Mortgage Implications of the CEWS on Business Owners

What is the CEWS?

The CEWS (Canada Emergency Wage Subsidy) is an economic stimulus package for businesses and business owners that have seen negative financial outcomes and revenue losses due to the Covid-19 Pandemic.

During the pandemic, Ontario has suffered many economic hardships, which have been carried heavily by the small business owners that fuel our regional economies.

Through the CEWS the federal government has been able to stimulate the economy enough that many of our small businesses were able to stay afloat, but when it comes to the personal financial affects on the small business owners themselves, some new questions have arisen.

Let’s take a moment to explore the effects of the CEWS on mortgage applications and how it’s looked at by the lenders.

First and foremost the CEWS is considered a grant. The financial implications when it comes to a mortgage application is that the accepted funds are redacted from the overall sum of income. This is unfortunate because the CEWS in and of itself is a replacement for revenue that was lost due to the federal government having to shut down during the pandemic for public safety.

This does lower the speculative valuation of the business based on the analysis that would be completed during the application process, and does in effect devalue some companies when it comes to acquiring the right mortgage. This is a lasting affect of the CEWS that many did not see coming, and could be costly to many borrowers.

How might this cost more than the obvious devaluation? The chance that a mortgage renewal is looming may very well be a reality for some small business owners. Those that want to try for a better situation might encounter some barriers due to this, and the renewal may be more costly in terms of a higher interest rate than you want to be paying.

If you’re a small business owner in Ontario that has accepted the Canada Emergency Wage Subsidy grant, and are interested in purchasing or renewing your mortgage, apply below or call me today and we can discuss the best strategy for you to get the right mortgage!

Source: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html

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