National Post (National Edition)
Small firms seeing sharp drop in sales
CFIB seeks governments’ direct support
TORONTO • Half of Can- ada’s small firms said they have seen a drop in sales due to the economic effects of the COVID-19 infection, with four in 10 of those affected businesses also reporting a decrease of more than 25 per cent, according to a new survey conducted by the Canadian Federation of Independent Business (CFIB).
“The early economic impacts of coronavirus on Canada’s SMEs has been massive,” Dan Kelly, CFIB president, said in a statement Tuesday. “Even more alarming is our finding that a full quarter of small firms would not be able to survive for more than a month with a drop in business income of more than 50 per cent.”
Industries most impacted by the virus are hospitality, arts/recreation, retail and personal services. The survey suggests the average cost to those affected by the economic impacts of COVID-19 is about $66,000.
As many as 43 per cent said they have reduced staff hours and 20 per cent have begun temporary layoffs; 38 per cent have already experienced supply chain issues; while 42 per cent noted that they expect to have zero sales if they avoid face-to-face contact with potential clients.
More than 8,300 businesses responded to the survey conducted online on March 13.
As many as 91 per cent of firms polled said the government should offer direct financial support to small business owners suffering from the downturn. Just over two-thirds would like temporary tax relief on income, payroll and sales taxes (69 per cent), and would prefer to see planned tax increases such as CPP/ QPP and carbon tax cancelled (66 per cent). They also asked to delay tax filing deadlines and eliminate penalties for late payments and remittance, and introduce wage subsidies for businesses to retain staff (58 per cent).
Prime Minister Justin Trudeau said a major announcement on supporting the economy is coming Wednesday, and the government is planning changes to upcoming tax deadlines to provide more flexibility for businesses and taxpayers.
The economic environment for small businesses in
Ontario could become more distressed after Premier Doug Ford declared a state of emergency in the province, which mandates the closure of bars, restaurants, theatres, libraries and bans public events with more than 50 people.
“We’re facing an unprecedented time in our history,” Ford said. “This was a decision that was not made lightly. COVID-19 constitutes a danger of major proportions.”
The declaration’s intent is to slow the spread of the novel coronavirus and avoid overwhelming the healthcare system, Ford said.
Effective immediately, the province ordered the closure of all facilities providing indoor recreation programs, all public libraries, all private schools, all licensed childcare centres, all theatres, cinemas and concert venues, and all bars and restaurants except to provide takeout food and delivery.
Shopping malls are not included, but Ontario’s chief medical officer of health said he is monitoring that situation.
Essential services such as grocery stores, pharmacies, convenience stores, public transit, manufacturing facilities, construction sites and office buildings will continue to operate, Ford said.
Ontario Chamber of Commerce said while it welcomes the Ontario government’s move, it asked “all levels of government to implement measures to support small business owners who are most vulnerable at this time.”
“The federal government has already announced proposing changes and flexibility around extending unemployment insurance and we look forward to further details that should cover these workers and the self-employed,” the chamber said in a statement.
TD Bank, which on Tuesday downgraded Canada’s GDP to a 1.4-per-cent contraction this year, compared to a 1.6-per-cent increase at the start of 2020, says a key distinction with COVID-19 relative to past pandemics is not the number of impacted countries, but rather the strong behavioural response to limit contagion via largescale quarantines and interruptions to business operations.
“We have not seen anything similar in scale in recent history. The result creates far more forecast uncertainty over the next several months,” TD chief economist Beata Caranci, said in a note to clients.