Small Business Owners Still Falling Through the Cracks

Evelyn Jacks & Beth Graddon

Small business owners in Canada are among the most impacted fiscally by the pandemic, according to the Canadian Federation for Small Business (CFIB). In a recent survey, the group reported that almost 80% of small businesses are fully or partially closed, and on average, it’s cost them more than $200,000 already. Will the new announcements from this week help?

According to the CFIB’s ‘Investigating the Impact of COVID-19 on Independent Business’ survey, current measures are not enough and 51% of small businesses aren’t sure if they can continue to survive if current restrictions remain in place through May. Only 10% of business report being fully open, 30% don’t have cash flow to pay April bills and 39% are worried about permanent closure. Meanwhile, 32% who have already closed are unsure if they’ll be able to re-open at all. The results also show that what the government is doing so far just isn’t enough to help.

The help available to small businesses includes the legislation to introduce the Canada Emergency Wage Subsidy (CEWS) that was passed last weekend, but only 29% believe it will help them avoid further layoffs or recall staff. Unfortunately, many small businesses also rely on using independent contractors on an as-needed basis, which could allow them to continue operations and generate needed revenue, but the CEWS is only available to cover the wages of employees.

Another option is The Canada Emergency Business Accounts (CEBA) which offers loans of up to $1,000 backed by the federal government, with no interest applied if it’s repaid in full by December 2020. But unfortunately, it requires businesses to have a minimum $20,000 payroll. Under the old criteria (a $50,000 minimum payroll), 1 in 5 businesses didn’t think they’d qualify for the loan. More importantly , 56% of businesses surveyed said they have no capacity to take on more debt right now, which means the recent changes to allow for a lower payroll threshold will not help.

Business owners could qualify for the CERB, however. As it stands now with the CERB, there are a couple of options to allow small business owners to qualify for the program, but the scenarios are limited, making it inaccessible to many. Dividends qualify towards the $5,000 (over the last 12-months) income criteria, for those that have drawn this income. Additionally, those drawing a formal salary from their incorporated company may have the option of covering their salary through the CEWS, or laying themselves off to receive the CERB. But that doesn’t help those who have done neither.

Fortunately, more assistance may be coming soon. On April 16, the Prime Minister also mentioned that there is a new program being introduced, called the Canada Emergency Commercial Rent Assistance which would offer support for April, May, and June. Additionally, Finance Minister Bill Morneau said that the government would be offering forgiveable loans to commercial landlords who offer rent reductions to businesses.

Knowledge Bureau Report will keep you in the loop on any new emergency provisions available to help small businesses.

Additional educational resources: get all the technical details of the COVID-19 Canada Emergency Response provisions by enrolling in the Virtual CE Summits. It’s a sought-after educational event from Knowledge Bureau in a new format: a professional online course plus interactive live virtual meeting. The online learning release will be available April 22 on the Virtual Campus, and the interactive Zoom event will take place on May 13.

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