Canada: Regional Relief And Recovery Fund (RRRF)

The Regional Relief and Recovery Fund (RRRF) is a $962 million Federal Government program supporting small and medium-sized western Canadian businesses that have been negatively impacted by COVID-19.

There are four funding streams that eligible businesses can apply to:

To quickly determine if you are eligible for the loan program visit the RRRF Eligibility Assistant.

Apply for the RRRF here.

Refer to the application guide for instructions on how to complete the form. Applications cannot be started and saved, so they must be completed in one session. Incomplete applications will not be assessed and will be considered ineligible for funding.

Businesses are limited to the submission of one application for RRRF.

Western Economic Diversification Canada (WD) will provide eligible small and medium-sized enterprises (SMEs) with an interest-free repayable contribution of up to $40,000 to help alleviate financial hardship resulting from COVID-19. The objective of this program is to assist western Canadian SMEs that do not qualify for the Canada Emergency Business Account (CEBA) program or the "RRRF - Community Futures Stream."

Who Can Apply for the RRRF

The RRRF is open to businesses that are not eligible for the CEBA program, the "RRRF - Community Futures Stream," or the "RRRF - Women's Enterprise Initiative Stream".

Businesses must meet the following mandatory criteria to receive funding from the RRRF:

• Have fewer than 500 full-time employees

• Are located in Western Canada (defined as British Columbia, Alberta, Saskatchewan, or Manitoba)

• Are not located in a rural area serviced by a Community Futures (CF) office

• Find and contact your local CF office in British Columbia

• Find and contact your local CF office in Alberta

• Find and contact your local CF office in Saskatchewan

• Find and contact your local CF office in Manitoba

• Are not eligible for the "RRRF - Community Futures Stream"

• Are not eligible for the "RRRF - Women's Enterprise Initiative Stream"

• Have applied and were declined for funding from the 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

When to Apply

Applications will be accepted on an ongoing basis and will be assessed as they are received. The RRRF will close once it successfully distributes funds to eligible businesses across Western Canada.

Every effort will be made to notify applicants by email with a decision on their application status within 10 business days.

Funding is subject to availability.

Program Parameters

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.

Repayment Terms

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-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.

Disbursement of the Contribution

If an application for funding is approved, you will be asked to review and accept a Contribution Agreement with WD before funds, up to a maximum of $40,000, are disbursed through a single payment.

The total amount of the contribution must be reported as income in the year in which the contribution is received.

Reporting Requirements

Funding recipients will be required to attest that the full amount of the contribution was expended for operating costs, such as rent, wages and salaries, utilities, insurance, debt expenses, professional fees, and property and business taxes.

Businesses will be required to submit a final report that includes:

• Number of jobs maintained, as a result of RRRF

• Confirmation that the business is continuing its operations

• Other metrics as may be requested by WD

WD may request a copy of the Recipient's financial statements.

How to Apply

Refer to the application guide for instructions

• Applications cannot be started and saved, so must be completed in one session.

• Incomplete applications will not be assessed and will be considered ineligible for funding.

• Businesses are limited to the submission of one application for RRRF.

• Completed application for relief funding (please note that this smart application form will customize the eligibility criteria based on the answers you provide)

• Financial statements for the past two years

• Estimated 2020 cash flow needs from April 1, 2020, to September 30, 2020

Under the RRRF, your funding request may be scaled to your operating deficit, but not be more than $1 million. For pre-revenue firms that have received angel or venture capital funding, requests will be scaled to 50% of annual operating costs to maintain operations for six months up to a maximum of $500,000, less other approved federal COVID supports.

Repayment Terms

The following repayment terms will apply:

• 100% of contribution must be repaid

• No scheduled monthly repayments are required until after December 31, 2022

• Three-year repayment period, beginning January 2023

• The full balance of the contribution amount must be repaid no later than December 31, 2025

Disbursement of the Contribution

If an application for funding is approved, you will be asked to review and accept a Contribution Agreement with WD, before funds will be disbursed (may include advanced payments).

The total amount of the contribution must be reported as income in the year in which the contribution is received.

Reporting Requirements

Recipients will be required to attest that the full amount of the contribution was expended for fixed operating costs, such as rent, wages and salaries, utilities, insurance, debt expenses, professional fees, and property and business taxes.

Businesses will be required to submit a final report that includes:

• Number of jobs maintained, as a result of RRRF

• Confirmation that the business is continuing its operations

• Other metrics as may be requested by WD

WD may request a copy of the Recipient's financial statements.

If you are a rural business requesting more than $40,000, these are your eligibility requirements.

How to Apply

Community Futures has 90 offices supporting rural business in British Columbia, Alberta, Saskatchewan, and Manitoba. Applicants from rural communities are asked to apply through the website of their local CF organization, or their provincial Community Futures website.

• Find and contact your local CF office in British Columbia

• Find and contact your local CF office in Alberta

• Find and contact your local CF office in Saskatchewan

• Find and contact your local CF office in Manitoba

Eligibility Requirements

To be eligible for the RRRF, SMEs must meet the following requirements:

. Be located in non-metropolitan regions (all areas served by Community Futures organizations) in Western Canada.

. Attest that they have not received duplicative supports through other federal or provincial government COVID-19 support programming such as the CEBA.

. Must have been viable and not experiencing any liquidity or other financial difficulties as of March 1, 2020.

. Experienced a material adverse effect on business operations on or after March 1, 2020 as a result of the COVID-19 pandemic.

. Been an established business before March 1, 2020.

. Be a sole proprietorship, partnership, corporation, social enterprise, or other similar organization.

Eligible Costs

The following are eligible costs the RRRF will cover:

• Lease payments for existing equipment and machinery;

• Salaries and benefits (will only be considered for support if the business has not received support under the Canada Emergency Wage Subsidy (CEWS);

• Property taxes;

• Utilities;

• Bank charges and interest payments;

• Office supplies;

• Vehicle operating expenses;

• Professional fees;

• Monthly insurance payments;

• Rent (applicants are expected to pursue with their landlord access to the Canada Emergency Commercial Rent Assistance (CECRA) for small businesses); and

• Other fixed operating costs applicable to the applicant.

Repayment Terms

The following are the terms for eligible businesses to repay the RRRF:

• No interest accrual or principal payments through December 31, 2022

• If 75% of loan is repaid by December 31, 2022, the remainder of the loan is forgiven

• Blended principal and interest payments beginning January 1, 2023

• Loans must be repaid by December 31, 2025

• No prepayment penalties

Women-owned or women-led businesses requesting over $40,000 must apply through the funding stream for loans over $40,000.

The access to financing will support small enterprises unable to access larger federal relief funding programs, or unable to obtain a loan/credit from traditional financial institutions, and that are struggling with working capital needs.

Eligibility Requirements

To be eligible for the RRRF WEI stream, small and medium-sized businesses must be:

• Women-owned or women-led.

• Established prior to March 1, 2020;

• Impacted adversely due to the COVID-19 pandemic;

• Viable and not experiencing financial pressures prior to March 1, 2020;

• ineligible, and/or not receiving other federal relief support for the same expenditures.

Eligible applicants include sole proprietors and "main street" businesses, such as retail shops, restaurants, corner stores etc. and businesses of strategic importance to the community.

Eligible Costs

Loans are to cover only fixed costs. Costs such as rent, salaries, and benefits will only be considered if the applicant is ineligible, rejected and/or not already receiving assistance for these costs from other federal and provincial funding measures.

The following are eligible costs the loan may cover:

Salaries, and benefits (will only be considered if not eligible or declined from the CEWS;

• Property taxes;

• Rent; (applicants are expected to pursue with their landlord access to the CECRA for small businesses);

• Utilities;

• Cleaning supplies and additional safety measures;

• Bank interest/charges;

• Office supplies and vehicle operating expenses;

• Lease payments for existing equipment and machinery;

• Professional fees;

• Insurance; and

• Other eligible expenses associated with retooling, rethinking workflows, automation, robotics, developing new markets, etc.

Parameters of the RRRF:

The following are the parameters of the RRRF:

• The maximum assistance provided will be $40,000.

• 0% interest and no principal payments until December 31, 2022.

• Principal repayments can be voluntarily made at any time.

• 25% (not to exceed $10,000) can be forgiven provided the applicant has paid 75% of the original loan amount prior to December 31, 2022.

• If the applicant is unable to repay the loan by December 31, 2022, the loan will be converted to a three-year term loan with interest rates up to 5%, effective January 1, 2023.

• The full balance must be repaid no later than December 31, 2025.

How to Apply Through the WEI Stream

There is a WEI in each western province that serves urban and rural women-owned or women-led businesses. Applicants from women-owned or women-led businesses are asked to apply through the website of the WEI organization in their province:

• British Columbia - Women's Enterprise Centre

• Alberta - Alberta Women Entrepreneurs

• Saskatchewan - Women Entrepreneurs of Saskatchewan Inc.

• Manitoba - Women's Enterprise Centre

Originally published by Crowe MacKay, July 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.