November 28, 2022

The Queens County Citizen

Complete Canadian News World

The federal government has cut supplies to 50,000 SMEs

The federal government has cut supplies to 50,000 SMEs

Justin Trudeau and his Finance Minister Chrystia Freeland predict the Canadian economy will soon be in turmoil. They also mentioned the possibility of entering a recession, especially given the Bank of Canada’s fight against inflation with its key rate hikes.

At that time, the federal government would cut funding to 50,000 Canadian SMEs, including more than 10,000 Quebecers.

how By causing them to lose the $10,000 to $20,000 in grants the government promised them during the COVID-19 pandemic under the Canada Business Emergency Account (CEBA).

The reasons? These SMEs are considered ineligible for the financial assistance program due to payroll size (too small or too large), non-deferrable expenses and technical reasons related to tax structure.

  • Listen to Michel Girard’s financial editorial broadcast live every day at 7:35 am. at :

program

Under this federal financial assistance program, nearly 900,000 SMEs were initially able to benefit from an interest-free loan of $40,000 to $60,000. To support them financially during the health crisis in 2020. .

Approved funds for loans and grants issued through the CEBA Emergency Account totaled $49 billion, with 571,851 SMEs receiving loans of $60,000 and 326,420 of $40,000. $.

The appeal of this federal loan? In addition to this loan, a grant of $10,000 to $20,000 will be given to SMEs who repay the loan by the end of December 2023.

In Quebec alone, 182,923 loans and grants were initially approved, with a total value of $10.1 billion.

The problem?

Around 50,000 SMEs have been informed by their respective financial institutions that their applications will eventually be considered ineligible and as a result, they will have to repay their loans by the end of December 2023 without being eligible for a $10,000 grant at $20,000. .

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The Canadian Federation of Independent Business (CFIB) strongly condemned the decision by the federal government.

According to her, the Trudeau government should revise its position and “ensure that all SME recipients who received CEBA loans in good faith, but are now deemed ineligible, can keep the subsidy portion of the loans. [de 10 000 $ à 20 000 $]The same is true of other beneficiaries of the popular federal program.

On the edge of the precipice

The survival of many of them depends on it. By losing access to these grants, which range from $10,000 to $20,000, disqualified SMEs find themselves heavily indebted.

“It is unfair to force SMEs that have benefited from loans granted in good faith by the government to lose its core benefit,” laments Jasmine Gunet, vice-president of national affairs at the Canadian Federation of Independent Business.

“It makes you wonder if the government has not forgotten that many SMEs are struggling every day to survive during restrictions and restrictions. Asking small businesses that benefited from CEBA to repay their loan in full could be fatal for them because of the enormous debt they have accumulated due to the pandemic.

  • Listen to Michel Girard’s financial editorial broadcast live every day at 7:35 am. at :

Review Request

CFIB is asking the Trudeau government to amend its status by allowing 50,000 ineligible SMEs to keep a portion of the grant after repaying the balance of their loan. “At a minimum, the CFIB directs, a requalification process must be put in place for SMEs affected by this recall.”

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Faced with high input costs, runaway inflation, labor shortages and supply chain disruptions since the end of the pandemic, 64% of SMEs are struggling with pandemic debt, averaging $144,000.

The CFIB is also asking the Trudeau government to defer repayment of loans from the CEBA Emergency Account Program for another year, to December 31, 2024, to give SMEs time to regain their financial health.

Originally scheduled for December 31, 2022, the loan repayment deadline (to qualify for subsidies) has been postponed to the end of December 2023.