Prime Minister Justin Trudeau has announced a significant increase in wage subsidies for small and medium-sized businesses hit hard by the global COVID-19 pandemic. Friday’s announcement came after serious pressure and repeated pleas from the business community to increase the wage subsidy from the 10 percent originally announced. Backdated to March 15, the federal government will now subsidize 75 percent of payroll for small and medium-sized businesses deemed eligible.
“It’s becoming clear that we need to do more,” said Trudeau. “This means people will continue to be paid even though their employers have to slow down or stop their businesses.” Ontario Premier Doug Ford commended Prime Minister Trudeau for taking action to protect Ontario businesses.
The federal government also announced the launch of a special emergency business account for small businesses. Under that account, banks can offer $40K in government-guaranteed loans interest-free for the first year. Trudeau says the first $10,000 will be forgiven if certain conditions are met. On top of that, Trudeau says they are making $12.5 billion available to help with “operational cash flow requirements.”
The Government is deferring Goods and Services Tax/Harmonized Sales Tax (GST/HST) remittances and customs duty payments to June 30, 2020. This measure could provide up to $30 billion in cash flow or liquidity assistance for Canadian businesses and self-employed individuals over the next three months
“This will be a significant investment so we can bounce back, it’s necessary. We have to get through these next few months of restricted economic activity,” said Trudeau.
Earlier Friday the Bank of Canada lowered its overnight lending rate to 0.25 percent amid the COVID-19 crisis. Rate moves, under normal circumstances, would happen every six weeks when the Bank of Canada meets, but this is the second cut in the last two weeks.
Canada had previously held the highest central bank rate at 0.75 percent. Trudeau said Canada can make moves like this because of the great shape our country’s balance sheets were in when this virus hit.