The federal government announced on Wednesday that it is extending two emergency business loan programs until the end of the year, and outlined its rationale for the new hiring subsidy program that comes into effect this month.
The Business Credit Availability Program (BCAP) and the Highly Affected Sectors Credit Availability Program (HASCAP), designed to help hard-hit companies manage cash flow throughout the pandemic, were set to expire at the end of the month.
These co-lending and loan-guarantee programs will now run until Dec. 31. The BCAP and HASCAP, which are administered in partnership with private banks, have provided around $2-billion and $732-million worth of loans respectively to date.
In a news conference on Wednesday, Finance Minister Minister Chrystia Freeland also outlined the government’s thinking on the new Canada Recovery Hiring Program (CRHP), which will be available retroactively as of June 6.
Private, Canadian-controlled companies that have experienced a significant revenue drop – calculated in the same manner as the existing Canada Emergency Wage Subsidy (CEWS) program – can apply to be reimbursed for 50 per cent of their added payroll expenses, compared with a baseline period of March 14 to April 10. The goal is to encourage companies to rehire workers or increase their wages and hours.
The $595-million program was introduced in the April budget and is intended to dovetail with CEWS, which winds down over the summer. It will be administered by the Canada Revenue Agency (CRA) and run until Nov. 20.
Some economists have criticized the program for excluding newly formed businesses. To be eligible, a company needs to have had a payroll account with the CRA as of March 15, 2020. Ms. Freeland said this exclusion was by design.
“Our support needs to be increasingly targeted, and the companies who need our support the most … are the companies that were hit by COVID as an external shock,” she said.
“We have supported them with a suite of measures throughout the pandemic, and now that we see the light at the end of the tunnel, this particular program is targeted at helping those hardest-hit companies come roaring back.”
She also defended the fact that the program, despite its name, does not actually require companies to hire new workers. Businesses can also be reimbursed for increasing employee wages or hours
“We didn’t want to say to companies, ‘Hey, you only get money if you hire a new person, but you’re not going to get support if you increase the hours of that part-time worker to full time.’ We wanted to create an equally powerful incentive to do that, because that is important for Canadian workers,” she said.
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