During the times of coronavirus pandemic, thousands of businesses in Canada have been impacted; particularly the small-sized enterprises are facing massive losses resulting in companies running out of cash or shutting down permanently.
According to Reuters.com, Small businesses account for 97.9% of total Canadian firms. Many companies, mostly dealing with travel, tourism, and hospitality, have started to lay off their employees. The pandemic is expected to tip the economy into another recession, and the loss of too many small businesses would only worsen the situation.
Most small business groups are continually working on how to deal with their workers and how to ensure their employees’ safety instead of concentrating on how to grow their business. Small-scale businesses, with employees lesser than 100, are at major risk of a slow down due to the pandemic outbreak.
Government coming to Rescue Small Businesses
Canada Emergency Response Benefit (CERB) provides financial support to both employees and self-employed residents who are affected by Covid-19.
The benefits include the opportunity to receive $2,000 for four weeks if you are eligible. The benefits are available if:
- You are a citizen of Canada, and age must be at least 15 years old.
- You have not quit your job voluntarily.
- Your self-employment or employment income was at least $5,000 for the year 2019 or in the past 12 months to the date of application.
- You have stopped working because of COVID-19related reasons, or you are eligible for Employment Insurance or sick benefits or have exhausted Employment Insurance Benefits or employment insurance fishing benefits.
The government of Canada made the introduction of the Canada Emergency Business Account (CEBA) to provide $40,000 interest-free emergency loans to small businesses. This program aims to protect jobs, keep employees on the payroll, and help them recover quickly.
The Federal Government of Canada has also introduced the Canada Emergency Commercial Rent Assistance (CECRA) to support small-scale businesses in Canada. All the companies that have seen a decline of 70% revenue in their business have to pay 25% of their rent. A survey shows that around 40% of 1 million small businesses have suffered a decline of 70% in revenue.
As the economy is re-opening, Canada’s government has extended and redesigned its Canada Emergency Wage Subsidy (CEWS) program. It has broadened the program, and under this program, every person who experienced a drop in the revenue can apply for the subsidy. The employees who are hard hit can now apply for a top-up of 25%. The employees are also assured that they will receive subsidy more than what they received before. The subsidy amount will depend on the loss of revenue. Hence, there is more flexibility in the program.
The government is urging employers to look into the program so that their workers can benefit from it. They have also launched a CEWS calculator that will guide the workers with step-by-step procedures and tell them about the subsidy they are eligible for.
It has been reported that 275,000 employees have been given subsidies under the CEWS program. With the new reformed program, many more workers and employers will be benefited from the program. It is advisable for everyone hit by the COVID-19 crisis to apply for this program and benefit from the subsidy you are eligible for.
Need for Change in Support Programs
There are a few loopholes in the CERB program as many workers, students, and seniors in need do not qualify for this program. It has resulted in a lot of anger and frustration in small business owners as the support they need from the government is not there. They call to change the program and extend to even those who have not found work and increase the amount people can earn to receive these benefits.
Kimberley Sabo, a specialty tea seller who sells at fairs and does not employ anyone, was forced to shut her business as she was not eligible to avail of the benefits of the support program. With the decline in the sales due to the pandemic, she was hoping to get relief from CEBA, but she doesn’t qualify for the minimum payroll, so she has to shut down ultimately.
According to Reuters.com, around 15% of the employed and self-employed workforce in Canada do not qualify for these benefits.
Many small scale businesses in Canada do not fit the criteria for CEBA assistance as their payroll is outside the requirements of CEBA, and their revenue is not decreased enough to be eligible or are not old enough to qualify for a 75% wage subsidy.
For Canada Emergency Commercial Rent Assistance, the government’s main goal should be to help deliver the programs to the tenant with flexibility instead of putting strict rules. It will be a very crucial step towards the recovery of the economy by helping those businesses who require support to get things moving back to normal. CFIB estimates that nearly 19% of the small businesses will fail if they do not get sufficient help from the relief program.
Demand for Change
The Canadian Federation of Independent Business has also introduced a petition calling the government to expand the availability of emergency assistance programs affecting small businesses. The petition has already gathered over 7,000 signatures. The petition calls for an extension of CERB for those who have not yet found work and an increase in the amount people can earn through the benefit.
The federation also demands an increase in the emergency loan amount available for small businesses through changes in CEBA. CFIB requires to raise the amount to $60,000 and for half of the amount to be forgiven after the potion is repaid. The federation wants the $30,000 to function as a grant and won’t increase debt for small businesses.
There is a need to change the present criteria as a 70% decline in revenue leaves many businesses out of the bracket. Current programs are very complicated, and many small businesses in need cannot benefit from it.
There is a demand for tenants to apply for themselves instead of depending on landlords. The application process also needs to be simplified so that more people can benefit from it. Even though businesses are opening, their sales are relatively meager. There is a need for extending the program until it gets bad but with the changes.
We are hopeful that all the affected employers and workers from COVID-19 in Canada will benefit more from the programs than before and overcome the losses with time.