Small businesses need better access to financial aids: advocates


Published April 14, 2020 at 10:59 pm

Many small businesses are unable to benefit from the Canada Emergency Business Accounts (CEBA) due to strict eligibility requirements. 

Many small businesses are unable to benefit from the Canada Emergency Business Accounts (CEBA) due to strict eligibility requirements. 

According to a report from the Canadian Federation of Independent Business (CFIB), only 20 per cent of businesses remain fully open, while 49 per cent are partially open, and 28 per cent have had to close completely. 

Additionally, 22 per cent of businesses have no revenue due to the pandemic, and 33 per cent have seen declines of 51 to 99 per cent of their gross revenues. 

Most alarming, 51 per cent of business owners have said they can’t confirm their business will survive if current restrictions remain in place until the end of May. 

However, in order to benefit from the CEBA, small businesses must have between $50,000 and $1 million in payroll to be eligible for a CEBA loan. 

“Nearly 80 per cent of small businesses are fully or partially closed due to COVID-19 with little or no revenue coming in, while their bills continue to pile up,” Dan Kelly, president of CFIB, said in a news release. 

“The Canada Emergency Business Accounts allow the banks to offer a loan of up to $40,000 backed by the federal government with no interest and up to $10,000 forgivable when fully repaid by December 2022. While more debt isn’t the answer for every business owner, thousands of small firms have applied for this much-needed lifeline. Unfortunately, the smallest businesses—those with payrolls under $50,000—are not eligible for the support,” he continued.

According to CFIB, this means nearly 20 per cent of businesses are ineligible for funding through the CEBA. 

Further, CFIB is urging the Government to amend the CEBA to include the following: 

  • Eliminate the payroll eligibility to access the loan, particularly the $50,000 minimum.
  • If a payroll test remains, drop the minimum payroll requirement to $10,000 and allow dividends paid to family working in the business to be included.
  • Increase the maximum threshold from $1 million to $2.5 million and/or consider alternative means of assisting firms (such as forgivable loans) that have been completely shut down but require larger amounts of cash to help them with their fixed costs.
  • Ensure all businesses have access regardless of where they bank, including through smaller credit unions
  • Allow businesses to use the loan to access $10,000 as a grant right away to help cover costs, including rent

“As we enter the second month of a virtual shut-down of most small businesses, all solutions need to be structured with flexibility in mind,” Kelly said. 

“The CEBA is a good initiative and could help many businesses hold on, if they are allowed to access the program,” he added. 

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