On Thursday (April 16), Prime Minister Justin Trudeau announced an expansion of the eligibility criteria for interest-free loans of up to $40,000 for businesses and non-profit organizations.
However, small businesses and organizations that do not use a payroll system remain ineligible for the loans.
“When we hear the program is not reaching as many people as it should, we make changes,” Trudeau said. “A few weeks ago we launched the Canada Emergency Business Account to help small businesses struggling with cash flow. Under this program, banks are offering $40,000 loans that are guaranteed by the government.”
Trudeau said more than 195,000 small business loans have been approved, worth around $7.5 billion in credit to small and medium sized businesses.
Under the eligibility expansion, businesses that spent between $20,000 and $1.5 million in total payroll in 2019 can now apply for the loans.
Previously, the loans were only available for businesses and non-profit organizations with annual payrolls between $50,000 and $1 million.
“This is money and employers can use to cover operational costs and help with other immediate needs,” Trudeau said.
The expansion followed complaints from businesses with payrolls just under or just over the previous eligibility threshold who were not eligible for the loans.
However, small businesses that do not use payroll remain ineligible.
This includes self proprietors and small businesses that hire freelancers, people who work on commission, or gig workers.
Small business owners who pay themselves through management fees or dividends instead of salary are also not eligible for the loan.
Trudeau also announced plans to implement the Canada emergency commercial rent assistance program, which will help small businesses with rent for the months of April, May, and June. He said the federal government will have to work with the provinces and territories to implement the program as they govern rental relationships.
He said details of the new program would be announced soon.
