Government help for many small businesses too little, too late

Apopular pub in my neighbourhood announced it is closing. After 13 years in business, and a devoted customer base, the owner said he simply couldn’t keep it afloat. It came as a shock to the community — this is the kind of well- loved spot that is always busy and bustling with life.

While the economic repercussions of COVID-19 are being felt by everyone, for small businesses, the impact has been completely devastating.

Many small businesses operate on razor- thin margins. While some may have the reserves to get them through a bad month or two, few have the cushion to weather shutting their doors for months.

Stores and restaurants can service their customers through online orders, but for many, this represents only a drop in the bucket of their usual sales and is solely a convenience option. The owner of a boutique told me her sales are at only 20 per cent of what they normally are. Like many small businesses, she relies mainly on foot traffic, and online sales are only a very small part of her revenue stream.

Small businesses, already reeling from the “Amazon effect” of the past few years, have been left wondering how they are going to survive. In Alberta, where the economy was already hurting, the impact to small businesses has been even more painful.

Small businesses are now looking to the federal government for much needed support to get them through this latest hurdle. However, what they are finding is that they just don’t qualify for a lot of the federal economic assistance that has been announced.

For example, many small business owners operating as sole- proprietors don’t pay themselves a salary. Instead, they pay themselves through dividends. It isn’t uncommon for some small businesses to have very small payrolls, oftentimes employing no staff or only temporary part- time hires. This means that many small businesses don’t qualify for the wage subsidies or the Canada Emergency Business Account (CEBA), which provides interest- free business loans. To qualify for the CEBA, businesses need to have a minimum $20,000 payroll in 2019.

The Canadian Physiotherapy Association has raised concerns about the fact that the federal wage subsidy programs and the CEBA are premised on a business model that excludes arrangements where workers are classed as contractors, not employees. This is the case with physiotherapists, and a growing number of other industries. In today’s gig economy, many businesses have done away with formal employment arrangements, which can be expensive and don’t offer the flexibility that a lot of workers crave these days. Many workers are instead hired by businesses as independent contractors and are thus not on payroll as employees.

On April 15, the federal government announced that people can earn up to $1,000 while collecting the Canada Emergency Response Benefit ( CERB), which provides a taxable benefit of $ 2,000 every month for workers who have lost their income due to COVID-19. In theory, a small- business owner could qualify for this, but only if they pay themselves under $1,000.

The problem is that the CERB barely covers half of the average commercial rent for a boutique owner on a trendy street in a big city. Commercial rent relief has been the No. 1 ask of small businesses since mandatory closures began across Canada six weeks ago. Monthly rent is the largest overhead for most small businesses, and figuring out how to make rent when doors are shut and revenue has fallen off a cliff is no easy task.

Finally, on April 24, Trudeau announced that rent assistance for small businesses is on the way in the form of forgivable loans to commercial property owners. However, as has been the case with many of these announcements when initially unveiled, Trudeau was scant on important details like dates. Rent assistance will be operational by “mid- May,” with further details to come.

But rent is still due, and small businesses are still waiting for the information they need to plan for the immediate future.

The sad reality is that for many, it is too little too late. Some doors have closed for good, and others are on the very brink of doing the same.

for small businesses, the impact has been completely devastating.