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Prime Minister Justin Trudeau unveiled sweeping measures on Friday to protect Canada’s small businesses from the economic fallout of the coronavirus which is pushing the country into a recession.

The measures include a sharp increase in wage subsidies, more availability of loans through banks and credit funding agencies, and more tax deferrals for business. Trudeau praised the Bank of Canada for its measures earlier Friday, in which the central bank began a program of large-scale asset purchases for the first time and lowered its policy rate to the near zero.

“We know that for small storefront businesses, they’re struggling with cash flow right now,” Trudeau said at a press conference outside his residence in Ottawa. “It’s hard to raise money and make money in this climate.”

Banks are working with the government to offer C$40,000 ($28,5000) loans to certain businesses, which will be guaranteed by Ottawa. All loans will be interest free for the first year and up to C$10,000 can be forgiven if certain conditions are met, Trudeau said, adding the government has increased the wage subsidy program to 75% for small businesses, up from the 10% subsidy announced last week.

The government will also increase access to credit to help inject cash into small and medium sized businesses with an additional C$12.5 billion to Export Development Canada and the Business Development Bank Canada.

“This means that businesses will be able to apply for a guaranteed loan when they go to their financial institutions to get help as they weather the impacts from Covid-19,” Trudeau told reporters.

Supporting Actions

Trudeau, who said he expects more details of the measures to be revealed by Monday, also praised the Bank of Canada’s rate cut to 0.25% and other policy measures on Friday morning.

“I’m pleased with the supporting actions taken by the Bank of Canada this morning,” Trudeau said. “Monetary policy is very important, but as the governor of the bank has repeatedly said, the most important thing we can do to help people and the economy in this crisis is for the government to take strong fiscal action.”

Canada’s Finance Minister Bill Morneau and Bank of Canada Governor Stephen Poloz will hold a press conference at 1 p.m. Friday in Ottawa.

The following is a list of new measures taken by the federal government:

  • Government will cover 75% of wages for affected workers. This figure represents an increase from the 10% subsidy announced last week.
  • Announces expansion of more credit through Export Development Canada and Business Development Canada totaling extra C$12.5 billion.
  • Sales taxes and import duty payments to be deferred until June, worth about C$30 billion.
  • Creation of Canada Emergency Business Account through banks, which can extend C$40K in loans guaranteed by government to qualifying businesses.
  • Loans are interest free for 1st year, C$10k is forgivable under certain conditions.
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