Businesses indirectly hit in lockdowns slipping through cracks of COVID supports

Click to play video: 'Ontario’s latest business supports found lacking by many'
Ontario’s latest business supports found lacking by many
WATCH: On Friday, Ontario announced it would soon offer $10,000 grants to companies forced to shut their doors by public health restrictions. But many say the money doesn't got so far enough – Jan 7, 2022

Two years into the COVID-19 pandemic, government responses still have gaps that fail to include some small businesses hit hardest by lockdowns and renewed restrictions tied to the Omicron wave, business owners and advocates say.

Liz Clark is the owner of Chair Decor, a linen supplier that works with venues and event spaces in southwest Ontario, catering specifically to weddings and major corporate functions.

Chair Decor doesn’t fall under any of the businesses specifically restricted in Ontario’s latest round of lockdowns, but with venues and weddings themselves subject to strict capacity limits to stem the Omicron tide, the impact on the supplier’s bottom line is obvious.

“Technically, I’m open. But are you really open when your clients aren’t open?” Clark tells Global News.

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“We are a supplier, so if our venues are closed, essentially we’re closed. And so we’ve been massively impacted since March of 2020.”

Liz Clark, owner of Chair Decor, says the provincial government is missing businesses like hers with its latest $10,000 support grant. Provided.

'The damage is the same'

While Ontario’s recently announced $10,000 Small Business Support Grant is available to restaurants, gyms and other businesses forced to close in the most recent provincial lockdown, there are no supports available at the provincial level for those, like Chair Decor, suffering knock-on effects.

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“Very simply, essential businesses allowed to remain open and those permitted to operate with capacity restrictions (e.g., discount and big box stores selling groceries, supermarkets, grocery stores, convenience stores, pharmacies) are not eligible,” a spokesperson for Ontario’s ministry of economic development, job creation and trade said in a statement to Global News asking why support businesses are not included in the grant.

The ministry says it expects 28,000 small businesses will qualify for its support grant.

Clark says she’s spoken to the Ontario government as an advocate for the wedding and events industry but says it’s “discouraging” to have not heard any acknowledgment from officials about this gap.

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Dan Kelly, president of the Canadian Federation of Independent Businesses (CFIB), says Chair Decor is not the only business falling through the cracks of the patchwork of COVID-19 support between the provinces and federal government.

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Kelly says he’s heard from dry cleaners suffering without a steady stream of office workers getting suits cleaned, and salons left empty as regulars stretch out their time between trims. While lockdowns, capacity restrictions and calls to work from home drag down their bottom line, he says there hasn’t been an appropriate lift in support for businesses hit by spillover effects.

“If your restaurant is locked down, you’ve got a $10,000 grant. But if your business supplies the restaurant industry and that’s your only customer, you get nothing,” Kelly says.

“The support grant for small businesses needs to be available to businesses, all businesses, that have been … either directly or indirectly affected by these restrictions. The damage is the same.”

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While the federal government’s Local Lockdown Benefit is reserved for businesses subject to capacity limits, other programs such as the Hardest Hit Business Recovery Program and the Tourism and Hospitality Recovery Program are based on demonstrated business declines.

Clark says a model like this is more suitable for businesses like hers that are not immediately thought of as disadvantaged in a lockdown.

“Those programs are structured around a numbers game, really, and it is much more beneficial for companies like myself,” she says of federal support she’s been able to tap.

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Sector-specific vs. revenue decline

The reality is similar in British Columbia, which saw applications for a small business support grant open as closures were extended last week.

Though restrictions are more limited in B.C. than Ontario, with restaurants allowed to continue indoor dining, only a narrow subsection of businesses are eligible for the grant.

“We know businesses across all sectors and in all areas of B.C. have been greatly affected by the pandemic,” a spokesperson for the province’s ministry of jobs, economic recovery and innovation said in a statement.

“While many businesses were able to stay open or reopen early in the pandemic, bars, nightclubs, gyms, fitness centres and dance studios have been among the hardest hit of businesses.”

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B.C.’s recovery grant, the spokesperson added, is meant to “complement” existing programs at the federal level.

Kelly says that some programs, at both the provincial and federal levels, are more closely tied to revenue decline than a sector-specific support.

He points to New Brunswick, which went into lockdown last week with a $10,000 grant available to a swath of businesses that could point to any revenue decline of 20 per cent during the period.

No support for new businesses

Kelly notes that the feds have yet to fix one glaring aspect of its COVID-19 response, which sees existing supports limited to businesses that were open pre-pandemic. Any owner that took a chance to set up shop during an upswing of the pandemic, perhaps, remains locked out of any federal support program.

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CFIB estimates that 180,000 businesses will close their doors in connection with the pandemic. Kelly says now is the time we should be encouraging entrepreneurs to get into the game and showing them that the government has their back.

“Some have argued, ‘well, you should have known better that you’re in the pandemic.’ But if we have that attitude, who’s going to be crazy enough to start a business?” Kelly asks.

“If we don’t encourage entrepreneurs to do this, my goodness, what a gap we’re going to have. We’re going to be digging our way out of this for years and years and years.”

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Global News asked Finance Minister Chrystia Freeland whether there were any plans to expand eligibility for any supports to include new businesses started during the pandemic, and was pointed to a Dec. 22, 2021 speech from the deputy prime minister.

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ʺThe support programs we have introduced are for businesses that were created before the onset of COVID-19, when no one knew that we would experience a pandemic,” Freeland responded in French.

“We have to have data to be able to make a comparison and we find that the fairest approach is one that uses a comparison between current revenues with revenues before the pandemic.”

Debt relief needed, CFIB says

Beyond the restrictions, the shoe waiting to drop on the other side of the pandemic is small business debt load. CFIB estimates that the average small Canadian business had to take on debt of $170,000 to make it through the successive lockdowns over the past two years.

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Kelly and the CFIB are lobbying Freeland to reopen the Canada Emergency Bank Account for new loans of up to $80,000 in total and increase the forgivable portion to 50 per cent of the principal amount.

Clark says Chair Decor is carrying more debt today than it has in the past six years she has owned it.

While she says it was a significant relief when the federal government announced last week that businesses would have an extra year to repay their CEBA loans, she says moves from the feds have not been enough to give the business confidence heading into what was supposed to have been a banner 2022.

“We’ve been very smart with our cash flow and we are able to stay afloat. We are taking on more risk this time around by keeping staff around,” Clark says, noting the challenge of letting staff go and hoping they return.

“So there is more risk right now as we try to make it through this lockdown,” Clark says.

She believes the biggest factor in whether Chair Decor stays in business is clarity on future restrictions from the province.

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Clark says she would like to see a clear plan from the province on how to manage successive waves of the virus without a constant need to re-enter lockdown. Only that will provide businesses with enough foresight to hire, hold on to coveted employees and chart a path out of debt.

“We want to be open. We want to be given the opportunity to earn revenue, to work, to employ people, and that’s the ultimate goal,” she says.

“So I really hope that we can say that this is the last lockdown, and hopefully we can start to move on, learn to live with this and start to operate businesses again and contribute to the economy.”

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