This article was updated on April 28, 2020 to reflect additional information regarding the Innovation Assistance Program administered through Industrial Research Assistance Program of the National Research Council of Canada, including the window for submitting applications. As of April 28, 2020, additional information about the other support programs covered in this article was not available.
On Friday, April 17, 2020, Prime Minister Trudeau announced that the federal government will provide over $1.2 billion in funding for targeted measures for businesses dealing with the economic impacts of COVID-19. Over half of this funding will specifically assist smaller and earlier-stage businesses that are unable to access existing COVID-19 support measures.
What are the new supports and what businesses will qualify for these supports?
The total funding announced Friday was broken down into categories, three of which may benefit small-medium sized and early-stage businesses:
- $675 million of financing support for small and medium-sized businesses unable to access existing COVID-19 support measures;
- $250 million to assist innovative, early-stage companies that are unable to access existing COVID-19 business supports; and
- $20.1 million in support for Futurpreneur Canada to continue to support young entrepreneurs across Canada who are facing challenges due to COVID-19.[1]
Although the announcement only provided limited details on each of the new categories of funding, some information can be discerned from the agencies, programs and/or organizations through which the funding will be provided.
Funding for small and medium-sized Businesses through Canada’s Regional Development Agencies
The $675 million in financing support for small and medium-sized businesses that are unable to access the government’s existing COVID-19 support measures will be provided through Canada’s Regional Development Agencies. As their name suggests, these development agencies are regionally based agencies that work to fuel economic growth within their respective regions.[2]
These agencies are already accommodating existing clients with flexible arrangements. For example, FedDev Ontario is deferring payments, considering alternative project activities and costs; accelerating reimbursements of claims and advances, adjusting cashflows across fiscal years, adjusting project milestones, and extending 2019-2020 reporting deadlines.[3]
It was not immediately clear whether businesses would need to be existing clients of these agencies. However, Trudeau specifically stating that these funds are intended to support businesses that are falling through the cracks of existing business relief programs is a good indication that being an existing client will not be a pre-requisite.
A statement on the FedDev Ontario website on Friday encouraged businesses to contact the agency for assistance navigating the process once the details of the new fund are launched national in the coming weeks.
Assistance for innovative, early-stage companies through the National Research Council of Canada’s Industrial Research Assistance Program
The $250 million to assist innovative, early stage companies that are unable to access existing COVID-19 business support will be provided through the Industrial Research Assistance Program of the National Research Council of Canada. Trudeau’s announcement that the assistance is aimed at assisting innovative companies aligns with the program’s stated strategic objectives:
- Help small and medium-sized businesses in Canada develop and commercialize technologies.
- Collaborate with regional and national organizations on initiatives that support the development and commercialization of technologies by small and medium-sized businesses.
The Globe and Mail reports that the funding for innovative companies comes after calls from the technology sector that previously announced relief programs were not meeting the needs of many early-stage and growth-stage technology companies.
Present COVID-19-related programs and supports from the Industrial Research Assistance Program are geared at companies that can find and provide solutions to the COVID-19 outbreak.[4] Friday’s announcement contained no indication that the same would be true of the additional funding and a post on the National Research Council of Canada’s website on Friday evening indicated that “small and medium-sized Canadian businesses unable to secure funding under the Canada Emergency Wage Subsidy and the Business Credit Availability Program can apply for financial assistance.”[5]
The program was subsequently named the NRC IRAP Innovation Assistance Program (IAP). It was also announced that the IAP would provide a wage assistance subsidy for up to 12 weeks to eligible small-medium enterprises pursuing technology-driven innovation who have been unable to secure funding under the Canada Emergency Wage Subsidy (CEWS). To be eligible, a company must:
- Be ineligible for the Canada Emergency Wage Subsidy
- Be an incorporated, profit-oriented small or medium-sized business in Canada
- Be a company with 500 or fewer full-time equivalent employees
- Plan to pursue growth and profit by developing and commercializing innovative, technology-driven new or improved products, services or processes in Canada
- Lack sufficient financial resources to sustain operations from April 1, 2020 to June 23, 2020 inclusive
- Have a Canada Revenue Agency business number
- Be incorporated by no later than March 1, 2020
Eligible companies could start applying for the IAP online on Wednesday, April 22, 2020, and the program will accept applications until April 29, 2020 at 11:59p.m. Additional information about the program, including how to apply, are available on the National Research Council’s website.
Assistance for young entrepreneur through Futurpreneur Canada
Finally, the $20.1 million in support of young entrepreneurs across Canada who are facing challenges due to COVID-19 will be provided through Futurpreneur Canada. Futurpreneur Canada is a non-profit organization that provides financing, mentoring and support tools to aspiring business owners aged 18-39.
Trudeau’s announcement indicates that this funding will allow Futurpreneur Canada to provide payment relief for its clients for up to 12 months. While the Prime Minister’s announcement was not clear on whether the funding would assist businesses that are not presently clients of Futurpreneur Canada, a press release from Futurpreneur Canada on Friday clarified that: “[the funding] will enable Futurpreneur to provide its existing clients with crucial financial support, while also helping thousands more young entrepreneurs launch successful new businesses that will grow the Canadian economy in the years to come.”
The press release went on to indicate that Futurpreneur Canada would be working with the Government of Canada on the details of the support in the days to come and that more information would follow.
What other supports are available for small businesses?
The new supports announced Friday join a growing list of federal relief and support programs for Canadian businesses.
Just a day prior, Prime Minister Trudeau announced the new Canada Emergency Commercial Rent Assistance (“CECRA”) program to assist small businesses with rent for the months of April, May and June, as well as an expansion to the qualifying payroll range under the previously announced Canada Emergency Business Account (“CEBA”) program. Please see our blog post discussing those announcements, which also contains an overview of other federal and provincial supports for businesses.
Relief and support programs are changing rapidly. Businesses should closely monitor these changes, take advantage of any programs they are eligible for and consult with their legal and professional advisors to ensure they are taking the proper courses of action.
Are you a small or early-stage business in need of financial support as a result of COVID-19?
Siskinds LLP has developed a comprehensive operational plan that aims to protect our employees, clients, colleagues and the greater community while continuing to deliver uninterrupted legal services. Our website now has a COVID-19 Legal Updates page, which contains additional COVID-19 legal resources. Siskinds’ experienced business lawyers are available to provide timely, helpful and safe legal services as your business navigates your pandemic response and the available supports.
[1] The New Release from the Prime Minister’s office is available at: https://pm.gc.ca/en/news/news-releases/2020/04/17/prime-minister-announces-new-support-protect-canadian-jobs
[2] General information regarding Canada’s Regional Development Agencies is available at: https://www.feddevontario.gc.ca/eic/site/723.nsf/eng/home
[3] FedDev Ontario has created a designated page on their website for COVID-19 resources: https://www.feddevontario.gc.ca/eic/site/723.nsf/eng/h_02567.html?OpenDocument
[4] Details of these programs were available on the National Research Council of Canada’s website at: https://nrc.canada.ca/en/research-development/research-collaboration/nrc-covid-19-programs
[5] See: https://nrc.canada.ca/en/support-technology-innovation/nrc-irap-innovation-assistance-program-iap