Canada’s economic outlook is getting gloomier by the day. And across the country, entrepreneurs are desperately awaiting details from Ottawa on the government’s plan to keep their small businesses alive.
This week began with a significant announcement by Prime Minister Justin Trudeau, offering a 75 per cent subsidy on employee wages to businesses that qualify for the assistance. Beyond small businesses, that subsidy would also be available to large companies, as well as non-profit organizations and charities.
Eligible businesses will have to prove their revenue has dropped by at least 30 per cent.
But the federal government has yet to provide substantial details on how that money will flow to business owners. How and when they receive funds will be a key factor in determining if they can keep more employees on their payrolls.
Finance Minister Bill Morneau and Small Business Minister Mary Ng were supposed to provide an update on Tuesday. That update was eventually pushed back to Wednesday.
Dan Kelly, chief executive of the Canadian Federation of Independent Business (CFIB), told BNN Bloomberg in a television interview this week his organization is receiving 800 calls a day from concerned entrepreneurs. One small business owner we spoke with, who declined to comment, said their accountant has been sleeping at the office, trying to find ways to help clients avoid bankruptcy.
The government has said its wage subsidy will cover the first $58,700 of an employee’s salary, paying up to $847 a week (backdated to March 15th). It’s not yet clear what that would mean for employees whose income is often based on sales commissions or, say, tips that waiters rely on.
Also confusing to small businesses is how the government will determine the drop in a company’s revenue. For example, will it be based on performance in the same period last year? Or is it based on some longer period? What about businesses that have a history of lumpy revenue? And it’s also not clear if a business that lost a big new contract due to COVID-19 would qualify for the subsidy.
There’s no doubt this environment is challenging for lawmakers to navigate in real-time and clearly there’s been a need to further iron out the details.
But speak to any small business owner today and you’ll know what’s at stake. Fast clarification and quick access to funds could be the difference between survival and bankruptcy.
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