The impacts of COVID-19 are clearly resulting in changes in finances, making this time especially difficult for many businesses. Learn about the financial options available to small businesses.
In this guide we will cover:
- What are small business loans?
- COVID-19 small business loans
- Advice from experts
What are small business loans?
Small business loans are sums of borrowed money that help companies with their financial expenses. These loans can be used for a variety of reasons including a company’s mortgage, working capital, new equipment or disaster relief. The terms and eligibility requirements vary by loan.
COVID-19 small business loans
The Government of Canada has announced the Business Credit Availability Program (BCAP) to help Canadian businesses access financing during this time of great economic uncertainty related to COVID-19. The Economic Response Plan promotes access to financing for Canadian businesses in all sectors and all regions. Under this program, Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) will provide $65 billion in direct loans and other types of market-rate financial support to small and medium-size businesses.
- Business Credit Availability Program
- EDC: Helping Canadians During COVID-19
- COVID-19: How the Federal Government is Supporting Small Businesses
Support programs for businesses
The government has implemented a number of programs to help businesses, including:
- Canada Emergency Business Account: New emergency account for Canadian businesses that will offer interest-free loans of up to $40,000 to small businesses and non-profits to help cover their operating costs during a period when their income was temporarily reduced.
- Canada’s Emergency Wage Subsidy: This subsidy provides eligible employers with a wage subsidy of 75% of salary, up to a maximum of 12 weeks.
- Temporary 10% wage subsidy: A three-month measure that will allow eligible employers to reduce the amount of payroll deduction required to be remitted to the Canada Revenue Agency (CRA).
- Work-Sharing Program: This program will provide income support to employees eligible for Employment Insurance who agree to reduce their normal working hours because of developments beyond the control of their employers.
- Canada Emergency Response Benefit (CERB): For self-employed individuals, the government will provide a taxable benefit of $2,000 every four weeks for up to 16 weeks to eligible workers who have lost their income due to COVID-19.
- Canada Emergency Commercial Rent Assistance (CECRA): This program will lower rent by 75 per cent for small businesses that have been affected by COVID-19.
- Insured Mortgage Purchase Program: The government will purchase up to $150 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation. This will provide long-term stable funding to banks and mortgage lenders and help facilitate continued lending to Canadian consumers and businesses, and add liquidity to Canada’s mortgage market.
Advice from experts
When dealing with an outbreak, pandemic or disaster, always consider expert advice that can help you better handle your business. The better you understand and implement their advice, the greater chance your business can have at sustaining these periods of financial uncertainty.
Refer to the resources made available by the Department of Finance Canada to support businesses during this period of financial distress.
Test capital access options
In the event of unexpected incidents, it’s important to explore and test your capital access options to ensure you have the funds you need regarding payroll and inventory. This is especially helpful in relation to market changes—including both drops and increases in demand. The better you’re able to assess your options, the easier it is to determine where you stand financially when situations like the COVID-19 outbreak arise.
Stabilize your workforce capacity
Consistently check in with your employees and ensure they’re able to fulfill their duties during times of crisis. This can help your business continue to grow financially despite the circumstances. Regularly check in with your employees to ensure they’re not ill or showing symptoms. If they begin to display symptoms, send them home immediately to prevent it from spreading to other members of your staff. If you have several sick employees, spread out their responsibilities to other employees or consider enacting a remote work policy until the illness begins to dissipate.
Related Article: Tips for Business Communication During the COVID-19 Crisis
Manage your inventory
Ensure you’re able to maintain a good stock of products and supplies during these periods. This is especially important if you foresee an increase in demand for one of the products you sell. For example, in the case of COVID-19, hand sanitizers and disinfectant wipes have seen an exponential rise in demand that correlates with the increased spread of the disease. Managing your inventory and distribution helps you better prepare for these situations. Consider diversifying your distributors to ensure you can continue to receive inventory if one supplier can’t meet order requests.
Meet cleaning material demand
In case you need to provide extra cleaning protection for your customers and staff, it’s important that you’re well-stocked with cleaning supplies and materials. Verify your maintenance contracts and ensure you have enough supplies to meet an increase in demand.
Review your insurance coverage
If you own a small business, it’s especially important to contact your insurance agent to better understand your policy and coverage. Although it’s impossible to know exactly what incidents lie ahead, knowing or adjusting your coverage helps you feel better prepared. You can also invest in business interruption insurance, which can help during unforeseen circumstances in the future.
Be mindful of movement restrictions or access controls
If customers are affected by guidelines that restrict their reach to your company, be mindful of ways to help them. They may also want to avoid your physical location out of concern about public contamination. For example, if your storefront has to close, consider expanding your online services to better serve your customers.
Communicate with your customers
When unexpected instances arise, remember to maintain a steady flow of communication with your customers. Let them know of any changes in operating hours, closures or changes in operation such as protective measures. Make sure your customers know that you’ve taken the steps to assist them and protect them from harm when they do business with you.
Create a plan
One of the best ways to prepare for unexpected incidents is to develop a strategic plan among your staff. It needs to include the measures and provisions your company plans to take in the event of an improving or declining situation. Consider creating practice scenarios that your employees and management team can navigate.