'We need to do a better job figuring out how to flatten the curve on small business failure'
When it comes to the top concerns surrounding COVID-19, business cash flow (including getting paid, meeting payroll or paying suppliers/rent/mortgage/bills) is number one, according to 76 per cent of employers surveyed by the Canadian Federation of Independent Business (CFIB).
Long-term business finances came in second (74 per cent) followed by the economic repercussions (68 per cent). Also on the list are health impacts (58 per cent), access to government support (56 per cent) and staffing (including layoffs, retention and work refusals) (55 per cent).
Many small businesses plan to use the Canada Emergency Business Account (44 per cent) with many others wanting to use it, but not being eligible (20 per cent). Only 11 per cent say they don’t need it with the remainder unsure, found the survey of 10,550 employers.
Once running, the program will provide up to $40,000 in interest-free loans with up to $10,000 forgivable. However, it is restricted to businesses with payroll between $50,000 and $1 million, says CFIB.
“These loans can’t be available fast enough and we strongly recommend eliminating the payroll test and making the $10,000 forgivable portion a simple grant that is available quickly,” says CFIB executive vice-president Laura Jones in Vancouver. “It needs to now transition to be more support than was initially envisioned.”
Another CFIB survey found membership was divided on the wage subsidy program being offered by the federal government and it won’t do much to stem the avalanche of layoffs.
Rent is one of the biggest regular costs for small businesses and for those who pay rent, 61 per cent paid or plan to pay in full for April. About one in four have deferral agreements in place with landlords. Most of the rest could not pay their rent in full and don’t have an agreement in place (seven per cent), found the survey.
“April rent was really tough, and many businesses will find May a total nightmare if things don’t change,” says Jones. “Provinces should move to reduce property taxes and introduce a rent subsidy for hard hit business like those forced to close by provincial essential services rules.”
The vast majority of entrepreneurs are concerned about business coming in after the coronavirus outbreak, found CFIB.
“Ninety per cent are worried that customers will reduce or delay spending even when COVID-19 is over,” says Jones. “There are a lot of people who are very concerned about their favourite Main Street businesses right now and so it was interesting to me that business owners themselves are feeling more pessimistic about that.”
“Small business owners are a very resilient, optimistic lot under normal circumstances, but we are in extraordinary circumstances, and I think that’s an indication of the stress level that they’re under. We need to do a better job figuring out how to flatten the curve on small business failure, as the situation is pretty desperate.”
