Canadian Small Business Isn’t Saved Yet
A lot of holes remain in government programs targeted at small businesses. But a few straightforward fixes would help a lot.
Canada now has a bunch of programs in place to support small business: a wage subsidy (CEWS), a loan (CEBA) and a rent subsidy (CECRA). The programs are fine, and are helping a lot of businesses. But, there are some clear holes, and the small business community is quite aligned on what they are and how to fix them. No one wants to continue to ask for more, but the holes are quite large. Businesses, livelihoods, families will be crushed unless they are closed. Here’s how to do it:
1. PROVINCIAL RESPONSIBILITY: Commercial Evictions Moratorium and make CECRA mandatory. The UK did this on March 24th, Australia on March 29th. New York State on March 20th. We are hearing that landlords are not coming to the table to agree to the CECRA plan. Businesses need to be protected from eviction due to forced closure, and landlords need to be forced to agree to what is a REALLY good deal for them. Provinces agreeing to CECRA and not imposing a moratorium on evictions either do not understand how small business works, or don’t care about them. There’s no other explanation for not taking this obvious step. I outline the need for a commercial evictions moratorium here.
CECRA should also be mandatory for small businesses who’s revenues are down more than 70%. Let’s be clear about what we’re asking for: if a business was forced to close, has near zero revenue, and $10K a month in rent, we’re asking the landlord to take $22,500 for three months instead of $30,000. At a time when their space is not allowed to be used. Tenant pays $7,500, government pays $15,000. This is a great deal for landlords: they get paid most of rent, maintain relationships with tenants, get cash now instead of deferrals. We are hearing landlords are refusing to consider the CECRA deal and demanding full payment. If this continues, they should be forced to accept.
A practical step-wise approach would be as follows: first, institute the commercial evictions moratorium before May 1. Then, announce that you expect landlords to take this deal. Ask tenants who’s landlords are not participating to e-mail their concerns to government. Monitor during May, and if landlords are not taking this deal in significant numbers, make it mandatory in June. Give landlords every opportunity to accept this fair sharing of the burden, but be ready to protect small business if they don’t.
2. FEDERAL & PROVINCIAL: Another tier for CECRA. Businesses who’s revenues are down 30–70% should also qualify for rent relief. We propose a 50% loan in the same format as the current tier.
3. PROVINCIAL & MUNICIPAL: Waive 25% of 2020 property taxes for affected businesses. Fixed costs are still too high for businesses forced to close to protect the community.
4. FEDERAL: Fix the holes in the CEBA loan. At this point, everyone involved in small business and the government knows what the issues are:
a. Ensure new businesses qualify. Allow PD7A statements to be used to confirm 2020 payroll activity for new businesses without 2019 payroll
b. Allow payments to contractors to qualify as payroll. Minister Ng has talked about this hole, and the community businesses it exposes (barbershops, tattoo parlours, gyms, etc.). It’s long past time to fix it, using tax returns to prove 2019 payments.
c. Help family-owned and collective businesses. Use the BDC to review other applicants on a case-by-case basis who should qualify, but don’t due to the minimum payroll requirements.
Every level of government has some more work to do to protect local community businesses. Things are happening, but slowly and incompletely. I get that this is hard, but if we really want to “re-open” soon, let’s make sure our community businesses will be there to help us all get back on our feet.
