indicatorAdvice for Alberta businesses during the COVID-19 pandemic

Navigating COVID-19 relief programs for your small business

By ATB Financial 26 May 2020 7 min read

Since March 2020 when the COVID-19 pandemic was first declared, businesses and industries across Canada and Alberta have suffered significant losses. This economic crisis has seen your customers quarantined and your suppliers shut down—yet your bills are still due.

As a Canadian entrepreneur, you want to access every avenue available to sustain your enterprise. On top of deferral options offered by financial institutions, there are also federal and provincial programs available which can help mitigate the impact of mandated shutdowns, decreased sales and disappearing revenues.

But which programs apply best to your situation, and at what cost?

To fully leverage the options available, you’ll need to hone in on key aspects of your business, from cost structure to business model, says Sandi MacGregor, ATB Entrepreneur Strategist. A good first step is sitting down and answering the tough questions, such as, ‘Am I able to meet my commitments?’ and ‘Should I take on more debt?’

Focus on covering costs

Keeping the wheels of the economy turning during these uncertain times is critical for Canada’s future, Sandi says. “Relief programs address short-term needs of business owners, giving you breathing room to figure out how to continue or how to pivot your business in a new direction.”

She says you can start by calculating what it will take to keep your enterprise afloat.

To do this, consider:

  • What will you need to do to keep operating? (Cover payroll and accounts payable, perhaps launch online sales)
  • What is due? (Leases, utilities)
  • What do you owe? (Loans)
  • Can you cover all costs? (Are you still generating sales, can you cut expenses?)

Defining what you need and what your business needs to stay viable will help guide which option or options to put your time and effort into applying for.

Consider the following:

  • What are the total costs to run your business?
  • How much are your basic costs—utilities, rent, payroll?
  • What are your forecast sales over the next two quarters; will they be enough to be viable or fall short?
  • What are your current commitments, including accounts payable?
  • Will you need to change your business model to stay a business, and how?

If you can’t project your cash flow in these uncertain times, have fixed costs and can’t rely on sales, you’ll likely need to take on debt. Addressing the above questions will help you estimate how much long-term debt you might need and how much you’re able to take on.

Relief shorthand

We hear what’s keeping Alberta entrepreneurs up at night and linked three major concerns with associated aid programs:

If you need help with your operating costs (existing or new): Canada Emergency Business Account (CEBA). Willing to assume some short-term debt? This is one of the first programs you should look at as it’s the least risky debt available: interest free until December 2022, and renewable for three years at five per cent if not repaid in full. If you do pay in full by December 31, 2022, you’ll receive 25 per cent loan forgiveness ($10,000). You can also access CEBA if you’re changing your business direction and have new costs for equipment, communication and delivery. Visit this page for FAQ and eligibility requirements.

If you need to cover payroll costs: Canada Emergency Wage Subsidy (CEWS). This taxable program will cover up to 75 per cent of your employee wages, retroactively between March 15 and August 29, 2020. Eligibility is based on lost revenue, you may apply if your gross revenue has dropped by at least 15 per cent in March, and 30 per cent in April and May. Use it to rehire key employees who were laid off because of COVID-19, then, since you get cash back, “you can use it to afford upcoming expenses, like rent or utilities,” Sandi says. If you’re still unable to cover the remaining 25 per cent of your employees’ wages, programs like the Canada Emergency Response Benefit (CERB) are available to employees who have lost their job due to COVID-19. Keep in mind, if you do temporarily lay off employees, there’s a chance they may not return once the business re-opens.

If you’ve already taken advantage of the 10% Temporary Wage Subsidy, you can still apply for the CEWS but the 10 per cent will be subtracted from your refund request.

If you need to cover your lease: Canadian Emergency Commercial Rent Assistance (CECRA). Administered by the Canada Mortgage and Housing Corporation, this evolving program works by offering loans to commercial property owners to cover reducing small business tenants’ rents for April, May and June 2020. A small business tenant (including non-profit and charitable organizations) is a tenant who pays no more than $50,000 in gross monthly rent (per location), generates less than $20 million in gross annual revenues and has temporarily suspended operations or has at least a 70 per cent decline in revenue due to COVID-19. Your landlord must apply, more details about the application process and fund distribution can be found on the Canada Mortgage and Housing Corporation site.

If you need help with cash flow (and CEBA isn’t enough): Export Development Canada (EDC) Business Credit Availability Program (BCAP). The federal government works with your financial institution to guarantee a new operating line of credit or new term loan for 80 per cent of its value, helping us help you cover rent, payroll, operating costs and ordinary course debt payments (such interest and temporary advance repayment that has been incurred since March 1). Unlike CEBA, which only offers a loan of $40,000, businesses can apply for a loan up to $6.25 million (with a maximum amortization period of five years). The terms and conditions of an EDC BCAP loan are set by each financial institution within the parameters of the EDC offering. Contact your advisor for the exact details offered by your financial institution. Applications will need to meet your financial institution’s credit qualifying criteria and be able to service it. Visit this page for FAQ and eligibility requirements.

Payment deferrals

“If you are expecting sales to rebound to the same level you had pre-COVID and expect to be able to resume loan payments within three months, deferring certain payments could be a good option,” Sandi says. “Deferring a payment gives you cash in hand to pay for things coming due."

“If this doesn't cut it, or you need additional support in other areas, that’s where relief programs come in.”

Deferrals are an option if you don’t need to take on more debt, don’t qualify for CEBA, or are not in a position to take on more debt. Here are some of the deferral options ATB is currently offering:

  • Credit cards: Most financial institutions offer zero minimum payments for a period of time. Interest—which typically is higher than other loans and will continue to accumulate on the outstanding balance, so we recommend leaving this choice as a last resort.
  • Lines of credit: Interest on your line of credit quietly continues to accumulate during a deferral period. And generally, will be due at once, along with your regular monthly interest rate, when the grace period is over. However, COVID-19 has prompted some changes. Contact us to discuss possible alternatives.
  • Term loans: In agreement with your bank, you can suspend payments on the interest and principal of your term loan for a defined period and extend your amortization by the same time. Be aware your interest costs will grow over the life of the loan, so make sure this option fits with your financial forecast and business priorities.

Qualifying Alberta businesses also have the option to defer their utility payments until June 18, 2020.

Evaluate risk

Keep track of everything you apply for and the details—such as how you used your loan—as there undoubtedly will be audits later on. You need to document all your processes and the numbers you’ve included to back up why you thought you qualified, and the numbers you used in the application.

Once you’ve determined the program(s) that will benefit you and your business the most, apply. “Government funds are not unlimited. If you believe you qualify and will use the funds as intended, then apply as soon as possible,” Sandi notes.


You can trust us to be at your side with more COVID-19 tips, resources and business advice to mitigate the impact of this downturn and optimize your business opportunities.


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