How the 2021 federal and provincial budgets impact small businesses and startups
This past month, the federal and provincial government unveiled their long-awaited budgets. With both plans focusing on keeping citizens safe and healthy and kick starting our economic recovery, we now have a glimpse into what the road to post-pandemic recovery will look like.
The DMZ has reviewed both the Ontario provincial and federal government budgets and identified key commitments that will affect the small business and startup ecosystem.
Here’s what you need to know about both budgets.
Federal Budget Highlights
The full federal budget can be found here.
High Level Overview – Big Measures
- $101.4 billion in new spending over three years to fuel the recovery and kick-start the transition to a green economy.
- $30 billion over five years and $8.3 billion per year after that to create and sustain a national child care program. Goal is a $10/day child care service by 2025-2026.
- $18 billion to build safer, healthier Indigenous communities.
- $17.6 billion for green recovery — to conserve 25% of lands and oceans by 2025 and to put Canada on course to exceed climate change targets by cutting emissions to 36% below 2005 levels by 2030.
Small Business Support
- Emergency Subsidy Supports: The Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy will be extended until September 25th 2021, with the possibility of extension till November.
- Canada Recovery Hiring Program: A $595 million investment to help businesses pivot to recovery with incentives to hire back, grow hours, or increase wages.
- Sectoral Workforce Solutions Program: A commitment to provide $960 million over three years for a new training program. Funding will help design and deliver training that is relevant to the needs of small and medium-sized businesses, and to their employees.
- Digital Adoption Program: A commitment to a $4 billion investment into a Digital Adoption Program to help Canadian small businesses become more competitive, go digital, and take advantage of e-commerce.
- This investment will help 160,000 businesses become more competitive, and will create jobs for 28,000 young people.
- Lowering Credit Card Fees: A commitment to engaging with stakeholders to lower the average overall cost of interchange fees for small businesses.
- Creating the Small Business and Entrepreneurship Development Program: The government is investing over $100 million to ensure Canada’s entrepreneurship ecosystem is supporting inclusive growth.
- Enhancing the Canada Small Business Financing Program: The government proposes to improve the Canada Small Business Financing Program through amendments to the Canada Small Business Financing Act. Amendments are projected to increase annual financing by $560 million, supporting approximately 2,900 additional small businesses.
- The government is investing $2.6 billion over four years to the Business Development Bank of Canada to help small- and medium-sized businesses finance technology adoption.
- Support for Women Entrepreneurs: The government will provide up to $146.9 million over four years, to strengthen the Women Entrepreneurship Strategy.
- Women entrepreneurs would have greater access to financing, mentorship, and training. Funding would also further support the Women Entrepreneurship Ecosystem Fund and the Women Entrepreneurship Knowledge Hub.
- Supporting Black Entrepreneurs: The government is investing an additional $51.7M in the Black Entrepreneurship Program, on top of the previously invested $221 million, to further strengthen the Black entrepreneurship ecosystem.
- Supporting Aboriginal Entrepreneurs: The government is committing $42 million over three years to expand the Aboriginal Entrepreneurship Program.
- Strategic Innovation Fund: Budget 2021 proposes to provide the Strategic Innovation Fund with an incremental $7.2 billion over seven years on a cash basis, starting in 2021-22, and $511.4 million ongoing.
- Student Work Placement Program: The government is committing $239.8 million in the Student Work Placement Program in 2021-22 to support work-integrated learning opportunities for post-secondary students.
- Skills for Success Program: The government is investing $298 million over three years in a new skills program that would help Canadians at all skills levels improve their skills. The program will fund organizations to design and deliver training to enhance foundational skills, such as literacy and numeracy, as well as transferable and soft skills.
- The government has committed to increase venture capital funding and support the continued growth of Canada’s innovative companies, the budget proposes to make available up to $450 million on a cash basis over five years, starting in 2021-22, for a renewed Venture Capital Catalyst Initiative that would increase venture capital available to entrepreneurs.
- $50 million of this amount would be dedicated to support venture capital investments in life science technologies.
- $50 million of this amount would support a new Inclusive Growth Stream to increase access to venture capital for underrepresented groups, such as women and racialized communities.
- Establishing a Canada-wide early learning and child care system: The government is investing $30 billion over the next 5 years to establish a $10 per day Canada-wide early learning and child care system which will help all families access affordable, high-quality, and flexible child care no matter where they live. This is the largest initiative to increase the size of Canada’s Labour force since NAFTA.
- Establishing a $15 minimum wage: The Government of Canada announced its intention to introduce legislation that will establish a federal minimum wage of $15 per hour, rising with inflation, with provisions to ensure that where provincial or territorial minimum wages are higher, that wage will prevail.
- The government has committed $17.6 billion into Canada’s green recovery, which it says will help the country exceed its Paris Agreement targets and reach net-zero emissions by 2050.
Supporting Asian Canadians
- With the increase in reports of harassment and attacks against Asian Canadians, the government will invest $11 million over two years, to expand the impact of the Canadian Race Relations Foundation.
Other notable commitments
- The Universal Broadband Fund, designed to bring better internet service to remote and rural communities, is getting an extra $1 billion over six years.
- The CanCode program, which helps young people learn digital skills including coding, is getting $80 million to help it reach three million more students, with an emphasis on underrepresented groups.
- The federal government will appoint its first data commissioner, who will issue guidance to help protect people’s personal data and to encourage innovation in the digital marketplace.
- In efforts to streamline the Express Entry program for highly skilled immigrants, the immigration minister will have the authority to help select Express Entry candidates to become permanent residents.
- There’s also a promised overhaul of the digital platform that supports Canada’s immigration system. The government will spend $428.9 million in new funding over five years, so that application processing will improve starting in 2023.
Provincial Budget Highlights
The full provincial budget can be found here.
High Level Overview – Big Measures
- $16.3 B to Protect Health of Ontarians
- $23.3 B to Protect the Economy
- $39.6 B Total Direct Support
- $11.3 B Cash Flow for People and Business
- $51 B Total Supports over next four years
Small Business Support
- Ontario is committing to an additional round of support for small businesses through the Ontario Small Business Support Grant.
- Small businesses who have been determined as eligible recipients of the Ontario Small Business Support Grant will automatically be entitled to a second payment equal to the amount of their first payment, for minimum total support of $20,000 up to a maximum of $40,000 — no new application necessary. Confirmed eligible businesses can expect to receive their second payment later in the spring.
- Eligible business owners who have not yet applied for the grant have until March 31, 2021, to submit an application.
- For main street businesses: Ontario is investing an additional $10 million in the Digital Main Street program in 2021–22 to help more small businesses achieve digital transformation and serve customers effectively online. The program will continue to provide digital transformation grants, an online learning platform, training programs, and digital service squads offering technical support to small business owners.
- Ontario is committing $400 million over four years to create the Invest Ontario Fund, which will support Invest Ontario and encourage investments in the key sectors of advanced manufacturing, technology and life sciences. The province is pitching it as a “‘one-stop’ shop for business and investors. This is the first funding commitment for the new agency, which the government launched in its last budget.
Reskilling and Training Tax Credit
- The government is proposing a new tax credit that would give recipients up to $2,000 to cover 50% of the cost of re-training, for a total of $260 million for 230,000 workers. This refundable tax credit is eligible for those 26 to 65 years in age to seek financial support to return to the Ontario job market. This credit is eligible to be used for tuition to aid in training for new skills at public and private colleges across the province.
- The highly anticipated digital ID is expected to be released by the end of year. This new form of secure, electronic government-issued ID will conveniently be used to access government services while protecting data privacy. This technology will allow users to be in full control of personal information and who it is shared with.
- The government has also set aside $500 million for the Ontario Acceleration Fund which includes:
- $2.2 million to develop the Single Window for Business, a transformational digital solution designed to use emerging technology, data, and responsive design to improve the business experience with government services. A designated single window will provide a solution that makes it easier for businesses to access the information and services they need to get up‐and running, create jobs and grow.
Increased Broadband Capacity
- The budget pledges $2.8 billion in new funding for broadband infrastructure, as the province promises to expand reliable services to every region of the province by 2025. The commitment brings its total broadband funding to almost $4 billion for the six years starting in 2019–20.
Ontario Vehicle Innovation Network
- Ontario is investing $56.4 million over the next four years to create the new Ontario Vehicle Innovation Network. This will help accelerate the development of the next generation electric, connected and autonomous vehicle and mobility technologies that contribute to a lower environmental and carbon footprint.
Research and Development
- The province plans to contribute more than $500 million to research and development with the potential for health-related and other breakthroughs at universities, colleges and academic hospitals. It plans to spend the money alongside federal and private-sector partners, citing the Ontario Institute for Cancer Research, the Ontario Brain Institute, Ontario Genomics, Compute Ontario and the Fields and Perimeter institutes.
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