Resource Hub: Relief for Start-ups & Pre-Revenue Companies in Canada

26 May 2020

These are trying times for businesses across the globe, but perhaps the hardest hit are the fledging new and emerging companies that were already fighting an uphill battle pre-COVID-19. Unfortunately, these start-ups often do not meet the requirements to qualify for the majority of relief programs that comprise the over $145 billion that Canada has spent since the outbreak, the largest of which is the Canada Emergency Wage Subsidy program. See our COVID-19: Guide to Federal and Provincial Relief Programs.

Still, Canadian start-ups are not without options. There are programs, relief and funding available at both the federal and provincial level. However, some of these resources are not as widely known because they have not received the same level of national media attention as some other Canadian programs. To assist businesses in this space, we have prepared this comprehensive resource for start-ups and entrepreneurs to help summarize the sources of relief available.

Federal Resources

  • New Government Online Tool: Find Financial Help During COVID-19 (post-COVID): This web-based benefits finder tool was developed by the Canadian Digital Service and launched on May 22, 2020. It is designed to help Canadian individuals and businesses easily gain access to government relief programs based on their eligibility criteria. The tool is still in its early stages, so you can expect changes and improvements over the coming weeks and months.
  • NRC-IRAP Program (pre-COVID program; post-COVID addition): Small and medium-sized Canadian businesses pursuing technology-driven innovation may be eligible for financial support from NRC-IRAP. On April 17, 2020, the federal government announced that an additional $250 million will be available through the Innovation Assistance Program that provides a wage subsidy up to 12 weeks to employers. (Due to high demand, the call for applications for this program is now closed.) See our detailed article on this program here.
  • Scientific Research and Experimental Development Tax Incentives (pre-COVID): This program aims to provide either an income tax deduction or an investment tax credit for those Canadian corporations that aim to address technological or scientific advancement.
  • Futurpreneur Canada (pre-COVID program; post-COVID addition): As part of its COVID-19 Economic Response Plan, the federal government infused an additional $20.1M into Futurpreneur Canada. Futurpreneur Canada is a non-profit that provides financing, mentoring and support tools to entrepreneurs between the ages of 18-39.
  • Venture for Canada Internship Program (pre-COVID): A program that specializes in pairing qualified post-secondary students for internships with SMEs, start-ups, social enterprises, non-profits and charities.
  • BDC Capital Bridge Financing Program (post-COVID): Through convertible notes on market standard terms, BDC Capital will match current financing rounds being raised through qualifying investors into eligible Canadian start-ups. Qualified investors must currently have $10M under management and at least three portfolio companies. A qualified investor can also be a third party limited investor. Eligible companies must have been backed by a qualified venture capital firm, have raised $500,000 in external capital before applying for the program and must be specifically impacted by COVID-19. This co-investment targets Canada's venture-backed, high growth potential start-up sector. See our detailed article on this program here.
  • EDC Business Credit Availability Program Guarantee (post-COVID): The BCAP Guarantee is available to all Canadian businesses. EDC provides a guarantee to financial institutions, which gives businesses access to additional credit for payroll and operational costs.
  • Income Tax Deferral (post-COVID): CRA has deferred the payment until August 31, 2020 of any and all income tax amounts owing between March 18 and September. No interest or penalties will accrue on these amounts owing during this period.
  • Canada Emergency Business Account (post-COVID): Banks and credit unions will provide interest-free loans to start-ups who had a payroll between $20,000 and $1.5M in 2019. These loans are backed by the federal government. The loan can be up to $40,000. If it is repaid by December 31, 2022, 25% of the loan will be forgiven. Small companies that do not have a commercial account with a major bank have remained ineligible for CEBA, however, a recent statement from the federal government indicates that they are working to amend this program to make it more available to small businesses.
  • Regional Relief and Recovery Fund (RRRF) (post-COVID): The federal government will provide $1 billion for the creation of the new Regional Relief and Recovery Fund. The funding will be provided to small businesses through the federal government's six regional economic development agencies: Atlantic Canada Opportunities Agency (ACOA), Canada Economic Development for Quebec Regions (CED), Canada Northern Economic Development Agency (CAnNor), Federal Economic Development Economy Agency for Southern Ontario (FedDev Ontario), Federal Economic Development Initiative for Northern Ontario (FedNor) and Western Economic Diversification of Canada (WD). The funding applies to businesses that do not qualify for the Canada Emergency Wage Subsidy (CEWS) or the Canada Emergency Business Account (CEBA). For example, RRRF funding through FedDev Ontario is intended to support southern Ontario businesses that have otherwise been unable to access other relief measures. The funding is available in two branches: (1) $213 million for small and medium-sized enterprises facing financial pressure, with priority for manufacturing, technology and tourism; and (2) $39.4 million to provide rural businesses with access to capital and technical support. FedDev Ontario is accepting applications on an ongoing basis and will review on a "first-come, first served" basis until funding is fully committed.

Ontario-based Resources

Quebec-based Resources

  • Local Investment Fund / Fonds local d'investissement (post-COVID): Measure to relax the terms and conditions of loans already granted through LIF. This measure is aimed at importing flexibility into outstanding loans. It places a 6-month moratorium on the repayment of both the principal and interest of loans that have been granted through LIF. One of the LIF's stated goals is to promote access to capital for start-ups and to provide support to the next generation of entrepreneurs.
  • Concerted Temporary Action Program for Businesses / Programme d'action concertée temporaire pour les entreprises (PACTE) (post-COVID): PACTE is a loan guarantee that offers at least $50,000 to businesses suffering from liquidity issues as a result of COVID-19. An eligible business must show that its cash flow issues are temporary and that the liquidity shortage is due either to a problem with the supply of raw materials or products, or a substantially decreased ability to deliver its products or services. To be eligible, the recipient must be in the process of maintaining, consolidating or restarting its activities.
  • Collaborative Action Employment Maintenance Program / Programme actions concertées pour le maintien en emploi (PACME) (post-COVID): PACME offers financial assistance for training as well as assistance to companies implementing teleworking and work-from-home infrastructures. Companies can be reimbursed for 100% of their expenses (up to $100,000) relating to training fees, equipment purchases and human resources management activities.
  • PME MTL (pre-COVID): A loan of up to $150,000 or a subsidy of up to $25,000 may be available to Montreal-based Quebec companies that are active in the following sectors: transport and mobility; creative and cultural industries; digital industries; clean technologies; or life science and health care technologies. There are also various other industry-specific grants and subsidies available here.
  • Emergency Assistance to Small and Medium-Sixed Business/Aide d'urgence aux petites et moyennes entreprises (COVID-19) (post-COVID): Provided by the Government of Quebec and facilitated by PME MTL in the Montreal area, loans up to a maximum of $50,000 at an interest rate of 3% may be available to small and medium businesses.

Alberta-based Resources

  • Alberta Innovates Technology Futures Micro-Voucher (pre-COVID): The AITF's micro-voucher is a $10,000 grant paid directly to a service or product provider on behalf of the applicant start-up. The service or product provider must provide, for the benefit of the applicant, market assessments, business plan developments, IP assessments or acquisition of materials or equipment critical to the start-up's operations. The micro-voucher aims to support tech in early start-up developments.
  • ATB Financial Customer Relief Program (post-COVID): Start-ups that are customers of Alberta Treasury Branches will be able to apply for deferrals of business loans they have with ATB.
  • Startup Edmonton (post-COVID): Startup Edmonton is offering free access to online programs for local start-up founders and companies.
  • Tax Deferrals (post-COVID): Corporate income tax balances coming due between March 18 and August 31 are deferred until August 31, 2020.

British Columbia-based Resources

  • Women's Enterprise Initiative (pre-COVID): Western Economic Diversification Canada started the Women's Enterprise Initiative (WEI) to assist female entrepreneurs in starting, scaling up and growing their businesses. WEI is a non-profit organization that provides business advisory services, training, networking opportunities and loans to start-ups. WEI also has representation in Alberta, Saskatchewan and Manitoba.
  • Innovate BC's Ignite Program (pre-COVID): Provides up to $300,000 to fund innovation projects in the areas of natural resources, applied science and engineering if the projects can secure matching funds from industry or government sources at a ratio of 2:1 matching dollars to Ignite dollars.
  • BC Hydro (post-COVID): If a start-up has closed business for 14 consecutive days due to COVID-19, and has ceased operations and has not earned revenues, BC Hydro will forgive the start-up's hydro bills. The start-up must apply for the program through BC Hydro. If approved, charges from April to June 2020 will be waived from the start-up's BC Hydro account. Applications must be submitted before June 30, 2020.

In addition to the above, please see the following resources for general information that may be helpful for navigating the start-up space at this time:

Gowling WLG has expertise in provinces across the country. For further information on any of the programs outlined here, please contact a member of our Tech Sector Group.

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