Regional Relief and Recovery Fund (RRRF)
January 20, 2021 update: Regional Relief and Recovery Fund Expansion
A month ago, the CEBA loans were expanded from $40,000 to $60,000. Now the Regional Relief and Recovery Fund (RRRF) loans have also been expanded. The maximum amount of funding under the expansion is up to $20,000 regardless of the original amount approved (example: if an applicant did not receive the full $40,000, they can still only apply for a maximum of $20,000). The additional funding is based on the company’s operating deficit from October 1, 2020 to March 31, 2021 and will be the lesser of either $20,000 or the forecasted operating deficit.
Businesses unable to access existing relief measures can shortly apply for funding under Western Economic Diversification Canada’s Regional Relief and Recovery Fund (RRRF). The objective of this program is to assist western Canadian SMEs that do not qualify for the Canadian Emergency Business Account (CEBA) program or the RRRF – Community Futures Stream.
Business can apply for funding up to $60k through the Regional Relief and Recovery Fund (there is another program for over $60k in funding). This program has the same $10k forgiveness as CEBA.
Apply here: https://www.wd-deo.gc.ca/eng/20060.asp
Tip: before you start, scan a void CHQ, as you will be required to submit it at the end of the application process.
RRRF VS CEBA
Originally, the government came out with the CEBA $40k loan program. Unfortunately, many businesses could not qualify for the CEBA program. One of the CEBA loan requirements was based on wages, and many business do not pay wages, but instead pay dividends to owners.
This is a new Loan-Grant program does not require wages, and therefore owners who pay dividends instead of wages can qualify.
This loan-grant is available to business that have suffered losses or will suffer losses due to the current economic climate.
This loan application is based on showing your expected revenue streams coming into your business will not meet your expected cash outflows. The Loan-Grant is based on a budgeted shortfall. Being the difference between your project revenue and your projected expenditures (not expenses). You will receive a loan-grant to the lesser of $60k or the extent of this deficit.
We have not yet received the definitions and/or interpretations of some of the terminology of their requirements.
On the surface, for now, we feel that expenditures will include loan repayments, payments to owners (in lieu of wages), business us of premise—in lieu of rent and utilities are some of the expenditures that are claimable. You can estimate the expenses based on prior year amounts.
More Information on the Regional Relief and Recovery Fund (RRRF)
Source: Government of Canada
Who can apply for the RRRF
The Regional Relief and Recovery Fund (RRRF) is open to businesses that are not eligible for the Canadian Emergency Business Account (CEBA) program or RRRF – Community Futures Stream.
Businesses must meet the following mandatory criteria:
• Have fewer than 500 full-time employees (FTEs)
• Are located in Western Canada (defined as British Columbia, Alberta, Saskatchewan or Manitoba)
• Are not located in an area serviced by a Community Futures (CF) office
• Are not eligible for the RRRF – Community Futures Stream
• Have applied and were declined for funding from the Canada Emergency Business Account (CEBA) or were not eligible for CEBA funding
• Were operational as of March 1, 2020
• Have suffered financially because of the COVID-19 pandemic
• Intend to continue operations in Western Canada
Examples of business that are eligible to apply to the RRRF:
• Pre-revenue firms (e.g. a company that has not had any sales to date)
• Businesses that do not have salaried employees (e.g. a company with a workforce of contract employees)
• Businesses with no payroll that do pay their owners a salary (e.g. a company that pays its owners through dividends)
Examples of businesses that are not eligible to apply to the RRRF:
• Sole proprietorships
• Not-for-profit organizations
You can also use the RRRF Eligibility Assistant to quickly determine if you can apply.
Under the RRRF, eligible businesses can receive a conditionally repayable contribution up to $40,000.
The contribution amount will be the lesser of the applicant’s estimated total operating balance between April 1, 2020, and September 30, 2020 or $40,000.
The following repayment terms will apply:
• Repayment of 75%, or up to $30,000, of the contribution amount, on or before December 31, 2022, will result in the forgiveness of 25%, or up to $10,000 of the total contribution
• No scheduled monthly repayments are required until after December 31, 2022
• If 75% of the contribution amount is not repaid by December 31, 2022, the balance owing will be converted to an additional three (3) year term repayable contribution (with a fixed monthly repayment schedule), beginning January 2023, with no forgivable portion
• The full balance, of the contribution amount must be repaid no later than December 31, 2025