ESL school operator sees revenue drop 90%
Says small businesses are suffering
Michael Elkoussy, who has been operating an English as a Second Language school for 10 years in Downtown Vancouver, says his revenues have dropped by more than 90 per cent since the COVID-19 crisis began and he’s afraid that his business might not last until summer.
With the majority of his students being from countries like Japan, Italy and South Korea, he started noticing a downturn at the beginning of January and then had to close March 12 due to the social distancing health directive, moving classes online.
Teachers at his Eh Plus English school have been willing to work from home online and have all offered to take a pay cut. And he’s managed to get deferrals on various things including loans, Elkoussy said Tuesday. But he says he has been unable to get any help from his landlord on rent.
Elkoussy says the federal government’s offer of up to $40,000 in loans to businesses during the crisis is nice, but the problem is that it just increases the debt burden on the company. He doubts he will be able to make it to the summer, loan or no loan.
“If the social distancing relaxes by the summer we still won’t be able to be open at that time because we will have essentially lost all of our liquidity into the pocket of our landlord,” he said.
His comments came as the Canadian Federation of Independent Business (CFIB), of which he is a member, released results from a survey showing that only 23 per cent of B.C. small businesses are fully open, 31 per cent don’t have cash flow to pay April bills and 40 per cent are worried about permanent closure.
“April has been very challenging,” said Laura Jones, executive vice-president of the CFIB.
“May is going to be a nightmare. It gets exponentially more challenging for businesses, small businesses, the longer this goes on because they have either no revenue or dramatically reduced revenue in most cases, and their bills are still piling up.”
Jones said the B.C. government, of all provinces, has shown some leadership in offering relief to businesses, including measures to reduce the school tax portion of the property tax bill by 50 per cent, but believes more will need to be done.
She says the biggest thing governments could do is to put in some emergency hardship money and subsidize business rents, particularly for those that have been forced to close down.
“Governments, including the provincial government, have taken some action to provide relief, but we’re saying it’s not going to be enough if we’re going to try to flatten the curve on small-business failure. The situation is pretty desperate and more is needed,” Jones said.
An email from the B.C. Finance Ministry said that the COVID-19 crisis was having a “significant” impact on all aspects of life with businesses feeling the effects especially.
The email noted that there was a combination of federal and provincial supports being put in place for business, including the $40,000 loan offer.
“Our immediate goal is to provide relief for businesses struggling with cash flow today. Knowing that they can apply for new federal support, defer certain tax payments and have a reduced school property tax can provide some breathing room that commercial property owners and their leaseholders need in the short-term,” the email said.