Helping small businesses cope with COVID

By Sean Feagan, Local Journalism Initiative Reporter

Small businesses with surprise costs from COVID-19 may be eligible for an interest-free loan through a new relief fund.

The Regional Relief and Recovery Fund (RRRF) is a federal funding program to help western Canadian businesses cope with financial hardship due to COVID-19 by providing interest-free loans.

For small- and medium-sized rural Alberta businesses looking for up to $40,000 in support, including those in Strathmore and across Wheatland County, the fund is being delivered by Western Economic Diversification Canada (WD) in collaboration with Community Futures Pan West Network.

The fund was created to help businesses that were not eligible for other federal support, said Phyllis Maki, executive director of Community Futures Network of Alberta. “The RRRF funding was announced when it was realized that a number of businesses were falling through the cracks with the CEBA (Canadian Emergency Business Account) program,” she said. 

Businesses were only eligible for funding under CEBA if they had at least $20,000 worth of payroll and could provide three years of financials, she said. “A business that is a year and half old is not eligible,” she said. “Or if there was a small mom-and-pop shop that didn’t have a large payroll, they weren’t eligible.”

If a business is larger and is looking for more than $40,000 in support, then WD is handling the application exclusively, she said.

The amount of funding provided is dependent on need, said Maki. “It’s really meant to help businesses get back on their feet.”

The funding could be used to meet the costs of new cleaning and personal protective equipment (PPE) requirements or paying suppliers, she said. A common example is for restaurants that received supplies just before the lock down.

“All of a sudden their day to day activities shifted overnight to minimal service when they had to close their doors,” she said. “We are finding that those restaurant types of places ended up with a lot of spoilage, but also had no revenue coming in to pay their suppliers – so now they have rotten food and a bill.”

There are some restrictions as to how the funding can be used.

“One of the things that they are not allowed to use it for is to pay off existing debt, including any community insurance loans that they might have,” said Maki. “The interest portion is eligible, but the principal is not.”

There are no prepayment penalties so borrowers can pay down on their loan anytime. “That means once they start generating revenue again, then they can come in at any point in time and pay those out,” she said.

The loan is interest-free until Dec. 31, 2022. If 75 per cent of the loan is repaid by then, the remainder of the loan is forgiven. After that date, the loan transfers to a regular-term loan and must be repaid by Dec. 31, 2025.