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Four ways Canadian governments can help small business survive COVID-19’s second wave

Our efforts to help small businesses survive the pandemic didn’t work. As we wind down the Save Small Business campaign, here’s what we learned and why the future can be different.

By Erin Millar, Jon Shell, Michael Smith and Ben Coli of SaveSmallBusiness.ca

“I have so much fear. How will I feed my family?”

Winding down Save Small Business

We’re writing this all down now because today, almost six months after we accidentally created a powerful grassroots coalition of tens of thousands of small business owners, we’re winding down the Save Small Business campaign.

The Save Small Business Campaign: Born Out of Desperation

We never set out to become small business advocates. But in mid-March it was clear to anyone with a small business background how devastating the shut-down would be. No one seemed to be paying attention, not the media (with some notable exceptions) and certainly not governments. We worried especially what COVID-19 would mean for businesses owned by women and other underrepresented people with less access to capital. It felt like war time, and saving small business felt like a calling. We’re not lobbyists, but rather a group of volunteers and small business owners. We didn’t know how to advocate for help, but we felt we had to try.

How the most important small business program was bungled

Save Small Business began with a simple petition asking for three things: a larger wage subsidy, help with fixed expenses like rent, and no-interest deferrals of debt payments. But once we surveyed the small business owners that signed that petition, it became clear that there was one issue that stood out: rent. 67% of business owners said rent relief was the most important potential government support, and nearly half said they wouldn’t survive without it. The much touted wage subsidy was the most important program for less than 10% of respondents.

Four problems with rent relief: (1) slow rollout; (2) provinces not showing up (3) over complicated paperwork; and (4) letting the banks off the hook

It would be another month, a full two months after these businesses closed because of COVID-19, before Minister Morneau announced details of how the government would help pay April, May and June rent via CECRA. While he should have focused on rent support as the most important issue facing small businesses, he prioritized other things.

What small businesses need to survive the next phase: confidence and cash

Looking ahead, there are two main issues where we think policy makers and advocates should focus: (1) making the economic response to future outbreaks less uncertain so small businesses can plan with confidence and (2) helping them navigate the massive build-up of deferrals incurred over the last six months.

Four recommendations for improving the government’s approach

Some of the government’s missteps are understandable: responding to a global pandemic is both new and incredibly challenging. However, we now have months of experience both here in Canada and from around the world. We know a lot more about this virus. It should be possible to create a playbook for responding to local outbreaks that account for the health, education and economic implications for that area. If this playbook were communicated, and businesses understood how they would be supported in the event of potential future shutdowns, they’d have the information they need to make a thoughtful choice about the future of their businesses.

  1. Listen to real people on the ground. Save Small Business has demonstrated that the government lacks a channel to hear from most small business owners. Many small businesses are not represented, whether because they are simply too small or don’t align with the narrow politics of the traditional business lobby. Whether or not the Liberal government likes the business lobby’s politics, it has a responsibility to listen to the broader small business community. And bankers, business consultants and big business advocates that have easy access to government don’t understand how small business actually operates. The government has an obligation to find new ways to listen to real small business owners, not only pay lip service to their self-appointed representatives.
  2. Put away the hammer, bring out the scalpel. The broad-stroke programs, like the Canadian Emergency Wage Subsidy, have provided billions in subsidies to profitable companies that did not need the support. In the panicked urgency of the early days of the crisis, wide-ranging, inclusive programs that enabled public health officials to shut everything down were understandable. Going forward, though, we know a lot more about this virus and we know we’re more likely to experience localized outbreaks. Melbourne, a city of five million people, is currently in complete shut-down to limit a localized outbreak. We don’t know how long it will take to produce and distribute a safe vaccine, so we need effective and efficient ways to manage the economic and public safety implications of these events. Think about a well-funded “economic SWAT team” that could help shut down businesses to protect the public while ensuring they are able to survive and support their employees, working in partnership with affected municipalities. The shift from frantic crisis management to strategic threat suppression needs to start now.
  3. Demand more from the financial industry. Canada’s banks and insurance companies benefited from their cozy relationship with the previous Finance Minister. While the banks avoided any real support to commercial landlords, and insurance companies refused to pay out business interruption insurance, no pressure came from the federal government. Meanwhile, massive debts have been racked up in the form of deferred rent as both landlords and tenants struggle with cash flow. As the economy re-opens, the finance industry should be forced to contribute in the form of commercial mortgage abatements to support the forgiveness of rent deferrals, and the payout of most business interruption insurance. When the dust settles, Canadians will seek answers as to why banks were allowed to continue to rack up huge profits while so many in the economy faced financial ruin. And the finance minister of the day had better hope that most Canadians don’t realize that the banks were paid millions in wage subsidies while they did so.

Written by

Entrepreneur, hopeful capitalist and aspiring economic justice activist

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