Weekly Digest – 21 April 2021
Welcome back to our Weekly Digest. Read on for the latest updates and some ideas to help us all move forward.
Canada-US Border Closure Extended Again
The closure of the Canada-US border to non-essential travel was extended again on Tuesday, only hours before it was set to expire. It is now set to last until at least May 21 in an attempt to slow the spread of the coronavirus.
Federal Budget 2021: Key Points You Need to Know
These are the highlights of the Federal Budget unveiled on Monday:
- $101.4 billion in new spending over three years to fuel the recovery and kick-start the transition to a green economy
- $30 billion over five years and $8.3 billion per year for a national child care program
- $18 billion to build safer, healthier Indigenous communities
- Wage and rent subsidies will be extended through the fall
- Maximum period of employment insurance sickness benefits will be extended from 15 weeks to 26 weeks
- Forecast of 1 million new jobs created by the end of 2021
- New federal minimum wage of $15
- $3 billion over five years to help provinces/territories improve long-term care
- $1 billion for the tourism sector for festivals and cultural events.
- New tax of 10 to 20% for luxury cars and aircraft worth more than $100,000 and luxury boats over $250,000
- $300 million to support black and other underrepresented entrepreneurs
- Interest-free period for Canada student and apprentice loans will be extended to March 31, 2023, at a cost to the government of an estimated $392.7 million in 2022-23.
If you have any questions regarding the new tax or government support measures, feel free to get in touch with us!
CRA: Filing 2020 Taxes Late Could Lead to Delays in COVID-19 Financial Aid
Although the Canada Revenue Agency (CRA) acknowledges the challenges that some Canadians may face in meeting their tax obligations due to the pandemic, they warned that they would need 2020 tax information to determine eligibility for the Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB) or the Canada Recovery Sickness Benefit (CRSB).
Missing the 30 April deadline may mean delays of up to two months when it comes to receiving any of these COVID-19 relief benefits. So if you need help with the timely and accurate filing of your taxes, get in touch with us so we can make the CRA’s verification process as smooth as possible and prevent penalties.
Alberta Expands Financial Support Program to SMEs
Alberta is expanding its Small and Medium Enterprise Relaunch Grant to include another payment of up to $10,000 for eligible businesses. This marks the third time the $10,000 payment has been made available to Alberta organizations. It will also be available to businesses that started operating between 1 March 2020 and 31 March 2021.
The Small and Medium Enterprise Relaunch Grant offers financial assistance to Alberta businesses that experienced at least a 30% decline in revenue because they were ordered to shut down or limit operations due to COVID-19.
Government Extends Access to COVID-19 Benefits
Minister Carla Qualtrough announced the government’s intent to introduce amendments to increase the number of weeks of benefits available for the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB), the Canada Recovery Caregiving Benefit (CRCB) and Employment Insurance (EI) regular benefits.
The proposed changes include:
- increase the number of weeks available under the Canada Recovery Benefit (CRB) and the Canada Recovery Caregiving Benefit (CRCB) by 12 weeks extending the maximum duration of the benefits through regulation from 26 weeks to up to 38 weeks;
- increase the number of weeks available under the Canada Recovery Sickness Benefit (CRSB) through regulation from the current 2 weeks to 4 weeks; and
- increase the number of weeks of EI regular benefits available by up to 24 weeks to a maximum of 50 weeks through legislation, for claims that are made between September 27, 2020 and September 25, 2021.
More information can be found here.
HASCAP Loan Applications Now Open
Loan applications for the Highly Affected Sectors Credit Availability Program (HASCAP) have opened.
Loans start at between $25,000 and $1 million for a single business depending on the size of the operation, and run up to $6.25 million for companies with multiple locations like a chain of hotels or restaurants. Interest rates are set at 4% across the board, terms will be up to 10 years, with up to a 12-month postponement of principal payments at the start of the loan.
To be eligible, companies will have to show a year-over-year revenue drop of at least 50% over three months, not necessarily consecutive, in the eight months before the application.
Further details can be found here.
Canada Emergency Business Account Deadline Extended
Eligible businesses facing financial difficulties due to COVID-19 can access a second CEBA loan of up to $60,000 with up to $20,000 of that being forgivable.
CEBA has two streams of eligibility: the Payroll stream and the Non-Deferrable Expense stream. If you previously received a loan of up to $40,000, you can apply for the CEBA expansion to increase your loan by an additional $20,000 ($10,000 of which is forgivable if repaid before Dec 31, 2022).
Applications for CEBA have been extended to June 30, 2021. More information can be found here. Alternatively, if you have any questions or require assistance, simply send us a message.
Government Support for Businesses
The federal government continues to enact measures to mitigate the financial impact of the pandemic. Here is an overview of the assistance you may be able to take advantage of:
- The Canada Emergency Wage Subsidy (CEWS) is intended to help businesses cover a portion of wages and keep employees on payroll. It continues until June 2021.
- The work-sharing program allows employees whose hours got reduced by an average of 10% to 60% to claim employment insurance for lost wages. This has been extended to 76 weeks from 38.
- The Canada Emergency Rent Subsidy provides rent and mortgage assistance until June 2021. Businesses can make claims retroactively for the period of Sept. 27 to Oct. 24, 2020.
- The Canada Emergency Business Account (CEBA) offers government-guaranteed bank loans of up to $40,000 for small businesses. The deadline for the application has been extended to March 31, 2021.
- For mid-sized companies, the Business Development Bank of Canada’s mid-market financing program provides commercial loans between $12.5 million and $60 million.
Upcoming Key Dates
Below are the upcoming key payment and filing dates to take note of:
- Your tax return for 2020 has to be filed on or before 30 April 2021.
- For self-employed individuals, if you or your spouse or common-law partner carried on a business in 2020, your return for 2020 has to be filed by 15 June 2021. However, if you have a balance owing for 2020, you have to pay it on or before 30 April 2021.
What Does It Take to Grow Profitably?
When you ask entrepreneurs what their business goals are, one of the most common answers will be something to do with growth. However, the real challenge is achieving both growth and profitability.
This Forbes article discussed how to grow profitably based on the model by Daniel Marcos of The Growth Institute. According to this model, different strategies are required depending on where a business is at in its development.
Startup stage (1-5 employees)– Focus on total revenue. Prove the business model and reach breakeven first. Learn who your more profitable customers are and build systems around delivering your products and services.
Grow up stage (6-15 employees)– Add the right revenue. Conduct an analysis of your gross profit to determine the customers you want to build processes around. It may be a difficult mind shift, but learn to say no to the customers that are not a good fit for your business.
Scale-up (16-100 employees)– Concentrate on the cash flow aspect of your business. Many companies grow too fast and flame out. So in order to not outrun your cash flow, you should know the cost of acquiring a new customer.
Ideally, you’d want the revenue generated by new customers to offset the cost of acquiring them. You want to have net cash flow from growth that you can fund through your operating profit.
Besides working on your cash flow, you must also continue refining the processes you started in earlier stages, growing your people, and adding talent with new skills that can help you in scaling up.
Need personalised business advice? Get in touch with us and tell us more about your business.
Contact us if you have any questions or want to discuss the next steps for your business.