What the Federal Budget 2009 Offers Canadian Small Businesses

Budget 2009 Direct Small Business Benefits

Improving Access to Financing

The government plan to get the sluggish lending industry moving again includes:

  • Delivering $13 billion in additional financing by increasing the flexibility and capacities of the financial Crown corporations, the Canada Mortgage and Housing Corporation, Export Development Canada, and the Business Development Bank of Canada. This includes at least $5 billion in new financing to be delivered through enhanced cooperation between these financial Crown corporations and private sector financial institutions under the new Business Credit Availability Program.
  • Increasing the maximum eligible loan amount a small business can access under the Canada Small Business Financing Program.

As of April 2009, the maximum loan a company can access under the Canada Small Business Financing Program will be $350,000 (rather than $250,000) and this maximum will double to $500,000 for loans that are taken out to buy real property. This is expected to result in more than $300-million in additional lending.

  • Creating the Canadian Secured Credit Facility, with up to $12 billion to support financing of vehicles and equipment for consumers and businesses.

Will these measures thaw the current credit freeze and allow Canadian businesses to access the money they need? Your guess is as good as mine. But I think the federal government should be commended for trying.

Other Direct Small Business Benefits of the Canadian Federal Budget 2009

The 2009 federal budget states that small businesses are dynamic and drive economic growth and job creation and pledges to support their growth through a variety of tax relief measures and replenishing the coffers of some of the established government programs that support small business. Here’s a list of the budget 2009 benefits that many small businesses will be able to use.

Federal Budget 2009 Tax Relief

  • Reduction of the general corporate income tax rate to 19 per cent
  • Increasing the amount of small business income eligible for the reduced federal tax rate of 11 per cent to $500,000 from the current limit of $400,000 as of January 1, 2009.
  • EI premium rates will be frozen at $1.73 per $100 for both 2009 and 2010—their lowest level since 1982—a projected $4.5 billion stimulus relative to break-even rates.
  • Providing over $440 million in savings for Canadian industry over the next five years by permanently eliminating tariffs on a range of machinery and equipment.
  • Introducing a temporary 100% capital cost allowance (CCA) rate for computers acquired after January 27, 2009 and before February 1, 2011. This is truly a 100% write-off because the rule that restricts CCA deductions to one-half of the CCA write-off otherwise available in the first year will not apply to these computers.
  • Extending the temporary 50-per-cent straight-line accelerated CCA rate to investment in manufacturing or processing machinery and equipment undertaken in 2010 and 2011.

Federal Budget 2009 Support for Small Business Programs

Several business support programs will get a much-needed infusion of funds under the 2009 federal budget:

  • $30 million over two years for the Canada Business Network
  • $10 million to the Canadian Youth Business Foundation
  • $200 million over two years to the National Research Council’s Industrial Research Assistance Program to enable it to temporarily expand its initiatives for small and medium-sized businesses.

According to Budget 2009, the National Research Council’s Industrial Research Assistance Program helps small and medium-sized enterprises innovate by providing technical and business advice, networking services, as well as direct, non-repayable, financial assistance. This program also provides companies with support to hire recent graduates from colleges and universities for up to one year to work on innovative business strategies and technology-related projects.

Programs and investments to help specific regions and specific industries that have been particularly hard hit by tough economic times are also part of the Canadian federal budget 2009. However, for Canadian small businesses, it’s the government’s proposals to invest in housing and infrastructure, the indirect benefits to small business, that will be the most help.

Budget 2009 Regional Business Support

Three particular regions of the country are targeted for development support; Southern Ontario, Eastern Ontario and the North.

In response to Ontario’s economic challenges, Budget 2009 provides more than $1 billion over five years for a new Southern Ontario development agency.

Budget 2009 also provides $20 million over two years for the Eastern Ontario Development program to support business and community development in rural areas of Eastern Ontario. This program will be administered by the Southern Ontario development agency.

Budget 2009 provides $50 million over five years to establish of a new regional economic development agency for the North.

Budget 2009 Indirect Small Business Benefits

All of the direct measures to aid Canadian small businesses that I’ve described previously in this article are good things. However, none of them will do as much to get the small business sector of the economy humming again as the federal government’s proposed investments in housing and infrastructure.

Overall, Budget 2009 proposes to provide up to $7.8 billion in tax relief and funding to help stimulate the housing sector and improve housing across Canada.

Two programs, one a tax credit, the other an outright grant, will be a huge boon to the hard-hit renovation and construction industries; the Home Renovation Tax Credit and the ecoENERGY Retrofit program.

 

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One Response to What the Federal Budget 2009 Offers Canadian Small Businesses

  1. Charles brooks says:

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