The Trudeau government introduced their first budget in more than two years this week, and it's a doozy. Approaching a whopping one trillion dollar net debt, the Canadian government did everything in its power financially to help Canadians weather the economic chaos caused by the pandemic. But with a further $100 billion in spending planned for 2021, your small business could be on the receiving end of financial assistance aimed at helping business owners thrive in the digital age.
Canada Digital Adoption Program
A large component of investment will be delivered via the newly coined Canada Digital Adoption Program, and it's expected to create thousands of jobs for young people and help around 160,000 struggling businesses across the country. The two pronged approach will focus on "main street" and "off main street" businesses, with main street businesses being eligible for micro-grants and support from over 28,000 "well trained young Canadians" who will help these businesses expand their customer base online (presumably in a scheme not too dissimilar from the current Young Canada Works Program).
Off main street businesses will be recipients of a more comprehensive support strategy which will be geared towards their industry; for example, food processing or manufacturing.
By the numbers:
- $101 billion projected spend across all sectors
- $1.4 billion over four years to Innovation, Science and Economic Development Canada (some of this will go toward microgrants and employing young people)
- $2.6 billion over four years to the Business Development Bank of Canada to help small and medium-sized businesses finance technology adoption.
Tax Saving Investment Incentives
Through this initiative, businesses will be able to expense up to $1.5 million in eligible investments before budget day 2024 on new technology or processes that help drive growth. The budget website says specifically that: "Eligible investments will cover over 60 per cent of capital investments typically made by Canadian-controlled private corporations."
Enhanced Financing for the Canada Small Business Financing Program
An additional proposed change coming down from the budget is an increase in annual federal financing for small businesses of $560 million. The government is expecting this to help an additional 2900 businesses, and will also make changes to who qualifies for financing to include charitable organizations and social enterprises as well as increasing the maximum loan amount from its current amount of $350,000 to $500,000.
Could Interchange Rates Be Lowered Too?
If you're not already familiar with Helcim, we're a payments company and interchange fees are a key component of the payment processing chain, so this particular point of the budget really piqued our interest. In addition to the above initiatives, the government is promising to engage in 2021 with key stakeholders in the payment processing ecosystem (likely issuing banks and card brands) to reduce interchange fees. They are also promising to do this whilst keeping cardholders current rewards programs intact, so it will be interesting to see how this will play out. If interchange rates are indeed lowered, this could mean significant savings for businesses currently processing payments under an interchange plus pricing model.