Concern as New Businesses Shut Out of All Federal Government Support Programs in Canada Amid Pandemic: Interviews

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More than a year into the lingering COVID-19 pandemic thousands of new businesses in Canada remain shut out of all federal government support programs.

The Canadian Federation of Independent Business has highlighted the fact that on May 19, 2020 Prime Minister Justin Trudeau promised to work on a potential solution for businesses that had not yet filed a tax return, such as newly created businesses, who found themselves not eligible for the wage subsidy, rent subsidy and the Canada Emergency Business Account loan program.

Dan Kelly, President and CEO of the CFIB, called it shameful that tens of thousands of businesses that began formal operations after March 2020 continue to face a gruelling stretch of new restrictions and lockdowns without any of the support available to other firms.

Dan Kelly
Dan Kelly

“There are thousands and thousands of businesses that get their start every year and typically it’s not like you decide to go into business one day and then automatically your business is set up the very next,” said Kelly. “It often takes months, sometimes years, before the business is actually operationalized. So all of those businesses that were often planned and worked on pre-pandemic and then went on stream during the pandemic just as it started or the months that followed they have by policy been excluded from all of the government support programs.

“For example, a restaurant owner contacted us. They had spent $400,000 – their entire life savings, every dollar they could borrow – to try to get a 100-seat restaurant open. It was supposed to start for April 2020. Unfortunately what happened is that the pandemic slowed down the finalization of their construction because of the lockdowns that began at the beginning of the year. They were only able to open their doors in June of 2020, serving a very limited number of people. Because they didn’t open in time, because they didn’t have a payroll account, a tax return from 2019, a business number at the appropriate date, they have been excluded, as have thousands and thousands of other businesses from accessing a single dollar from the rent subsidy, a single dollar from the wage subsidy, or a single loan dollar from the Canada Emergency Business Account. And that’s deeply unfair.

“These businesses need the support to be able to make it through. In fact, they probably deserve the support even more because they have no track record.”

Kelly said the organization has written, lobbied and talked to government “a thousand times” since the Prime Minister’s promise to fix the problem and there has been no progress whatsoever.

“I find it shameful that the Government of Canada that likes to talk about having the backs of the business community during the pandemic has completely ignored new small business owners simply because they were unlucky enough to open their doors during the worldwide pandemic,” he added.

Small business owners can now sign CFIB’s petition calling on the government to provide support to new firms.

In a letter to Deputy Prime Minister Chrystia Freeland, the CFIB has outlined the following recommendations:

  • Waive the requirement for an active CRA Business Number (BN) on the first day of each COVID-19 relief program or allow a business to apply for one;
  • As new firms are not able to determine their revenue loss compared to the same month in 2019 or January/February 2020, allow them to use provincial average revenue loss numbers by sector or determine revenue comparisons based on an average sales revenue over a few recent months, as Saskatchewan has implemented;
  • Allow new businesses that opened after March 1, 2020, to demonstrate a month-over-month revenue reduction when comparing a month between April 2020 and April 2021 to any month between November 2020 and April 2021; and
  • Allow new businesses to compare month-over-month revenues to the previous month (prior to increased restrictions).

“New businesses will be vital to Canada’s economic recovery, as they create new jobs and replace the businesses that we have lost. They face the same lockdowns as other businesses, and are often more fragile because they don’t yet have a list of loyal customers or any reserves after starting operations. We urge the federal government to deliver on the promise made a year ago and provide new businesses with the support they need,” said Kelly.

In a letter to the media, which appeared in the Globe and Mail, Brian Vallis, owner of Piatto Pizzeria + Enoteca, a family run business based in St. John’s, NL with locations in Atlantic Canada and southern Ontario, said it’s hard to exaggerate the widespread, debilitating suffering Canadians have endured over the past year. 

“One important group has fallen through the cracks — a group that is critical to the nation’s economic recovery and a return to higher employment and vibrancy in our downtown cores and neighbourhoods.

These are the entrepreneurs who risked their capital and started businesses during the pandemic — many not by choice but by circumstance, as they were well into building a new venture when the pandemic hit and had a financial imperative to complete the project and open their doors,” explained Vallis.

Image: Piatto Cambridge

“Canada’s newest entrepreneurs rented and renovated previously empty retail spaces, hired and trained people, and contributed to their neighbourhoods. In many cases they had strong support from the community and good sales until the second wave of lockdowns hit. Like the vast majority of Canadian businesses, they wanted to help flatten the curve, and therefore abided by all the regulations and restrictions to their operations just like everyone else. 

“However, without any “previous year” sales (based on pre COVID sales commencing April 2019), they did not qualify for government assistance, primarily Canada Emergency Wage Subsidy and Canada Emergency Rent Subsidy. They were between a rock and a hard place. By complying with lockdown orders, they had no way to survive.”

Not qualifying for government assistance means Canada’s newest entrepreneurs bore the full brunt of the business interruption with no help in the form of wage or rent subsidies. With each new lockdown, more permanent closures happened, and more businesses moved closer to the verge of collapse, said Vallis.

“If these businesses are not supported, and the associated jobs are not made available to those who need them, social problems — addictions, untreated mental illness and crime — are a reliable consequence that puts a strain on our social and medical systems. And when businesses close, the buildings that housed them often remain vacant for extended periods, serving as a blight on our neighbourhoods. This becomes all the more obvious the longer the buildings are left unattended, becoming worn and sometimes vandalized due to their lack of care,” he added.

“When this happens in the downtown core, the vibrancy that many municipalities worked on for years is diminished and communities experience decline at a time when we need growth.

“These new entrepreneurs want to be part of the recovery. They represent the spirit and initiative this country needs to recover, but they need support if they are going to survive, and they need it now. If the government is truly serious about building this country back better than it was before, if it cares about the vitality and safety of our towns and cities, and if it wants to do what’s best for those among us who struggle the most, it will rectify its unbalanced treatment of small businesses and expand their assistance programs to include our newest entrepreneurs who started their businesses during the pandemic. Supporting them with CEWS and CERS will surely aid in Canada’s recovery. In doing so, it will take an important step to recovery and to getting Canadians back to the Canada they know and love.”

Article Author

Mario Toneguzzi
Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He is the Senior News Editor with Retail Insider in addition to working as a freelance writer and consultant in communications and media relations/training. Mario was named as a RETHINK Retail Top Retail Expert in 2024.

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