Government Support at <1% of Losses Won’t Save Small Businesses in Canada (and more loans are not the answer)

When Justin Trudeau announced supports for Canadians in the form of the CERB and the Wage Subsidy, the intention was clear. Canadians would receive income replacement relief in the form of monthly grants to replace income lost due to COVID-19 closures. This money was justifiably not given out as loans, as you don’t loan money to folks who have no ability to pay it back. With the Canadian Wage Subsidy, this income was restored up to a minimum of 75% of pre-pandemic levels.

Given small businesses account for around 70% of all jobs in Canada, why has the approach been so completely different for them? Small Business owners are typically individuals that earn less on average to comparable positions elsewhere in the economy. These businesses drive our local economies, but their owners are typically not wealthy people.

So far, aid for small businesses has largely been in the form of loans. With many sectors of the economy completely shut down for months, this has left small businesses with the incredibly cruel choice of going deeply into debt or closing the doors entirely.

My own small business, The Haunted Walk, has the unfortunate distinction of being both a small business and in the tourism sector, two of the hardest hit economically by this pandemic. The total aid we have received from all levels of government is less than 0.6% of the revenue we have lost. We are expected to make up for the other 99.4% in the form of loans, with no indication of how we will ever afford to pay them back. When we extrapolate our losses over the time period that will be required to return to pre-COVID levels of income, the outlook is even more grim.

Far worse than that shockingly low degree of support, is that it comes with a significant catch. We are still forced to pay 100% of most our business expenses. None of our five commercial landlords offered to participate in the federal rent relief program. In fact, two landlords proposed to raise our rent in the middle of this pandemic! Our insurance has refused our claim for losses and we are subject to many contracts and agreements made in a pre-COVID world.

How will this end? Unfortunately it already has for many of the small businesses that give life to our communities in a way that larger corporations never can. Our federal and provincial governments need to take immediate steps to prevent a cataclysmic and cascading failure of small businesses across the country. The math speaks for itself.

A good first step would be converting the loan aid already rolled out into grants for small businesses. If we want these businesses to survive, we need to stop building programs around the premise that small businesses without income should pay for a portion of any support scheme. The wage subsidy presumes that small business will continue to pay 25% of the cost of salaries, for example, despite having an income of less than zero. Extend this aid to beyond the point when reopening our businesses is possible so there is at least a chance for some recovery.

Let’s stop treating small business as less worthy than any other segment of the economy. How would most Canadians react if their supports at this time amounted to less than 1% of their income? They would be mad as hell, and that is why small businesses will not give up on this fight.

Glen Shackleton is the owner/founder of Haunted Walks Inc., a company that offers extraordinary tours in Ottawa, Kingston and Toronto.

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