Small and medium-sized businesses in Atlantic Canada want governments to tweak recent support programs to help these companies avoid bankruptcy in the current pandemic.
Spokespeople for organizations representing the owners of SMEs applaud the government’s efforts to help small businesses and they understand that governments are reacting to the pandemic on the fly and don’t have time to produce flawless policies.
But many of the policies that have been announced aren’t big enough to help businesses facing ruin, or come with eligibility criteria that prevent too many SMEs from benefiting. Business owners want amendments to help them survive.
“We’ve been saying, we think it’s positive that you’re doing this, but you have to listen to the echoes coming back so you can tweak these things . . . and make sure these programs are as effective as possible,” Jordi Morgan, Vice-President for Atlantic Canada at the Canadian Federation of Independent Business, said in an interview.
Federal and provincial governments have rolled out a range of programs in the last two weeks to help SMEs and their workers after the pandemic has, in many cases, completely strangled their cash flow. The federal government has announced it will cover 75 percent of the payroll of businesses, as long as their revenues have fallen by at least 30 percent year-on-year. It has also announced a series of loans for small businesses. Provincial governments have outlined rent deferral measures, loans to help with cash flow as well as certain other programs. But most SMEs believe the measures are either insufficient to prevent ruin or don’t apply to enough businesses.
CFIB data – collected from a series of polls with small business people across the country – shows that three-quarters of Canadian businesses say cash flow is their most pressing problem. One-third say they are having trouble paying bills this month, while one-fifth cannot pay their rent.
The survey, which encompasses more than 10,000 responses, provides provincial breakdowns. It shows that in each of the Atlantic Provinces only 18 to 19 percent of the small businesses remain open, lower than the 20 percent level for Canada overall.
The percentage of companies unable to meet their April bills ranges from 23 percent in P.E.I., the lowest level in the country, to 31 percent in Newfoundland and Labrador (exceeded only by Alberta).
Asked if the Canada Emergency Wage Subsidy will help avoid layoffs or help to recall laid off workers, the percentage of businesses answering “yes” was 25 percent in New Brunswick, 29 percent in Nova Scotia, 32 percent in P.E.I. and 34 percent in Newfoundland and Labrador. The CFIB wants the revenue requirement removed from this program and for governments to show more flexibility in their policies.
“Over time, what we’re hoping is that the data we’re providing will help decision-makers make better policy,” said Morgan. “This is policy-making at light speed. Policy is not usually developed like this.”
The Nova Scotia Small Business Affiliation, which says it represents about 1,000 SMEs in the province, said Nova Scotia government’s $20 million fund to help small businesses is missing the mark. The fund is too small and is problematic because its payout is based on revenues in February 2020 or April 2019.
“It sounded like all businesses are getting $5,000,” said Lara Cusson, a spokesperson for the group. “The reality is it’s 15 percent of gross revenue for February or April. They are the worst months for most businesses so from the get-go it’s problematic. And 15 percent [of one month’s revenue] for a business with small margins is not very much.”
She said that Nova Scotia’s $20 million Small Business Impact Fund needs to be at least $500 million with a $200,000 cap for each business. Currently, other programs can be tapped only if the business is closed due to the pandemic, which means that businesses that try to eke out a bit of revenue are penalized, and programs that benefit only those with falling revenues don’t benefit new businesses, which don’t have a revenue history.
Cusson added that all levels of government need to help address this issue. Even municipal governments can give landlords a break on property taxes so they have more flexibility in dealing with their tenants.
“This is probably the most significant economic challenge the country has seen since the Great Depression,” said Morgan. “We haven’t seen anything like this before, certainly not in the time we’ve been keeping records.”