Article written by Pressilia Jelatian – Two programs were introduced in the summer of 2020 by the Quebec government to help small and medium-sized businesses in times of pandemic:
- Programme d’Aide d’Urgence aux Petites et Moyennes Entreprises (PAUPME); and
- The Temporary Concerted Action Program for Enterprises (PACTE).
PAUPME supports the working capital of Quebec SMEs through loans of up to $50,000.
PACTE is aimed at all companies operating in Quebec and carrying out commercial activities. The program is aimed at companies in a precarious situation and experiencing temporary difficulties as a result of the restrictions caused by COVID-19. This assistance is also passed on in the form of a loan to eligible companies.
Through these two financial assistance programs, the Quebec government aims to help companies maintain or relaunch their activities. These programs are designed to support companies suffering from a lack of liquidity linked to :
- an impossibility or substantial reduction in the ability to deliver goods and services;
- a problem with the supply of raw materials or finished products (goods or services).
Companies must meet certain conditions to be eligible for both programs. For example, a company under the protection of the Companies’ Creditors Arrangement Act or the Bankruptcy and Insolvency Act is not eligible for this assistance.
Aid to companies in regions on maximum alert (AERAM)
In October 2020, the provincial government added to PAUPME and PACTE a component coming under Aide aux Entreprises en région en Alerte maximale (AERAM). This component targets companies located in regions commonly referred to as “red zones”. As a result, these companies will benefit from a loan forgiveness and will therefore not be required to repay the entire PAUPME or PACTE loan, provided the following conditions are met:
- The loan was granted within the framework of the PAUPME and PACTE from October1, 2020;
- The loan was used to cover the portion of eligible fixed costs (not reimbursed under any other government program) and was disbursed for the closing period in question. Eligible fixed costs include the following:
- municipal and school taxes,
- rent,
- interest paid on mortgage loans,
- utility costs (e.g. electricity and gas),
- insurance,
- telecommunication costs,
- permits and association fees.
This means that spending on salaries, fringe benefits, employer and employee contributions, taxes and levies is not eligible for forgiveness.
The pardon can cover up to 100% of eligible fixed costs to a maximum of $15,000 per closing month. Loan forgiveness may not exceed 80% of the total amount of the PAUPME or PACTE loan.
To be eligible for AERAM, companies must meet the following conditions:
- be located in a red zone and belong to an economic sector affected by a public health closure order for at least 7 days;
- have ceased operations, in whole or in part, for a period of at least ten days in any one month since October1, 2020, in accordance with a decree or ministerial order.
In short, this assistance is designed to help a number of companies avoid having to repay a large part of the loan they have received, thereby preserving their liquidity and supporting their activities.
According to the information currently available, it is no longer possible for a company to apply for AERAM for the months of October to December 2020.
Additional support for start-ups
On February 3, 2021, the government announced that businesses forced to close by a public health order due to the pandemic will be eligible for reimbursement of fixed costs incurred in reopening. The aim of this bonus is to help eligible companies “return to normal”.
This assistance will correspond to one or two months of eligible expenses, and is in addition to any other reimbursements for which the company is eligible. For businesses that have had to close for 90 days or less, the maximum amount will be $15,000 per establishment. For businesses closed for more than 90 days, maximum assistance will be $30,000 per facility (or $15,000 per month).
Advertisement for the tourism sector
Certain PACTE bonuses are available for tourism businesses.
On February 18, 2021, the Tourism component of PACTE was enhanced to better meet the needs of businesses operating in this sector. Prior to the announcement, a tourism business could receive a loan forgiveness of up to $100,000 on loans received under the PACTE program. It is now possible for this company to obtain a loan forgiveness of up to $250,000.
It will also be possible for companies in the tourism sector to request reimbursement of all monthly energy expenses incurred between January 1 and December 31.er January 2021 and June 30, 2021, up to a maximum amount of $35,000 per month (and a maximum of $210,000 for the period from January to June). This reimbursement can be requested from July 2021.
The two announcements combined enable a tourism business to obtain a loan forgiveness of up to $460,000.
For more information on PACTE, PAUPME or AERAM, please contact your local investment fund (FLI ) or Investissement Québec.
See also our article on the Business Credit Availability Program for Highly Affected Sectors (BCHAP).
