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Federal Budget 2021: What's in it for small business

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The 2021 federal budget, released on April 19, contained some good news for small businesses, but the government did not deliver on many of the major program gaps affecting thousands of small businesses facing restrictions, closures and huge amounts of COVID-related debt.

Here are some of the key announcements from the budget and what they mean for your business. 

COVID-19 relief

As CFIB has called for, the federal rent and wage subsidies (CERS and CEWS) will be extended until the fall, though they are expected to start declining on July 4. 

While the extension is good news, the government did not improve these programs. There are still too many restrictions on the rent subsidy, including challenges for business who have both a holding and operating company and the requirement that businesses pay full rent within 60 days even if the subsidy doesn’t entirely cover their losses. We’ll keep pushing to fix this and other issues with the rent subsidy. If your business is shut out from CERS, tell us your story.  

A new hiring incentive

Following CFIB’s recommendation, the budget creates a new hiring incentive (the Canada Recovery Hiring Program) to encourage businesses to staff up in the summer as the economy starts to recover. The details on this incentive are still being developed, but it will begin in June and end in November, covering up to 50% of the costs associated with staffing up – whether that means recalling previous workers, adding new staff or increasing their hours. 

Businesses left behind

Sadly, the budget does not help address the rising debt burden many small firms are facing due to the pandemic. The average business has inherited $170,000 in new, COVID-related debt, but there was no action on our recommendation to expand the Canada Emergency Business Account (CEBA) to $80,000 with 50% forgivable, and no extension of repayment terms for loans. The government also didn’t move on our recommendation to make part of the Highly Affected Sectors Credit Availability Program (HASCAP) forgivable. This work continues. 

The budget also leaves an alarming gap: new businesses that opened up shop in 2020 are still ineligible for COVID relief, even though they were hit just as hard as others. We’re going to keep pushing the government to close this gap and ensure that all affected businesses can get relief. 

Credit card fees to keep going down

The government is taking action on a long-standing issue: high credit card merchant fees. The budget is light on details, but says the government aims to bring costs down for small business, which is particularly important with the rise in e-commerce and the higher fees that come with online and telephone transactions. CFIB has been on this fight for years, and we will stay there to push for significant reductions for your business.

Watching out for new spending and future taxes 

While CFIB has supported additional COVID related support programs, the budget dramatically increases spending on non-COVID related items, too. Small firms know that today’s spending is tomorrow’s tax bill. Now is definitely not the time to increase costs, but there was no change in plans to increase liquor and carbon taxes and CPP premiums. CFIB will also call on Parliament to reject the proposed “luxury tax” on some more expensive cars, boats and aircraft. This new tax will hurt many small businesses who sell and support these purchases. 

Also in the budget…

Here are some other items we’re keeping an eye on.

  • $1-billion in support for the tourism sector
  • Several hiring and training programs, including an increase in funding for Canada Summer Jobs, an apprenticeship service to connect apprentices with businesses, and more funding for work-integrated learning placements (co-ops, internships, etc.)
  • Support for businesses to help pay for mandatory quarantine for Temporary 
  • A program to help small businesses adopt new digital technologies
  • Ability to expense up to $1.5 million in capital investments in the year of purchase until 2024

As always, you can count on CFIB to continue to push for improvements to many of these measures in the days ahead. To support these efforts, please visit our new petitions page to add your voice.