Is Canada Doing Enough to Help Small Businesses?

Beth Graddon

Have governments effectively interpreted the financial effect of the pandemic on small businesses across Canada?  It’s a question we asked you last month and we got well over 1000 responses. The answer was a resounding no from 96% of you.  Here is what you told us...

Small businesses have different needs, and can’t meet the stipulations of the benefits.

“The reality is a small business’ cash flow from one month to another is slim. Being out of business for more than a month or two, with no cash flow will be the death sentence for many small businesses. Loans don’t work as this will only add to their reduction of cashflow later on. Asking them to rehire and pay 25% of a person’s salary is a joke. Wages are the largest cost. Their margins are not 25% in most small businesses; therefore, again they lose their cash flow and their business.“ - Wayne Ray

“The Government does not really know how this pandemic has affected the small business. One of our long-standing local businesses had to close its doors completely, as the costs to keep the building (rent/mortgage, utilities, repairs & maintenance, etc) were killing them. There may be too many stipulations in regard to applying for pandemic assistance programs, that don’t include some of the very small business.” - Cathy

The multiple assistance programs offered make it hard for businesses to effectively take advantage of what’s available to them.

“The $2000 CERB has made it difficult to bring back laid off employees. The CEWS is helpful but since the intention is to get individuals back to work or at least on the payroll, the CERB is interfering with getting people back to their employment.  As for the $40,000 loan to small businesses, it does not take into account that many franchisees own several franchises. If they each are set up under a separate corporation, they qualify for $40,000 for each business. On the other hand, if they are within one corporation, (. . .the rules are different). Many franchisees that I know are struggling to cover expenses but they do not qualify for a loan.” - Dan Merkley

The government has tried, but they may not be enough to reduce long-term impacts.

“I think the government has tried.  Not as much would have been shut down if there was more focus on very early testing and tracking.  This should have been put in place as soon as there was the hint of the virus.  What I worry about the most is the possible mass bankruptcies of small businesses and national debt that will have a tremendous lingering effect for many years to come.” - Nancy Campbell

“I know that the members of this government have not lived through a pandemic before, so all of this is new to each and every one of them. They are really trying their best, however many people/businesses are falling through the cracks. Sad to watch many of them closing due to great losses in capital.  If only the money had come sooner.” - Diane Woodham

Too much focus placed on helping big corporations?

 “It seems that small businesses (ie proprietorships) mean nothing at all to the government at this time or any other time. Every perk or benefit is more geared for the corporate world. And heaven forbid if you employ family members: they do not count as they are not at arm’s length. So, the small Mom and Pop, family business suffers.” - Alice Manderson

“This government only cares about the 1 per centers. They are led by someone who knows nothing about small business. . . so how on earth could they understand what it takes to run and maintain a small business?.” - Liza Wiley

“Our federal government pretends to understand small business, but in reality, it does not.  Cash flow is “KING” as you may know, for small businesses.  Consider suspending your incoming revenues, (as the pandemic forced upon us) but still having to pay out your static expenses (rent, utilities, insurance, property taxes,  etc.) .  The emergency packages and programs offered to the small businesses fall short compared to what large corporation are receiving and what the public services are receiving.    It seems that we are left to fend for ourselves and have little recourse to save our businesses. Realize that when we begin to resume restricted operations, sales will likely take more than 6 months to get back to pre-virus levels, as our customers must feel confident, that society have the pandemic under control, and that it is “safe to get back into the water”. Because this is a novel economic challenge, predicting the economic outcome is very subjective at this stage.  - Gaetan Ladouceur

And a couple of final comments that poses a provocative question.

“Have governments effectively interpreted the financial effect of the pandemic on small businesses across Canada?  With regard to the federal government: No.  The more important question is, however: Does the federal government actually care? “ - Mike and Karen

Belle thinks they do:  “Government tries but misses the mark.” -

A sincere thanks for the big response to last month’s poll question.  Please weigh in again this month when we ask: “Do you think it was a good move to waive T1 late filing penalties until September 1?”

Additional educational resources:  New – Personal Pension Planning for Corporate Owner-Managers course. In light of the new tax rules that penalize passive investments within CCPCs, advisors must understand how pension legislation can become a power tool to deal with wealth succession, business succession and tax optimization within a corporate environment.

Also, become the invaluable resource Canadians need to navigate the tax pitfalls relating to the COVID-19 Emergency Response Benefits and much more. Until June 30, get access to the September 30 Virtual CE Summit for free when you enrol in a Knowledge Bureau Designation Program. Consider the DFA-Tax Services Specialist™ program, or become a Real Wealth Manager™.

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