sickness benefits, effective March 15, 2020.
- Waiving the requirement to provide a medical certificate to access EI sickness benefits.
- Introducing the Emergency Care Benefit providing up to $900 bi-weekly, for up to 15 weeks (comparable to EI sickness benefit). This benefit would provide income support to: Workers, including the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits; Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent, but do not quality for EI sickness benefits; and parents with children who require care or supervision due to school closures, and are unable to earn employment income, regardless of whether they qualify for EI or not.
Application for the Benefit will be available in April 2020, and require Canadians to attest (and continue to attest every two weeks) that they meet the eligibility requirements. Individuals can apply through CRA’s MyAccount, their My Service Canada Account, or by calling an automated toll-free number not yet released.
An Emergency Support Benefit will provide up to $5.0 billion in support to workers who are not eligible for EI and who are facing unemployment. The individual amounts and process will be disclosed shortly.
- Implementing changes to the EI Work Sharing Program, which provides EI benefits to workers who agree to reduce their normal working hour as a result of developments beyond the control of their employers, by extending the eligibility of such agreements to 76 weeks, easing eligibility requirements, and streamlining the application process.
- Low/Modest Income Individuals A one-time special payment by early May 2020 through the Goods and Services Tax credit (GSTC) will be made. This will double the maximum annual GSTC payment amounts and result in an average boost to income for those benefiting by close to $400 for single individuals and close to $600 for couples.
- The maximum annual Canada Child Benefit payment amounts would be increased by $300 per child for the 2019-20 benefit year. This will be added to the May, 2020 benefit cheque.
- Canadians Abroad: The Emergency Loan Program for Canadians Abroad will provide the option of an emergency loan to Canadians in need of immediate financial assistance to return home or to temporarily cover their life-sustaining needs while they work toward their return. Each application will be assessed according to their specific situation and needs. This emergency assistance is a repayable loan. Eligible Canadians currently outside Canada and needing help to return home can contact the nearest Government of Canada office (https://travel.gc.ca/assistance/embassies-consulates) or Global Affairs Canada’s 24/7 Emergency Watch and Response Centre in Ottawa at +1 613-996-8885 (collect calls are accepted where available) or email sos@international.gc.ca.
- Students: A six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repaying these loans will be provided.
- Minimum RRIF Withdrawals: The required minimum withdrawals from Registered Retirement Income Funds (RRIFs) will be reduced by 25% for 2020. Similar rules would apply to individuals receiving variable benefit payments under a defined contribution Registered Pension Plan.
Tax Payment Extension: Businesses may defer, until after August 31, 2020, the payment of income tax amounts that become owing on or after March 18, 2020 and before September 2020. This relief would apply to tax balances due, as well as instalments. No interest or penalties will accumulate on these amounts during this period.
Other Payment and Filing Extensions: No comment was made about changing the filing and payments dates for payroll, GST/HST, and other non-income tax items.
CRA Audit Activity: CRA will not contact any small or medium businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks. For the vast majority of businesses, the CRA will temporarily suspend audit interaction with taxpayers and representatives.
Liaison Officer Service: The Liaison Officer service is now available over the phone and will be customizing information by ensuring small businesses are aware of any changes such as filing and payment deadlines, proactive relief measures, etc.
Payroll Subsidies: The government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum of $1,375 per employee and $25,000 per employer. Businesses will benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.
Trust Filing Due Date Deferral: For trusts having a taxation year ending on December 31, 2019, the return filing due date will be deferred until May 1, 2020.
T3 Slips Submission Date: No specific statement was made regarding the deadline for filing T3 slips reporting income taxable to the trust beneficiaries.
Other Returns: Many taxpayers are required to file other tax and information returns. No mention was made of these, including partnership returns and NR4 reporting slips.
EFILE Signatures: In order to reduce the necessity for taxpayers and tax preparers to meet in person, effective immediately the CRA will recognize electronic signatures as having met the signature requirements of the Income Tax Act, as a temporary administrative measure. This provision applies to authorization forms T183 or T183CORP.
FINANCIAL ASSISTANCE
Individuals: Canada’s large banks have confirmed that this support will include up to a 6-month payment deferral for mortgages, and the opportunity for relief on other credit products. Banks have affirmed their commitment to working with customers to provide flexible solutions, on a case-by-case basis, for managing through hardships caused by recent developments. This may include situations such as pay disruption, childcare disruption, or illness.
Businesses:
- The Business Credit Availability Program will allow the Business Development Bank of Canada and Export Development Canada to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses. The near-term credit available to farmers and the agri-food sector will also be increased through Farm Credit Canada.
- The Office of the Superintendent of Financial Institutions (OSFI) announced it is lowering the Domestic Stability Buffer by 1.25% of risk-weighted assets, effective immediately. This action will allow Canada’s large banks to inject $300 billion of additional lending in to the economy.
- For Exporters: The Minister of Finance would now be able to determine the limit of the Canada Account in order to deal with exceptional circumstances. The Canada Account is administered by Export Development Canada (EDC) and is used by the government to support exporters when deemed to be in the national interest.
Interest Rates: The Bank of Canada cut the prime interest rate to 0.75%. Other banks have also reduced rates.
Other Funding
Indigenous Community: $305 million for a new distinctions-based Indigenous Community Support Fund will be provided to address immediate needs in First Nations, Inuit, and Métis Nation communities.
Homelessness: The Reaching Home initiative will be provided with $157.5 million to continue to support people experiencing homelessness during the COVID-19 outbreak. The funding could be used for a range of needs such as purchasing beds and physical barriers for social distancing and securing accommodation to reduce overcrowding in shelters.
Domestic Abuse Shelters: Women’s shelters and sexual assault centers will receive $50 million to help with their capacity to manage or prevent an outbreak in their facilities.
CLOSING
Many of the measures listed above have only been announced recently (March 18, 2020) and are noted as requiring Royal Assent. In recent public comments, it was indicated that the opposition parties have promised their support to move these measures quickly, therefore, we can presumably expect draft legislation in the short term.
Over the next days and weeks, the specifics on these programs will be released. Most of the details for these initiatives will be released on one of these four webpages:
General: https://www.canada.ca/en/public-health/services/
diseases/2019-novel-coronavirus-infection/canadas-reponse.html
CRA: https://www.canada.ca/en/revenue-agency/campaigns/
Travel: https://travel.gc.ca/assistance/emergency-info/financial-assistance/covid-19-financial-help
Employment and Social Development Canada: https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus.html
Are you laying off employees due to COVID-19 circumstances?
Employers must issue Record of Employment (ROE) for all layoffs.
If you issue ROE's on paper, you must issue an ROE within five calendar days of:
- the first day of an interruption of earnings; or
- the day the employer becomes aware of an interruption of earnings.
The COVID-19 categories are as follows:
Personnel is under quarantine but does not have the disease:
The reason on their record of employment must be “D – Illness”.
Personnel goes into voluntary isolation:
The reason on their record of employment must be “D – Illness”.
EI claims will be evaluated on a case-by-case basis.
Employer closes his business:
The reason on the worker’s record of employment must be “A – Lack of work”.
For future LMIA purposes : ROE can be issued with EXPECTED RETURN DATE
Worker refuses to work because of the risk:
The reason on their record of employment must be “E – Voluntary termination” or “N = Leave”.
EI claims will be evaluated on a case-by-case basis.
Common Business Issues & Supports
Considerations:
Review and maintaining cash management needs, loan payments, financing, etc.
Determine if you qualify for payment deferrals or government programs.
Government and financial institution recovery programs will likely require accurate financial statements and records.
Getting this prepared in advance can make the application process easier.
Specialist Team Support:
- Accountant / Tax Specialist
- Business Advisor / Tax Advisor
- Banker
Considerations:
Review your insurance policies, including any endorsements and exclusions, with your broker and claims consultant to discuss anticipated loss exposures and relevant coverages.
Possible areas of coverage you should review for include:
- Business interruption: Disruption at insured location causing loss of income
- Contingent business interruption: Disruption to customers or suppliers causing loss of income
- Extra expense: Loss mitigation costs related to disruption (e.g. Increased telecommuting costs)
- Civil authority: Civil authorities prohibit access to insured location causing loss of income
- Ingress / egress: Denial of access to insured location causing loss of income
Specialist Team Support:
- Insurance Broker
- Insurance Advisor
Considerations:
A significant number of programs and support are being rolled out by all orders of government. Determine if you are eligible for any government assistance being offered and look to your business advisor to help navigate the various programs being offered.
Specialist Team Support:
- Business Advisor
- Chambers of commerce
- Government
Considerations:
It is critical all employee matters are handled prudently to mitigate further financial liabilities and legal challenges.
Do you have a communications process in place to keep employees informed as the event evolves? This can be difficult as staff may be working remotely.
As you define your new normal, do you have the right skill-sets around you? Are there existing employees you can re-deploy or re-train and are there other skills, such as IT, that you may need to bolster?
Should you need to layoff employees, it must be done carefully to remain compliant – governments have changed or amended employment standards and labour codes in response to COVID-19. Seek assistance from your legal advisor to work through your decisions and ensure you are not creating the potential for legal challenges or additional liability.
While many businesses are struggling, some critical and essential services and related industries are busier than normal. Any hiring must be done prudently to ensure long-term commitments are managed as the business normalizes. This might be an opportunity to explore models your business might not be used to, such as temporary contracts.
It is important to determine what supports are in place for employee assistance, including guidance on how to help employees navigate employment insurance and leverage available mental health support programs.
Determine how to stay in touch with employees, including the use of team collaboration tools to hold virtual meetings.
Where appropriate, maintain communications and contact with employees who may have been laid off and keep them apprised of programs and supports that are available to them. As the economy recovers, there may be an opportunity for them to return.
Specialist Team Support:
- Labour Lawyer
- Workforce Advisor
Considerations:
As you move from response to recovery, it is best to re-evaluate your current situation, with an eye to short-term and long-term steps you must take to position your business for the new normal.
Understand how your business has changed and what further changes are required to remain relevant in the market and profitable. Changes to the following might indicate broader shifts in your business requiring you to examine your business model and whether longer-term shifts are required to achieve your vision:
- Customer-base and new or evolving markets, including moving into new jurisdictions or product / service offerings.
- Network for delivering / distributing your products/services.
- Adoption of technologies whether they are to support e-commerce or virtual collaboration among team members and with your customers.
- Supply chain networks.
- Workforce requirements, including both the required staff complement and the skill sets necessary to deliver under a new business model.
Undertake financial modelling to review your product mix, pricing, expenses and overall profitability.
Evaluate your discretionary spending with a focus on containing costs by reducing or eliminating discretionary expenditures and conserving cash.
Implement cash-flow planning that includes regularly monitoring collections and staying abreast of aging receivables and sales to customers struggling to pay on a timely basis. Evaluate opportunities to offer payment options to your customers, while still protecting the value of the receivable.
Model your workforce costs and burn rate by developing scenario projections based on short- and long-term opportunities and challenges.
Stay attuned to your customer needs throughout this period of disruption so you understand any challenges they are experiencing with your product / service and how you may need to evolve.
Reconnect with your suppliers to review their supply chain projections and whether they anticipate any further disruptions. Build the results of these discussions into your financial model to anticipate any additional adjustments you may be required to make. For example, consider whether you will have interruptions in your supply chain and for how long or whether you will have the ability to build up inventory to sustain any supply interruptions. Begin exploring alternative supply chains.
Review your business' physical and cyber security protocols in light of the sustained nature of the crisis. Remain vigilant in managing your cyber security and ensure your employees are: monitoring for suspicious requests, emails, texts, etc. being sure not to disclose critical or sensitive information; authorizing payments only with confirmation from an appropriate authority; not clicking on potential ransomware links. Uncertainty increases both your vulnerability to and the likelihood of cyber attacks. Don’t lose sight of also maintaining the physical security of your business and your workforce, as well.
Financial pressures can motivate employees and your business partners to perpetrate fraud. In a similar vein, ensure you regularly review transactions for accuracy and authenticity to ensure that only valid transactions are processed and complete billings and deposits are made.
Specialist Team Support:
- Performance Improvement Consultants
- Business Advisor
- IT Service Providers
Medical Links
WCBA - Workers Compensation Board Alberta
The Government of Alberta has recently announced new measures to provide financial support to help employers through the challenges of the global COVID-19 pandemic.
These measures include a deferral of 2020 WCB premium payments for all private sector employers until 2021. When invoicing resumes in 2021, small and medium-sized employers (those with $10 million or less in insurable earnings) will only be required to pay 50 per cent of their 2020 premiums – the other 50 per cent will be paid by the Government of Alberta. More details can be found on their new employer fact sheet.
Helpful Links
Keep current on information as it comes out. Most of the details for these initiatives will be released on one of these webpages:
Support Programs for Entrepreneurs
To support entrepreneurs, there are two support programs:
The Business Development Bank of Canada (BDC) and Export Development Corporation (EDC) have created a $10 billion Working Capital Loan and are each contributing $5 billion to the program.
Through this Working Capital Loan, the new relief measures for qualified businesses include:
- 36 month subordinated working capital loans of $100,000 up to $2 million with flexible terms.
- Principal payment postponements during the first 12 months for all qualifying businesses and for existing BDC clients.
- Following the initial 12-month principal payment free period, 40 percent of loan is to be repaid within the remaining 24 months.
- 60 percent is payable in a balloon payment due at the 36th Month.
The business must be viable and in good standing. Excluded from the program are:
- Start ups
- Refinancing loans from other institutions
- Special Accounts (SA) and Business Restructuring Unit (BRU)
- Head office special initiatives such as syndication, HO-Mortgage, etc.
The Working Capital Loan – COVID-19 requires a General Security Agreement and a Personal Guarantee by ownership. Pricing is BDC Rate less 1.75 percent (currently this is 3.3 percent).
What You Need to Apply:
- Application for financing can be requested from your local BDC officer and must be hand signed
- Statement of personal affairs needs to be requested from the local BDC officer and completed – and signed by each shareholder with ownership of 25 percent or more – and must be hand signed
- Government Photo ID of all majority shareholders (ownership of 25 percent or more) along with a copy of most recent telecommunications and/or electricity bill as well most recent bank and/or credit card statement for verification purposes
- Site Visit (two to three photos of office premises) – Since BDC / EDC cannot verify the business location in person, 2-3 photos of the office premises will help for verification purposes if you have them
- Ownership chart
- Last three years of accountant-prepared financial statements
- If your company’s fiscal year end is more than three months old, interim statements are required with prior year comparable figures for the same time period
- Monthly cash flow forecasts for at least the next six months
- Specifics around the impact of COVID-19 on the business:
- Has this reduced your activity level?
- Have you experienced partial and / or complete closures of your facilities or operations?
- What activity level do you anticipate over the next six months?
- On a situational basis, BDC may require some degree of written concurrence from your primary lending institution that the bank will not pull their line of credit or other lending facility even if the new BDC / EDC financing puts the company in breach of covenants
The Canadian federal government has also announced the creation of a combined $65 billion of funding to be accessed under the BCAP:
- $40 billion to be offered through the new Small and Medium Enterprise Loanand Guarantee
- $25 billion to be offered through individual interest-free loans of up to $40,000 to small businesses and not-for-profits be made from the Canada Emergency Business Account.
These programs are being offered in partnership with Canadian chartered banks and other qualified financial institutions which will conduct the underwriting and manage the interface with their customers.
The Small and Medium Enterprise Loan and Guarantee Program will operate as follows:
- Small and medium-sized businesses can get support through a new program that brings BDC together with financial institutions to co-lend term loans to these businesses for their operational cash flow requirements. Eligible businesses may obtain incremental credit amounts up to $6.25 million. BDC provides 80 percent and a financial institution provides the remaining 20 percent.
- EDC will also provide guarantees to financial institutions so that they can issue new operating credit and cash flow term loans of up to $6.25 million to small and medium-sized businesses, as a result of a new domestic mandate enhancing EDC’s role in supporting Canadian businesses through COVID-19 crisis. These loans will be 80 percent guaranteed by EDC, to be repaid within one year.
- Eligible companies could obtain up to $12.5 million through these two lending streams.
- Applications must be made and can only be adjudicated through the existing bank or other authorized financial institution with whom the applicant has an existing banking relationship with.
The Canada Emergency Business Account Program will operate as follows:
- Small businesses may apply for an interest-free loan of up to $40,000 through the $25 billion established for this program and purpose.
- The funding is targeted to small businesses and not-for profits to help cover their operating costs during a period where their revenues have been temporarily reduced due to the economic fallout from the COVID-19 virus.
- This will better position the applicants to quickly return to providing services to their communities and to creating employment.
- The applications must be made through the applicants existing financial institution.
- To qualify, each applicant must demonstrate that they paid between $50,000 to $1 million in total payroll in 2019. Repaying the loan in full prior to December 31, 2022 will result in loan forgiveness of 25 percent of the loan being repaid, subject to a cap of $10,000.
