Weekly Update – 24 March 2021

Welcome back to our Weekly Update. Spring has arrived, at least for most of us! With the speed of vaccination against Covid-19 taking place globally, we are hopefully seeing the light at the end of the tunnel after dealing with Covid-related problems and solutions for more than a year. Read on for the latest updates and some ideas to help us all move forward this spring.

COVID Vaccine Shipments Won’t Be Affected By Possible EU Restrictions

Minister of Small Business, Export Promotion and International Trade Mary Ng said COVID-19 vaccine shipments would be affected by export restrictions being considered by the European Union.

According to reports, the EU is finalizing emergency legislation that would give it power to curb exports of COVID-19 for the next 6 weeks, due to supply shortages.

Ng said the government will continue to work with the EU to ensure that medical supply chains remain open. She also said expected vaccine shipments have been arriving and Canada is on track to receive 9.5 million doses by the end of March.

$23.7 Million Funding for COVID-19 Safe Voluntary Isolation Sites in Ontario

A $23.7 million funding for Ontario to operate safe, voluntary isolation sites under the province’s High Priority Community Strategy has been launched. This should reduce the risk of spreading the virus and keep communities safe.

The funding, over the course of six months, should allow for the continued operation of sites in Toronto, Peel, York and Durham, totalling up to 1,600 rooms.

Government to Unveil First Budget in 2 Years on April 19

The federal government will reveal its first budget in more than two years on April 19. This will be Chrystia Freeland’s first budget as finance minister.

The budget is expected to provide details on government spending amid the pandemic and outline the Liberal’s plan to spend between $70 billion and $100 billion over the coming years on stimulus for economic recovery.

The government has previously announced that the spending plan will include measures to establish a national child care system, improve skills training, and build a greener economy.

IMF Sees Canada’s Economy Rebounding

The IMF expects Canada’s economy to rebound this year as long as COVID-19 is brought under control. The IMF’s executive board also said the government should introduce a fiscal anchor to ensure credibility in debt management.

This comes after the recent sharp increase in public debt by 48% of its gross domestic product in 2020, up from 23.4% in the previous year. The IMF also urged Canada’s government to carefully balance short-term risks to growth and financial stability against vulnerabilities such as the buildup of leverage and rising house prices.

Government Invests in Training to Certify Canadians in Skilled Trades

The government is investing over $1.6 million in funding to The Redwood for a project under the Union Training and Innovation Program (UTIP) that will help local apprentices in Toronto succeed in the skilled trades. This is part of the $62 million investment over five years intended to help develop a highly qualified skilled trades workforce and help Canadians gain access to well-paying jobs.

$3.18 Million Top-Up Funding for Women-led Businesses Across the Prairies

More than $3.18 million in top-up funding have been given to Women Entrepreneurship Strategy (WES) Ecosystem Fund recipients in the Prairies. This investment will support coaching, mentorship, and networking opportunities to help women entrepreneurs in the Prairies navigate the pandemic and continue growing their business.

It will also support women-owned businesses to continue scaling up and accessing new markets as Canada’s economy recovers.

Government Extends Access to COVID-19 Benefits

The Minister of Employment, Workforce Development and Disability Inclusion, Carla Qualtrough, announced the federal government’s intent to introduce amendments to increase the number of weeks of benefits available for the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB), the Canada Recovery Caregiving Benefit (CRCB) and Employment Insurance (EI) regular benefits.

The proposed changes include:

  • increase the number of weeks available under the Canada Recovery Benefit (CRB) and the Canada Recovery Caregiving Benefit (CRCB) by 12 weeks extending the maximum duration of the benefits through regulation from 26 weeks to up to 38 weeks;
  • increase the number of weeks available under the Canada Recovery Sickness Benefit (CRSB) through regulation from the current 2 weeks to 4 weeks; and
  • increase the number of weeks of EI regular benefits available by up to 24 weeks to a maximum of 50 weeks through legislation, for claims that are made between September 27, 2020 and September 25, 2021.

More information can be found here.

HASCAP Loan Applications Now Open

New loan applications from the Highly Affected Sectors Credit Availability Program (HASCAP) have opened starting February 1.

Loans start at between $25,000 and $1 million for a single business depending on the size of the operation, and run up to $6.25 million for companies with multiple locations like a chain of hotels or restaurants. Interest rates are set at 4% across the board, terms will be up to 10 years, with up to a 12-month postponement of principal payments at the start of the loan.

To be eligible, companies will have to show a year-over-year revenue drop of at least 50% over three months, not necessarily consecutive, in the eight months before the application.

Further details can be found here.

Government Expands Canada Emergency Business Account Loans

Starting December, eligible businesses facing financial difficulties due to COVID-19 can access a second CEBA loan of up to $20,000 – on top of the initial $40,000 that was available to small businesses. Half of this additional financing, up to $10,000, will be forgivable if the loan is repaid by December 31, 2022.

Applications for CEBA have been extended to March 31, 2021. More information can be found here. Alternatively, if you have any questions or require assistance, simply drop us a message.

Government Support for Businesses

The federal government continues to enact measures to mitigate the financial impact of the pandemic. Here are the available assistance you can take advantage of:

Wage Subsidies

  • The Canada Emergency Wage Subsidy (CEWS) is intended to help businesses cover a portion of wages and keep employees on payroll. It continues until June 2021.
  • The work-sharing program allows employees whose hours got reduced by an average of 10% to 60% to claim employment insurance for lost wages. This has been extended to 76 weeks from 38.

Rent Relief

  • The Canada Emergency Rent Subsidy provides rent and mortgage assistance until June 2021. Businesses can make claims retroactively for the period of Sept. 27 to Oct. 24, 2020.

Business Loans

  • The Canada Emergency Business Account (CEBA) offers government-guaranteed bank loans of up to $40,000 for small businesses. The deadline for the application has been extended to March 31, 2021.
  • For mid-sized companies, the Business Development Bank of Canada’s mid-market financing program provides commercial loans between $12.5 million and $60 million.

Upcoming Key Dates

Below are the upcoming key payment and filing dates to take note of:

  • Your tax return for 2020 has to be filed on or before 30 April 2021.
  • For self-employed individuals, if you or your spouse or common-law partner carried on a business in 2020, your return for 2020 has to be filed by 15 June 2021. However, if you have a balance owing for 2020, you have to pay it on or before 30 April 2021.

Understanding Contribution Margin and Why You Need It

When you run a business, you obviously would like to know how profitable it is. You can check your profit margin to understand by how much your revenue exceeds costs.

However, if you’d like to dig deeper and learn how a certain product contributes to your profit, you have to look at the contribution margin.

When you create a product or deliver a service and deduct the variable cost of offering it, the leftover revenue becomes the contribution margin.

So simply put,

Contribution margin= revenue – variable costs

By knowing the contribution margins, you can decide whether to add or subtract a product line, how to price it, and how to structure sales commissions.

If a product’s contribution margin is negative, it means your company is losing money producing it. Your course of action could be to discontinue the product or increase its price. Meanwhile, if a product has a positive contribution margin, you would want to keep it.

However, the first step in calculating for the contribution margin is to use your income statement and identify all your fixed and variable costs. This is not as straightforward as it sounds because it’s not always clear which ones fall into each category.

So if you want to save time and ensure that you get the contribution margins right, get in touch with us so we can help you make informed business decisions.

Get in touch

Contact us if you have any questions or want to discuss the next steps for your business.

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