With an estimated 800,000 Canadian restaurant workers were laid off in March and many independent Canadian restaurants fearing they will have to close, there’s been massive fallout for the industry, and countless restaurants in need of assistance.
Fortunately, various financing options have emerged to help restaurants and their workers stay afloat. Whether or not these programs are sufficient is up for debate, but in any case: Here’s a breakdown of every financing option available for members of Montreal’s restaurant industry.
Federal funding options
At this stage it’s a no-brainer: Many workers and some business owners are eligible for Employment Insurance (EI) or the Canada Emergency Response Benefit (CERB) to help with living expenses during the coronavirus crisis.
If your business has seen drops in income of 30 percent in April and May compared to 2019 (or 15 percent in March), you’re likely eligible for the Canada Emergency Wage Subsidy (CEWS), designed to cover up to 75 percent of your payroll (or the first $58,700 per employee, whichever is lower) for up to twelve weeks, backdated to March 15, 2020. The goal of this program is to “enable employers to rehire workers previously laid off, and to keep those who are already on payroll.” Eligible companies will have to reapply each month through the CRA to demonstrate need.
Restaurant owners that aren’t eligible for the CEWS may be eligible for the federal 10 percent Temporary Wage Subsidy for Employers, a three-month measure designed to reduce the amount of payroll deductions remitted to the CRA. Any business, even those that haven’t seen revenue drops in recent weeks, is eligible for the 10 percent subsidy, which will cover up to $1,375 per employee and $25,000 per employer. Your restaurant can qualify for both the 10 percent wage subsidy and the CEWS, but if it does, the federal government will reduce its CEWS payments to account for funds sent through a separate program.
Restaurants that have paid at least $20,000 in payroll to employees in 2019 are eligible for the Canada Emergency Business Account (CEBA), a $40,000 loan that will remain interest-free until December 31, 2022. Recipients that pay 75 percent of the loan back by that date are also eligible to have the remaining 25 percent forgiven (and thus treated as a grant). Applications are currently open, conducted through banks: If you’re eligible, you’ll need your T4SUM and business number to apply through your small business’ primary financial institution. The payroll floor on this program has drawn criticism for excluding new businesses that lack established payrolls.
Restaurants and bars that pay less than $50,000 in monthly rent and have either temporarily ceased operations or have seen 70 percent declines in revenue are eligible for the Canada Emergency Commercial Rent Assistance program (CECRA). The program, announced April 24, provides forgivable loans to property owners (read: restaurant’s landlords) to cover 50 percent of rent for April, May and June — leaving restaurateurs and property owners to pay 25 percent of rent costs each. Crucially, the loan will only become forgivable if property owners agree to reduce their tenants’ rent by at least 75 percent for the three-month period, and if they agree not to evict the tenant at any point during this stretch of time. The program is slated to be in place by mid-May, so relief for April and May will be provided retroactively.
The federal government has also extended its Work-Sharing (WS) program, which provides income support to employees who work reduced hours while their employer recovers from conditions that have affected their business and are beyond their control. The program, designed to help employers avoid layoffs, requires a three-party agreement between the employer, employees, and the federal government (crucially, employees must agree to a reduced schedule of work, shared over a period of time, while federal subsidies cover wages lost). Prior to the pandemic, WS agreements were required to last between 6 and 38 consecutive weeks; employers can now extend their agreements to 76 weeks total (nearly a year and a half).
The federal government has also extended the GST/HST remittance deadline to June 30, 2020. If you’re a monthly, quarterly, or annual filer who owed these taxes in March, April, and May, you can hold onto those funds for now.
Provincial funding options
Any small business in Quebec that’s temporarily closed or on the brink of closing due to COVID-19 related financial hardship may qualify for the Emergency Assistance Program for Small and Medium-Sized Businesses. The program offers business owners loans of up to $50,000, distributed on the basis of need. Montrealers, specifically, are in luck: the province has set aside $40-million of this $150-million fund specifically for the businesses in the city. Applicants should apply through their regional county municipality (RMC).
Quebec businesses that are experiencing temporary cash flow issues stemming from difficulty obtaining or delivering raw materials, goods, or services are eligible to participate in the Concerted Temporary Action Program for Businesses (PACTE). Applications are reviewed on a case-by-case basis and those approved will receive a loan of at least $50,000 — although take note that bars are specifically excluded.
The Incentive Program to Retain Essential Workers (IPREW) from Revenu Québec offers financial assistance to individuals working essential jobs amid the COVID-19 pandemic. The program offers eligible workers $100 a week for up to 16 weeks beginning March 15, 2020 (applications open on May 19, so payments for work done earlier will be retroactive). The idea is to make up the difference between the $2,000 monthly payments available via the Canada Emergency Response Benefit (CERB) and eligible individuals’ wages, to incentivize individuals to continue working during the pandemic. Cooks, cleaners, drivers, and cashiers are all eligible, as long as their 2020 income falls between $5,000 and $28,600, they earn less than $550 per week, and they are not receiving CERB payments. Individuals who qualify should apply through Revenu Quebec.
The provincial government has also postponed provincial tax payments: businesses can now wait until July 31 to pay balances due for 2019 tax returns.
Private funds, business loans, and worker relief
Small businesses that have been generating revenue for at least 24 months are eligible for loans of up to $100,000 through the Business Development Bank of Canada (BDC) Small Business Loan program. Those experiencing financial difficulty and are no longer able to pay their suppliers as a result may also qualify for Purchase Order financing. This fund is designated to cover up to 90 percent of orders through the BDC.
Local restaurant employees may also be eligible for funding through the Montreal Restaurant Worker Relief Fund, a $100,000 fund designed to provide direct financial support to staff who’ve been laid off by restaurants unable to pay them. While the fund’s creators knowledge that many restaurants and their employees will soon receive government assistance, the fund is designed to bridge the gap between now and then, offering microgrants of $50, $100, and $150 to cover immediate essential expenses, like groceries and medicine.
Those in greater need can also consider the new Canadian Hospitality Workers Relief Fund, which will make grants of up to $500 — applications open May 6.
For restaurants considering the move to online delivery as a way to generate revenue mid-lockdown, a number of platforms are offering temporary discounts to new clients. TouchBistro, an iPad point-of-sale system for restaurants, is offering its online ordering platform to new clients free for the first 12 months; DoorDash is allowing new operators to sign up for the app free, paying zero commission for the first 30 days; and Yelp is waiving advertising fees and offering $100 in free search advertising for restaurants that offer delivery or takeout.
If none of these financing options feel right for your restaurant, you may be eligible for other small business loans in Canada. Try Smarter Loans’ restaurant loans search engine here.