With growing economic uncertainty during the COVID-19 pandemic, the financial landscape is shifting every day.
Whether it's dealing with sudden unemployment, ballooning debt, or expenses related to working from home, BNN Bloomberg wants to help Canadians navigate these uncharted waters. retirement
That’s why we created Ask BNN Bloomberg, where you can have your personal finance questions answered by industry professionals.
Email or send your questions via video to email@example.com, and we will aim to answer them weekly.
Questions and answers have been edited for clarity. Last names will not be used.
Affording cost of living on reduced hours
Brad in Sudbury Ont.:
I looked at the Canadian Emergency Response Benefit (CERB) every now and then about the requirements, but I never seem to be qualified.
I have had reduced hours at work since February but I make more than $1,000 on reduced hours. I can’t afford to pay some of my bills even though I make more $1,000. What do I do?
Every time I check the CERB requirement I am not qualified and I am afraid to apply for CERB thinking I might be cheating the system. (May 12, 2020)
Jessica Moorhouse, financial counsellor and personal finance blogger for JessicaMoorhouse.com:
Yes, unfortunately one of the key criteria to be eligible for CERB is you must be earning $1,000 or less per four-week period. If you earn more than $1,000 (even if it’s just a little bit more), then it would make you ineligible. If you apply for CERB and are found to be ineligible, you will be required to pay back any payments you received.
So, what are your options? If you are finding it increasingly difficult to pay your bills, I’d start there. Take a look at all of your expenses and see where you can cut back. For instance, if you have a mortgage, you can contact your lender about a mortgage deferral. If you pay rent, contact your landlord to see if they can work with you to find a solution, such as deferring your rent payments or other payment arrangements.
If you have debt, contact your creditors to see if they can reduce your interest or minimum payments. Really take this time to review all of your expenses and see what you can do now to minimize your cost of living to stretch the income you are earning. (May 13, 2020)
Financial options for small business owners
Paul in Red Deer, Alta.:
I have a small incorporated business in Alberta through which I do minor automotive body repairs and a headshot photography business. When the economy here started to drop a couple of years ago I had corporate and personal savings banked, ready for the slowdown. As things got slower, I quit paying myself (I'm my only employee) and started running the company and supporting myself through the combined company and personal savings and credit lines.
I now haven't paid myself a taxable income for two years, only through drawing down the savings and repaying shareholder loans to myself.
So now, I have had neither a company payroll to meet the $20,000 company requirement, nor the $5,000 in income personal requirement.
With the advent of COVID-19, business has come to a standstill and savings have run out. Am I eligible for anything? (April 27, 2020)
Kelley Keehn, consumer advocate at FP Canada:
I’m so very sorry to hear about your situation. It sounds like you’re one of the unfortunate business owners and individuals that is really falling through the cracks of the government benefits. Of course the Canada Emergency Business Account (CEBA) does not benefit you, you don’t have the payroll there; CERB doesn’t help you either - you don’t have at least $5,000 income in the last 12 months or 2019 - and of course, the wage subsidy is of no help to you either.
What could provide some assistance depending on your taxable earnings is the one time GST credit or the Canada Child Benefit. Also reach out to a professional like a certified financial planner. There’s a number of them across the country offering pro bono work, maybe they can dig into your finances and figure out something that could help get you through this crisis. (May 12, 2020)
Financial aid for small business owners
Susan in Woodstock, Ont.:
I own a tanning salon that’s just over two years old. I work most of the hours myself, so I don't qualify for the $40,000 loan. I do receive the $2,000 Canada Emergency Response Benefit but with barely any cash flow. Things are starting to get tight, especially when slow season is on its way.
Can you recommend any options for someone in this position? (May 8, 2020)
Filomena May, financial advisor at Filo Financial Solutions of Raymond James Ltd.:
Depending on if you are renting or owning your space, there are two potential options: As an owner, you could ask for a mortgage deferral from your bank, or see if there are other business loans or refinance options for you.
If you are renting, you can request rent relief from your landlord and/or renegotiate your rent. Aside from monetary relief, I have seen success with cross marketing with other small businesses and existing clients with promos in addition to social media to try to generate income.
In almost every case, review personal and business cash flow to determine what can be put on hold, stopped, and deferred to keep expenses down. (May 13, 2020)
Qualifying for CEBA
Trevor in Fonthill, Ont.:
I operate an independent financial advisory and tax preparation business and am hearing from many of my clients how they are in dire financial need and yet ineligible for any financial aid from the Canada Emergency Business Account (CEBA) program.
Small businesses that would otherwise qualify for CEBA but do not have a "business bank account" are not eligible for CEBA. Why has this not been identified as a huge oversight?
Many small business owners who have chosen to use a personal bank account rather than a "business bank account" to run their business operations through are not allowed to apply for CEBA. These would include plumbers, electricians, tax preparers, convenience stores, small garden supply centres, farmers, restaurants, bars, etc. Basically any business that is not incorporated may not qualify only because they have decided to save the high fees associated with having a business bank account and instead use a personal chequing account.
Why has this not been called out?
Corinne Pohlmann, senior vice president of national affairs and partnerships for the Canadian Federation of Independent Business:
We have heard from many small businesses that have been rejected from CEBA because they do not have a business banking account. As you noted, this is not uncommon among unincorporated businesses.
We have also found that new businesses, those using contract workers, and those who pay by dividends have been excluded from accessing this important source of financing. It is the government that put these parameters in place, even though it is being distributed by the banks.
We have been actively advocating that government broaden CEBA eligibility to these excluded groups. One approach is to ask for some other proof of business activity, such as commercial rent agreement or inventory/supply invoices. I would encourage you and your clients to raise the issue with their MPs to add more voices to the need for improvements to the CEBA program. (May 15, 2020)
Am I eligible for the CEWS?
Muhammad in Calgary:
I started a consulting business in January of 2019 and experienced good revenues for the year, as I was having clients both in the U.S. and Canada. Because of COVID-19, I only have U.S. clients.
My revenue stayed almost the same for the March to June period in 2019/2020 comparison, but if I continue to have only my U.S. clients, my revenue will certainly decrease in comparison from June to August.
Am I eligible for the wage subsidy for the June to August period, if at all? (May 15, 2020)
Peter Papadakis, principal of financial planning and tax advisory services at Kerr Financial Consultants:
The Canada Emergency Wage Subsidy (CEWS) provides eligible Canadian employers whose operations have been affected by the COVID-19 crisis a subsidy of 75 per cent from the first $58,700 per employee wages, retroactive from March 15, 2020, to the recently extended date of August 29, 2020. Eligible Canadian employers includes individuals and taxable corporations that experience an eligible reduction in revenues of at least 15 per cent from March 15 to April 11 and 30 per cent from April 12 to June 6 due to the COVID-19 crisis.
Based on the current rules, and the fact that your March through to June revenue has not changed, you would not currently qualify for the benefit. The government has stated that it will consult with key business and labour representatives over the next month on potential adjustments to the program to incent jobs and growth, including the 30 per cent revenue decline threshold.
We encourage you to keep informed of the changes and consult the government of Canada website from time to time. (May 20, 2020)
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