30 Percent Of Small Businesses Don’t Have The Cash To Cover April Bills
SAINT JOHN — Small businesses across the country are worried about their monthly bills and mounting debt according to the latest survey done by the Canadian Federation of Independent Business (CFIB) — and the organization says it’s time for both the federal and provincial governments to give more support.
This is the fourth time that CFIB has surveyed its members on the COVID-19 situation. Many of them are in “dire straits” as the situation evolves, says Louis-Philippe Gauthier, CFIB’s director of provincial affairs for New Brunswick and Prince Edward Island.
“As you can expect … as the government progressively shut down areas of business and as the public health response has evolved, the reality of business owners has also evolved,” said Gauthier in an interview with Huddle.
“Many, many, many businesses are having cash flow issues evidently because they are essentially not operating. The recent data that we gathered this weekend indicates that we only have 20 percent of businesses that are fully open.”
The survey found that 30 percent do not have the cash flow to pay April bills and 39 percent are worried about closing their businesses for good.
“That reality of small business owners not having the runway to make it through a short period of time is very real,” said Gauthier. “And as we hit April 1 when rent was due, this reality came into focus and out data basically reflect that. It’s very painful.”
The new survey found that 44 percent of small businesses plan to use the federal government’s Canada Emergency Business Account to help stay afloat. However, 20 percent said they wanted to use it, but were not eligible. Only 11 percent say they don’t need it and the rest were unsure.
Once running, the program will provide up to $40,000 in interest-free loans with up to $10,000 forgivable. However, it’s restricted to businesses with payroll between $50,000 and $1-million. CFIB is advocating to change that.
“We’re asking them to modify that one to remove the payroll test … that should just be removed and they should be making at least $10,000 of that forgivable loan,” said Gauthier.
Other measures CFIB is advocating for include:
- That provinces provide rent subsidies to cover fixed costs of businesses hard hit by the COVID-19 crisis. CFIB is recommending 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.
- 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 to immediately reduce commercial property taxes by a minimum of 25 percent with the criteria that the relief be passed on to commercial renters.
“I don’t we’ve ever seen a time in history where government programs are being created, adjusted and modified as quickly had they have been. From that perspective, we’re supportive of all the efforts,” said Gauthier.
“The reality is, as the technical details of all these programs come out … we’re constantly providing feedback [from our members] to the federal government and the provincial governments to adjust the programs that they’re doing.”
CFIB is also advocating that federal and provincial governments move away from offering deferrals and loans to support businesses and instead offer things like grants. Their survey found 63 percent of small businesses do not think they will be able to make up for lost revenues when the COVID-19 emergency is over. Ninety percent are worried customers will reduce or delay spending, even when COVID-19 is over.
Gauthier said payment deferrals and loans are only pushing the problems further way for businesses to have to deal with later when it may not be any easier.
“Serious consideration has to made towards moving away from deferrals and loans and moving to the direction of grants,” he said. “In a lot of instances, it’s just shoving the problem forward and whenever we hit the moment where a business can restart. The full societal costs of COVID-19 should not be born by the businesses.”