Trudeau, Banks in Talks on Relief Package for Small Business

(Bloomberg) -- Canada’s finance department is working with the nation’s banks on a relief package for small business, according to people familiar with the talks.

The department has been in talks with Canadian lenders this week on a plan to provide emergency help for small businesses that have been hurt by shutdowns due to the Covid-19 pandemic, according to the people who asked not to be identified discussing the government’s plans.

So far, Ottawa has made C$10 billion ($7.1 billion) in credit available as well as a wage subsidy to help small businesses keep employees on the payroll.

The credit package was announced by Finance Minister Bill Morneau on March 13, but since then the economy has deteriorated. Canada saw 929,000 applications for unemployment benefits last week, smashing records, after businesses across the country were forced to close or reduce services to control the spread of the virus. Bank of Nova Scotia expects Canada’s economy to shrink 28% in the second quarter on an annualized basis, far exceeding the worst of the 2009-09 recession.

The government declined to comment directly on the talks.

Further Support

“The Covid-19 Emergency Response Act empowers the government, if necessary, to provide further support and stimulus to the Canadian economy,” Maéva Proteau, a spokeswoman for Morneau, said in an emailed statement Thursday. “With these additional tools, Canadians can have confidence that their government is well equipped to rapidly protect them and our economy in these challenging times.”

The Canadian Bankers Association declined to comment.

The government has created a C$107 billion fiscal stimulus plan to soften the economic blow of Covid-19 on the Canadian economy. It includes C$52 billion in direct support for companies and individuals, up from C$27 billion announced last week. It also has C$55 billion worth of tax deferrals for households and businesses.

Parliament approved the government’s fiscal stimulus package early Wednesday.

The discussions come at a time when Prime Minister Justin Trudeau’s government is also asking banks to provide relief for consumers, including cutting credit card interest rates.

“I can assure you that the Finance Minister has had conversations directly with the banks about credit card interest rates. We recognize that they are a significant challenge for many Canadians at this point,” Trudeau said Thursday.

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