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If your business is hurting during the COVID-19 shutdown, and the no-interest loans that the Canadian government is showering on businesses won’t work for you because of the program rules, you don’t have to close your doors just yet. Private mortgage loans come from investors who are looking to help business owners in your situation. After all, once the pandemic lifts, Canada will need businesses like yours to keep the economy strong. As new information comes available, the Federal and Provincial governments may need to add or amend some of the options available to Businesses as a wider net may be required to help more than was initially anticipated.
As you can imagine, the interest in the loans was intense. In the first five days of the program, the biggest banks in Canada approved more than $5 billion in no-interest loans, more than 20 percent of the money that the federal government set aside.
The loans max out at $40,000 and are guaranteed by the government. They are no-interest until the end of 2022, and businesses that pay 75% of the loan before the end of 2020 will have the remaining 25 percent forgiven.
The problem for a lot of businesses is that, to qualify, they have to prove that their 2019 payroll was between $50,000 and $1 million, according to the rules for the Canada Emergency Business Account (CEBA). The fact that the money comes as debt instead of a grant is another obstacle for many business owners. Great Britain and Australia have set up grant-based programs to help with fixed costs like rent for businesses.
Businesses that pay their employers as subcontractors and do not issue T4 tax slips are also ineligible. That leaves a lot of businesses in the dark. For example, Toronto-Dominion Bank received 70,000 applications in those first five days, but 20,000 were ineligible. Some lenders are deferring payments on commercial mortgages and boosting operating credit lines by as much as 25 percent for businesses that do not qualify for the CEBA loans.
So if your business did not qualify, you’re far from alone. More than half of the small businesses in Canada have four or fewer employees. The country has over 1.1 million small businesses that provide 8.3 million jobs – and kick in about 40 per cent of the economic output in Canada, according to Statistics Canada. A lot of those small businesses use payroll methods like those listed above, so they can’t meet the program’s metrics.
Again, though, this is where a private lender can come in and help with your business. Loans can be tailored to the needs of your current financial situation, so don’t let your business fall by the wayside during this temporary shutdown. It is hard to predict just how long the COVID-19 shutdown will last, but if your business was prospering before Canada’s economy had to go dark, there will still be a market for it once things reopen. There’s no need to take the risk of losing your house or other drastic steps to keep your business up and running. Reach out to Amansad Financial today to learn about how we can help you with your short term business capital needs.