Monthly bills and mounting debt top a long list of small business worries, finds a new survey taken by the Canadian Federation of Independent Business (CFIB) over the weekend.
“Main Street is scared that the economics of the ongoing shutdown are unsustainable,” said CFIB executive vice-president Laura Jones.
“We need to do a better job figuring out how to flatten the curve on small business failure, as the situation is pretty desperate.
“Broadly speaking there are three big challenges — relief is slow coming for bills due now, people are falling through government eligibility cracks, and too much of the relief is in the form of deferrals and loans, which just adds to the fear of coming out of this crisis with a mountain of debt that will be difficult or impossible to repay.”
Survey results show that many small businesses plan to use the Canada Emergency Business Account (44%) with many others wanting to use it, but not being eligible (20%).
Only 11% say they don’t need it with the rest unsure. 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.
“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,” said Jones.
Rent is one of the biggest month-to-month costs a small business needs to shoulder. For those that pay rent (65% of those surveyed) 61% 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 (7%).
“April rent was really tough, and many businesses will find May a total nightmare if things don’t change,” said 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.”
Other survey results relevant to cash flow and debt include:
- 30% report they do not have cash flow to cover April bills
- 42% report having an easy time with banks and 26 % report they are not
- 50% do not think provincial governments are doing enough to help business (32 % think they are doing enough, 16 % don’t know)
- 63% do not think they will be able to make up for lost revenues when the COVID-19 emergency is over
- 90% are worried customers will reduce or delay spending, even when COVID-19 is over.
Based of feedback from small business members CFIB is making the following recommendations:
- Make the Canada Emergency Business Account (CEBA) loans available as soon as possible, eliminate the payroll test and make the $10,000 forgivable portion a simple grant that is available quickly with a minimum of qualification criteria and administrative hassle.
- Provinces should provide rent subsidies to cover fixed costs of businesses hard hit by the COVID-19 crisis. CFIB continues to recommend provincial hardship grants of $5,000 a month to those forced to fully or partially close by provincial governments and those most affected by revenue losses. Ontario’s NDP opposition suggested a similar measure providing for a 75 % subsidy up to $10,000 in rent for small business that CFIB supports.
- Business owners and the self-employed should be able to have some limited earnings while remaining eligible for the Canada Emergency Response Benefit (CERB)
- Provinces should move immediately to reduce commercial property taxes by a minimum of 25 % with the criteria that the relief be passed on to commercial renters.
“If we don’t do a good job helping Main Street businesses survive this today, the cascading effects will be felt for years to come,” said Jones. “They are the job providers and creators for millions of Canadians. They are the connective tissue of our communities. Small business really is too big to fail.”
Read the full survey results for more details.
