Financial and Community Resources for Canadian Startups and Entrepreneurs during COVID-19

This is a live article — it was last updated April 27, 2020 at 5:00pm.

Photo by ConvertKit on Unsplash

This has been a trying time for everyone. There is no question that the combination of financial and health upheaval has resulted in strain on the operations of startups.

The government is thinking of startups and entrepreneurs and has recently announced several initiatives tailored to support them. The entrepreneurial ecosystem has also quickly assembled a set of shared community resources.

New announcements are being made daily. This post aims to summarize the various programs and initiatives available specifically to Canadian startups and entrepreneurs. I will be updating this regularly and will focus on initiatives that could be helpful to Canadian startups. If you see something missing, please feel free to email me at ramin@luge.vc.

From our team to yours, we wish you all safety and health during these times.

Luge Capital is continuing to actively invest in early stage fintech companies and we would love to hear from you — please get in touch here.

Government Programs

NRC IRAP Innovation Assistance Program [link 1] [link 2]

• The federal government is providing $250 million of funding to support technology companies that are not eligible for other Covid-related programs (e.g. the wage subsidy programs listed below). This includes high growth startups, pre-revenue startups, and other innovative companies.
• Details are thin right now. Some (unconfirmed) reports provide the following: Up to $847/week/employee will be provided for up to 12 weeks ($10,164 total). Innovation employees on T4 or T4a payroll as of March 1, 2020 are eligible. Payments will be made in the week of May 11. If you know more please email me!
• This program was announced by PM Trudeau and Minister Bains on April 17. Applications will be open via IRAP on Wednesday April 22. the funds will be disbursed over the following four weeks.

Canadian Emergency Wage Subsidy [link 1] [link 2]

• Eligible Canadian businesses can receive a 75% wage subsidy for wages paid in the 12 weeks between March 15 and June 6, 2020.
• For businesses paying wages to employees that are on leave, this subsidy further provides a 100% refund for employer-paid contributions to Employment Insurance, Canada Pension Plan, Quebec Pension Plan, and Quebec Parental Insurance Plan. This is new — it was announced by Finance Minister Bill Morneau on April 8.
• The maximum subsidy available is $847 per employee per week. Any amounts received from the Business Wage Loss Subsidy (see below) or the Canadian Emergency Response Benefit (see below) will reduce this maximum amount.
• This program is limited to businesses that have had a drop in gross revenues of at least 15% in March, or 30% in April or May. Details on the required drop are in the chart below. You can use either the accrual or cash method for these calculations, but not both! These thresholds and the allowance of accrual/cash method accounting are new — they were amended on April 8.

Gross revenue reduction thresholds, as of April 8, 2020.

• Apply for this program through your CRA portal. Eligible businesses will receive a direct deposit credit from the CRA. This credit is expected to be treated as taxable income, so make sure to budget for the additional income tax in your next filing.
• Payroll providers, including Wave, QuickBooks, and Humi, have enabled support for this program and the Business Wage Loss Subsidy (see below) and offer sample calculations. Kudos for the quick implementation!

Business Wage Loss Subsidy [link]

• The federal government has announced that they will subsidize 10% of salary, wages, bonuses, and other employee remuneration paid between March 18 and June 20, 2020.
• There is a subsidy cap of $1,375 per employee and $25,000 per employer.
• Employers receive the subsidy by reducing their remittance of federal, provincial, or territorial income tax (or applying for a refund if you have already remitted). Employers cannot reduce Canada Pension Plan contributions or Employment Insurance premiums with this program.
• This credit is expected to be treated as taxable income, so make sure to budget for the additional income tax in your next filing.
• This program is available to employers that are Canadian controlled private corporations (CCPCs) with less than $15 million of taxable capital in Canada, non-profits, and registered charities. If you need to verify if your company is a CCPC, see the CRA guidelines here.

Canada Emergency Business Account [link]

• As part of the new Business Credit Availability Program, small businesses and non-profits can obtain an interest-free loan of up to $40,000 from EDC. The total size of this program is $25 billion.
• If the loan is repaid prior to 12/31/2022, a quarter of the principal will be forgiven (e.g. up to $10,000).
• Businesses with between $50,000 and $1 million of payroll in 2019 can qualify. Apply through your financial institution.
• The government is advising that this program will roll out in the three weeks following March 27 and to work with your existing financial institution to apply. [link]

Co-Lending Program [link]

• As part of the new Business Credit Availability Program, BDC will lend up to $6.25 million, alongside another financial institution, to small and medium sized businesses.
• The total program size is $20 billion.
• The government is advising that this program will roll out in the three weeks following March 27 and to work with your existing financial institution to apply. [link]
• There don’t appear to be many details on this program right now. Email me if you have more details!

Loan guarantee for small and medium businesses [link]

• As part of the new Business Credit Availability Program, EDC will guarantee new operating credit and cash flow term loans from financial institutions to small and medium businesses.
• Individual guarantees are available up to $6.25 million, with a total program size of $20 billion.
• The government is advising that this program will roll out in the three weeks following March 27 and to work with your existing financial institution to apply. [link]
• There don’t appear to be many details on this program right now. Email me if you have more details!

Work Share Program [link]

• The newly expanded federal Work Share Program helps employers and employees avoid layoffs due to a decrease in business activity. The program provides Employment Insurance benefits to employees that reduce their working hours and share available work.
• The Work Share Program is available to employers that have experienced a decrease in sales and/or production levels, directly or indirectly related to the impact of COVID-19.
• The application itself is quite extensive, so allocate some time to apply. The forms you need to fill out are here, and the submission page is here.

Defer audits and payments of business tax [link]

• The CRA has deferred the deadline to pay corporate income tax (including balances due and installment payments) to August 31, 2020. This impacts amounts that are due between March 18 and August 31, inclusive.
• The CRA announced that it will not contact any small or medium businesses to initiate GST/HST or income tax audits for four weeks (beginning mid-March).
• Most other audit interaction will also be temporarily suspended.

BDC Purchase Order Financing [link]

• BDC offers eligible businesses financing of up to 90% of purchase orders. You can apply online here.
• BDC notes that due to high application volume, you might see longer than usual wait times.

Support for individuals

• The new Canadian Emergency Response Benefit provides up to $500 every week for 4 weeks, retroactive to March 15, 2020. Eligibility requirements are complex though focus on individuals who are furloughed without pay due to COVID-19. This 4-week benefit can be applied for up to four times successively, for a total benefit of up to $8,000 over 16 weeks. [link 1] [link 2].
• The new Emergency Support Benefit provides up to $900 bi-weekly for 15 weeks to workers who are not eligible for employment insurance. Apply via CRA My Account [link].
• The new Emergency Care Benefit provides up to $900 bi-weekly for 15 weeks for those that cannot go to work due to COVID-19, don’t have paid sick leave, and don’t qualify for employment insurance. Apply via CRA My Account [link].
• Canada Child Benefit payments are temporarily increased to $300 per child. Apply via CRA My Account [link].

Provincial programs

• Quebec is offering businesses loans and loan guarantees of at least $50,000 to eligible businesses operating in Quebec that are experiencing temporary difficulty due to COVID-19 [link].
• British Columbia is offering a one-time $1,000 payment to individuals that have lost income due to COVID-19 [link].
• Nova Scotia will defer payments for all government loans until June 30, 2020 [link].
• Saskatchewan is allowing businesses with cash flow concerns to defer remittance of provincial sales tax for three months [link].

Startup Community Initiatives

CoronaSupport.ca [link]

• A fantastic group of volunteers recognized how difficult it is to navigate the wide variety of personal support programs that are available.
• This website asks simple survey questions and instantly provides a list of programs you may be eligible for.

TechToronto Online [link]

• TechToronto is a fantastic community of entrepreneurs that has shifted its learning and engagement sessions online. I recommend joining even if you are based outside Toronto.
• There are often daily sessions that you can register and attend for free. Follow their twitter for regular updates [link].

Remote Work Opportunities

• You can search for remote work opportunities on The Help List, Prospect, Jobspresso, Remote|ok, We Work Remotely, Stack Overflow, Who Is Hiring, and Remote Weekly.
• This Google Sheets document lists 200+ employers that are hiring right now, what they are looking for, and how many open positions they have.
• This Google Sheets document summarizes ~1500 remote jobs from ~100 employers, but looks like it was last updated in February.

Community Resource Hubs

• Next Canada has organized an incredible set of resources for startups and entrepreneurs [link].
• MaRS has assembled an excellent set of resources and readings [link].
• Fintech Cadence offers a collection of coaching, guidance, and other resources [link].
• Upside Foundation has a live guide of resources and tools to help manage your business [link].
• Hockeystick offers an up-to-date and verified list of venture capital investors that are actively investing right now [link].
• COVID-19 Continuity is a newly-formed coalition of Canadian business owners that offer a daily briefing and collection of resources [link].
• NorthOne has an excellent list of the many new offers that businesses are extending right now [link].
• MTL+Ecommerce recently launched the #covidsupport campaign to organize strong grassroots support for startups, SMB, and retailers [link].
• Humi has assembled strong analysis on some of the government programs above, including a very helpful comparison of the two wage assistance programs [link].

Silicon Valley Bank Debt Relief [link]

• Silicon Valley Bank has announced that borrowers of venture debt with principal $10 million USD or less can defer principal payments for up to six months.
• It is not clear from SVB’s website whether this is available to Canadian businesses. If you know more, please email me!

Facebook Small Business Grants Program [link]

• Facebook is offering $100 million in cash grants and ad credits for up to 30,000 small businesses in 30 countries.
• The program is still evolving — it is not yet explicit how to qualify or whether Canadian businesses are eligible, but for now you can sign up for updates.

For brevity, I have not presented every technical detail of every program, of which there are many. Some of the programs and initiatives in this article may change, contain errors, or not be generally available. You should carefully review the programs you see here prior to taking action.

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