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A hand painted sign about the Canada Emergency Business Account is seen in the front window of Capital Espresso, a coffee shop on Queen St. West, on April 15, 2020.

Fred Lum/the Globe and Mail

Small and medium-sized businesses in Ontario will receive nearly a third of the $962-million in federal relief funding that will flow through Canada’s regional development agencies and rural financing organizations to help companies that aren’t eligible for other relief programs.

​Prime Minister Justin Trudeau announced the program on April 17 as a tool to help cash-strapped entrepreneurs, including those who don’t qualify for or were declined by other relief programs, such as the partly forgivable $40,000 Canada Emergency Business Account (CEBA) interest-free loans. It’s now called the Regional Relief and Recovery Fund, and will largely allow companies to apply for similar loans with forgivable components.

The Federal Economic Development Agency for Southern Ontario, or FedDev, will receive $252.4-million, while the Federal Economic Development Initiative for Northern Ontario, called FedNor, will receive $49.5-million. Full details for the cross-Canada rollout are expected Wednesday morning.

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Entrepreneurs across Canada have warned that Ottawa’s federal relief programs have left them behind. Some have shut down for good.

Others have said that strict payroll criteria for the CEBA program are arbitrary, hurting businesses whose payrolls are too high or low, as well as sole proprietors and companies with non-traditional payrolls. The Canada Emergency Wage Subsidy requires business owners to prove a 30-per-cent-or-more drop in revenue, which some owners say punishes them​ for working to keep money flowing during the crisis.

The Canada Emergency Commercial Rent Assistance program, meanwhile, has come under fire for funding landlords instead of tenants while providing unclear, inconsistent details that are driving landlords away from applying.

The regional agencies were each tasked with finding out the best way to allocate the money in an appropriate manner for their region. The Community Futures Network of Canada, which provides support to small businesses in rural areas, as well as Futurpreneur Canada, which assists young people in launching businesses, will also receive funding.

In an interview late Tuesday, Economic Development Minister Mélanie Joly said that the latest program emerged from discussing these problems with businesses.

“What became crystal clear is not only did we have to move our position from an approach that was based on liquidity, and support to businesses through subsidies – but also that these measures, while they were positive, were not tailored to all business models,” she said.

She highlighted tourism, tech and manufacturing as sectors that could benefit from the program, as well as Main Street storefronts. The agencies will be able to release funding at their own discretion.

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Many of the federal government’s regional development agencies were created to respond to localized economic problems. The Atlantic Canada Opportunities Agency grew from a Pierre Trudeau-era program to boost employment in the region. Western Economic Diversification Canada was created under Brian Mulroney to help the West build fortunes beyond commodities; FedNor came from the same era. FedDev emerged from the Great Recession under Stephen Harper.

These agencies, Ms. Joly said, are “closest to the ground” and already have expertise in regional business needs. In Ontario, the funding increase will nearly double the agencies’ annual budgets.

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