Canadian small businesses are worried that crucial wage and rent subsidy support programs from the federal government are scheduled to come to an end on October 23 and they have yet to hear if those lifesaving initiatives will be continued.
With ongoing capacity restrictions in certain parts of the country, a labour shortage growing and continued uncertainty about the impact and length of the brutal fourth wave of the pandemic, the Canadian Federation of Independent Business is urging the government to immediately extend and expand these programs.
“Businesses need certainty as so many are still dodging constant curveballs with a slow pick-up in revenues, labour shortages, and wariness around ongoing restrictions in the months ahead,” said Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB.
“No business owner expects government support forever, but they need to know they have something to rely on until all restrictions are lifted, and they can fully operate their business once again. They can’t afford for the government to dawdle until the last minute.
“The end of the pandemic may be in sight for some, but business owners are just not there yet. Small businesses will take an average of two years to recover from the pandemic. Pulling support at such a critical moment in their recovery would be a huge misstep.”
CFIB’s latest Small Business Recovery Dashboard shows that only 40 per cent of small businesses are making normal sales and less than half are fully staffed. Last month’s Business Barometer showed the largest decreases in short- and long-term small business optimism since the start of the pandemic in March 2020.
Bruce Winder, author of RETAIL Before, During & After COVID-19 and President, Bruce Winder Retail, said the two things that have made the difference between small business survival and extinction during the pandemic have been ecommerce and government supports.
“Along with ecommerce, small to medium sized firms have used government supports to remain solvent in this difficult time. Ecommerce to keep their virtual doors open and government subsidies to help keep workers employed and expenses paid. Without supports, thousands of small businesses would have shut down for good and with them, employees would become jobless. Therefore, supports must continue until markets return to some semblance of normalcy, when the virus moves to a manageable state,” he said.
“Stopping the payments now would only defeat the purpose of offering them in the first place. Much of the money provided thus far would have been wasted. Not to mention that governments would have a difficult time recovering loans if small to medium sized businesses were allowed to go under. Governments would be forced to line up with creditors to liquidate any assets that small to medium sized firms would have at a fraction of the value. Losses would be massive.”
“One can argue that businesses, at some point in time, must stand on their own and make or break it in this new reality. The world has changed, and some firms will not survive life on the other side of the pandemic. They perhaps were going to fail anyway. It’s the natural circle of life of retail and business in general. Lending them more money may be for naught. But this argument is short-sighted.”
“The right thing to do is to continue subsidies until COVID-19 becomes manageable. There will be a portion of loans that will not be recovered but that is the price tag for supporting the many. Without the continuation of subsidies, we would quickly see mass bankruptcies and mass unemployment – things we need to stave off at this fragile time of economic and societal recovery.”
Alla Drigola Birk, Director of Parliamentary Affairs and SME Policy with the Canadian Chamber of Commerce, said the wage subsidy in particular has been kind of the make or break program for hundreds of thousands of small businesses in keeping their doors open and keeping employees on the payroll during the pandemic.
“The rent subsidy program as well has been crucial. It did have a bumpier start and it had to kind of come in in a new iteration last fall but since then the businesses that are still locked down and that still really need that support have taken advantage of the rent program as well,” she said. “Both of these programs are critical for businesses that are still hurting, particularly for those in the hardest hit sectors and we need to make sure that these programs continue through until the end of this year and through to the spring of next year for businesses in the tourism, hospitality and travel sectors.”
When asked what the consequences would be of those programs not being extended, she replied: “The consequences are that you brought thousands of businesses this far along and enabled them to survive when they otherwise would not have been able to and pulling these programs now is tantamount to letting folks drown 50 feet from shore. It wouldn’t make sense after all the (initiatives) that have been invested in keeping these businesses alive that you would pull the plug now, especially for those sectors that are not allowed to recover, who still have capacity restrictions, operating restrictions, travel restrictions. It’s really not fair for businesses who cannot operate normally to not be given the same opportunity to receive support from the government that other businesses in other sectors have had.”
Restaurants Canada is also calling on the federal government to increase and extend the wage and rent subsidies into 2022 to ensure foodservice businesses can pull through the ongoing pandemic.
“The fate of Canada’s 90,000+ restaurants is still uncertain,” said Restaurants Canada President and CEO Todd Barclay. “Most have been losing money or barely breaking even since coming out of initial lockdown last year, and at least 10,000 establishments have already closed. The rest need government support to help them survive the fall and winter so they can continue feeding our recovery.”
The national organization said recent survey results reveal restaurants need further support amid the ongoing pandemic:
- 8 out of 10 restaurants have been operating at a loss or barely scraping by with a profit margin of two per cent or less throughout the entire pandemic; nearly half of all foodservice businesses have been consistently losing money ever since the first wave of lockdowns ended last year;
- 7 out of 10 restaurant operators are still receiving the federal wage and/or rent subsidy; and
- If these critical sources of support end this month nearly 80 per cent said they will struggle to keep existing staff/have to cut staff hours and more than half said they will struggle with hiring back staff/hiring new staff.
The CFIB has shared its concerns in a letter to Deputy Prime Minister Chrystia Freeland.
The national organization is urging the federal government to:
- Immediately announce an extension to the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) to November 20;
- Work with members of Parliament to further extend the Canada Recovery Hiring Program, CEWS and CERS, to March 31, 2022;
- Return the maximum wage and rent subsidies to 75 per cent for all sectors of the economy, as promised to the tourism sector by the Liberal Party during the election;
- Include new businesses that started after the pandemic began in all business support programs;
- Offer additional funding through the CEBA loan and delay the repayment deadline to the end of 2024;
- Change the Canada Recovery Benefit to ensure it does not incentivize workers to stay at home rather than returning to the labour force; and
- Dedicate the $1 billion in funding to provincial governments to implement passport systems to small business owners required to implement these systems.
Small business owners can sign CFIB’s petition at cfib.ca/covidpetition calling on the government to extend the federal support programs and support small business recovery.