While federal measures to shore up Canadian businesses impacted by COVID-19 through payroll subsidies and small business loans come as welcome news to many businesses, they leave some small operations out in the cold.
Recently, the federal government announced two measures to help businesses. The first is a 75-per-cent payroll subsidy, while the second is a $40,000 loan. The Canada Emergency Business Account (CEBA) loan's eligibility requirements mean small businesses must demonstrate they paid out between $50,000 and $1 million in total payroll for 2019.
This past week, two small St. Albert businesses shared their stories with the Gazette. Herc's Nutrition and Viva Tan Beauty Boutique both fell short of the minimum payroll requirement to qualify for the loan. Without it, both businesses are struggling to make ends meet.
These cracks in the system are likely a result of the federal government hurrying to rush what funding measures it could. Alberta Chamber of Commerce president and CEO Ken Kolby said both ends of the payroll test throw up barriers for businesses – even $1 million doesn't go as far as one might think.
"You may think ($1 million) is a lot, but it's a tire shop," he said. "You can easily rack that number up if you had 20 employees,"
He suggests the solution could be as simple as asking basic questions of businesses applying for these loans, such as whether low payroll is due to a business having just started up.
On Tuesday morning, the Canadian Federation of Independent Business said one in five small businesses are too small to qualify for a federal emergency loan, based on a survey it did of more than 10,000 of its members. That survey also found 22 per cent of businesses have no sales or revenues and a third have seen gross revenue declines between 51 and 99 per cent.
While the government likely did the best it could on short notice, flexibility must be built into this system before these small businesses lose the ability to remain viable. Opposition parties made many specific recommendations to increase the program’s flexibility during debate on the bill Saturday and the government’s response would indicate more flexibility is in the works. That can’t come fast enough for many businesses. Small businesses are the lifeblood of the Canadian economy. They often operate on razor thin margins, with owners sometimes foregoing paychecks in favour of putting that money back into their companies.
Government support is not the only thing needed, though. Community support is essential, too. Many of these small businesses have closed their physical doors but are still offering curbside pickup services, delivery or other means of distributing their goods. We all have an opportunity to do what we can to support them through this crisis so they can bounce back once restrictions lift – let's not squander it.
