It is equally heartening to note that both the federal and provincial governments have not been found wanting in lending a much-needed helping hand to business owners to alleviate the economic devastation that will be caused by pandemic.

Policy initiatives

Among the more significant announcements made both by the federal and provincial governments are:

Federal

• 75% wage subsidy available to businesses that show a 30% revenue decrease due to COVID-19. The subsidy will cover 75% of the first $58,700 of salary earned per employee. This amounts to weekly payments of up to $847. This applies to businesses regardless of size, not-for-profits, and charities. The subsidy will be back dated to March 15, 2020.

• Launch of the new Canada Emergency Business Account which is expected to provide loans of up to $40,000 for small businesses, which will be interest-free for the first year and up to $10,000 of the principal could be waived for repayment.

• The Canada Emergency Response Benefit that will provide a taxable benefit of up to $2,000 per month for up to four months for workers who are earning no income as a result of the COVID-19 pandemic.

Provincial

• $17 billion in new economic measures for businesses to help stabilize the health care system, communities and the economy during the COVID-19 pandemic. These include:

* Increasing the Employer Health Tax (EHT) exemption for 2020 from $490,000 to $1 million. EHT is a deductible payroll tax in Ontario that provides partial funding for the Ontario Health Insurance Plan.

* Employers may defer Workplace Safety and Insurance Board (WSIB) payments for up to six months, and defer premium reporting and payments until August 31, 2020.

* Setting electricity prices for small business time-of-use customers at the lowest rate, 24 hours a day for 45 days and providing an additional $1.5 billion for electricity cost relief programs.

* Providing five months of interest and penalty relief for businesses to file and make payments for the majority of provincially administered taxes.

Our Chamber has complied all the major announcements made by the federal government and other agencies on a dedicated COVID-19 page. Click here to read more: COVID-19

Focus on small business

Small businesses are the engine of growth of the Canadian economy, employing approximately 70 percent of the Canadian working age population. It is pertinent to note in this context that small businesses can sustain themselves only when there is a regular cash flow. If cash flows stopped, many businesses would turn belly up rapidly because their expenses on rent, utilities, etc. would remain fixed.

According to two recent surveys, conducted by the Canadian Federation of Independent Business and the Save Small Business, 23 to 38 percent small business owners would not be able to pay their rent in April, and that percentage would jump to 70 percent in May. According to a 2016 JPMorgan study, 25 per cent of small businesses have less than two weeks cash on hand, and an additional 50 per cent have less than a month.

While there is no denying that the measures announced by the federal and provincial governments are welcome and laudatory, it is necessary to point out that a more nuanced approach is required to deal with the pandemic’s impact. Under the circumstances that we face, it may not be possible to have a one-size-fits-all approach to dealing with the economic impact of COVID-19, especially with regard to small businesses.

This is because the impact of the pandemic on a small business will be determined by the following factors:

• Geography: A small business in Toronto will be impacted differently than the impact on a small business in Chatham Kent.

• # of employees: A small business that employs 10 employees will be impacted differently than the one that employs one person.

• Revenue: A small business that has a turnover of $5,000 per day will be impacted differently than the one that has a revenue of $500 a day.

Already, small business associations across Canada are pointing out that the $40,000 loan to small businesses is placing the burden of economic revival squarely on small business owners who would be required to payback the loan.

It is being pointed out that “Businesses have closed to protect people in a public-health crisis. The burden should be shared as equitably as possible – banks, landlords, insurance companies and governments should all contribute. Loans, no matter how favourable, place the burden entirely on small-business owners.”

Duration of pandemic

There will be other factors, too, and therefore a nuanced approach is required to alleviate the expected economic woes. Also, it is unclear how sustainable these measures are going to be. It is necessary to factor into the policy equation the period for which these measures are being delivered by the governments to businesses.

From all the present indications and projections, the pandemic isn’t going away in a hurry. Dr. Howard Njoo, Canada’s deputy chief public health officer, has declared that “if you look at the science and the evidence … it’s not days and weeks, but certainly months that this pandemic will endure.”  

This uncertainty over the prevalence of the pandemic is a major cause of concern for the Canadian economy. Under normal circumstances, the federal government would have presented its annual budget this week. According to some estimates, the deficit would have been in the range of $20 - $30 billion, and the government would have attempted to address economic imperatives.

The COVID-19 pandemic, and the government spending to provide a stimulus to the economy will cost $200 billion, and that is not counting the government assistance needed to revive hospitality, airlines and other sectors.

While acknowledging the significant work that has already been done to help small businesses, the Indo-Canada Chamber of Commerce is seeking a more nuanced policy directions from the federal and provincial governments that can make life easier for the small business owner.