GOVT. OF CANADA'S ROLE: LOANS FOR SMEs AMID 'COVID-19'
In an extreme situation of a pandemic or a catastrophe, it’s the Govt. that should play an active part. Responsibly holding the citizens in such situations is the sole duty of a country. Significantly, it increases the responsibilities by two times or three times. However, the economic circumstances of a country are quite a significant factor. This is especially in determining how far a country can give support to the citizens. The Govt. of Canada has similarly played its responsible role in combatting issues that have arisen because of the pandemic ‘COVID-19’. SMEs, that are launched recently in the business world need to be stopped from dissolving via loans.
Hence, the policies announced by the Prime Minister, Justin shall be very helpful. Companies getting dissolved can also be a probability in an unpredictable situation or chaos. In addition to this, going bankrupt due to the current financial crisis. Hence, the provision of recovery loans by the Govt. is a facility for SME’s that can give them rapid stability.
Bankruptcy is a financial situation where an individual or business is undergoing heavy losses. They are unable to pay salaries to their employees. Furthermore, not in a situation to undergo an extreme financial crisis. Under such circumstances the Govt. declares the business and the business owner as bankrupt.
Hence, the role of the Govt. is to control bankruptcies. The current disturbance has a great tendency for bankruptcies to rise alarmingly. The current pandemic is an example as many small businesses can’t avoid situations of financial disturbances and panic.
RECOVERY THROUGH LOANS- FOR UPTO $40K:
A recovery process can take time due to business shutdowns for days. Adding insult to injuries there is a complete lockdown as well due to ‘COVID-19’. The respectable Prime Minister of Canada, Justin Trudeau has announced policies and reforms for SMEs i.e. small and medium-sized businesses. These are the announcement of loans from the financial crown courts. Especially to businesses that have been affected by the effects of Coronavirus. Such businesses can apply for loans up to a maximum of $40K variable. Hence, depending on the losses that they have incurred and the outcome of the losses. Mr. Justin particularly mentioned in his speech with emphasis. He said that the Govt. is particularly aware of the challenges and we are announcing a loan recovery scheme. This shall be 1-year interest-free loans for up to an amount of a maximum of $40K.
A substantial step in helping the SMEs in recovering from the crisis situation and making things stable for themselves. A recovery process through loans is a designed process by the Govt. to show the value of the business sector. Businesses, mainly talking about SMEs, while earning money are regular taxpayers.
Furthermore, they hold responsibility for the payrolls of many people. Businesses in Canada are mostly insured with business insurance, which means a business can claim insurance if at risk. They can also claim their money from Insurance companies if they are undergoing constant financial losses due to reasons they are not responsible for.
PM JUSTIN TRUDEAU’S KEY POLICY REFORMS FOR SME’s:
Prime Minister Justin has also announced some reforms in GST and HST Payments. He said that GST and HST in addition to the duties and taxes that are owed on imports shall be deferred until June this year. This means SMEs with imports and exports as part of their businesses can relax for a few more months at least. All these taxes and duties sum up to $30 billion in interest-free loans to small and medium-sized enterprises. Surprisingly, this is also a huge amount dedicated to the recovery process from ‘COVID-19’.
A financial recovery holds huge priorities for PM Justin Trudeau and the Canadian Govt. and the majority of policies are aimed to help the business sector especially SMEs.
MANAGING STABILITY- THE ROLE OF GOVT.:
While managing an unstable condition, the Govt. has to take care of many different conditions that can arise due to COVID-19. As it is a pandemic that has globally affected many countries especially the USA, China, and Italy that are key economies in the world. In such a situation the Canadian govt. has introduced dynamic change management policies for especially SMEs.
Managing through loans means businesses can continue as normal and manage the loan premium from their savings on a monthly basis. This can also be wiped off for up to $10K, which means the business will not be a defaulter if they are unable to pay the Govt. for loans up to $10K. However, in this regard as well the Canadian Govt. shall need to be convinced through legalities and proof of consistent losses. Canada has played its role in COVID-19 for the people as far as they can to bring stability. The Canadian Govt. is financially strong enough to feed its people in situations of pandemics and natural disasters.
WHAT’S AN INTEREST-FREE PERIOD?
In financial periods and interest terms, an interest-free period is a period where the return of the loan can be without any extra charges or interest. In the case of the current recovery loan period, its 1 year. This means for a period of 1 year the business can return the loan full amount without any extra premium or interest.
Normally, the businesses can only payback if they have recovered from the losses and are earning good money to pay back their loans. The main aim of the Govt. of Canada is recovery instead of businesses paying back, as that is something that’s not the primary concern.