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Cash crisis and debt nightmares top Ontario small business concerns

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Only 18 per cent fully open, and 40 per cent worried about permanent closure as CFIB calls for immediate government support

Toronto, April 7, 2020 – Monthly bills and mounting debt top a long list of small business worries, according to a new survey from the Canadian Federation of Independent Business (CFIB). 

“Ontario is facing both a health and an economic crisis, and governments need to tackle both emergencies together now,” said Julie Kwiecinski, CFIB director of provincial affairs for Ontario. “Main Street businesses are fighting to survive and need immediate and broad-based relief that goes beyond deferrals that still have to be paid later this year under current timelines.” 

Rent is one of the biggest month-to-month costs a small business must bear. For those that pay rent in Ontario (close to 70 per cent of those surveyed), 64 per cent paid or plan to pay in full for April. Only some (roughly 20 per cent) have deferral agreements in place with landlords for full or partial payment. Most of the rest could not pay their rent in full and have no deferral agreement in place (11 per cent). 

“April rent was really tough, and many businesses will find May an absolute nightmare if things don’t change,” said Ryan Mallough, CFIB director of provincial affairs for Ontario. “Ontario should move to reduce property taxes and introduce a rent subsidy – like the one opposition leader Andrea Horwath proposed over the weekend – for hard hit businesses, like those forced to close by provincial essential services rules.”

Survey results also show that many Ontario small businesses plan to use the Canada Emergency Business Account (43 per cent) with many others wanting to use it, but not being eligible (21 per cent). Only 10 per cent say they don’t need it, with 20 per cent unsure. Once running, the program will provide up to $40,000 in interest-free loans with up to $10,000 forgivable. However, it will be restricted to businesses with payroll between $50,000 and $1 million. 

Based on feedback from small business members, CFIB recommends the following actions: 

  • The Ontario government should provide rent subsidies to help businesses hardest hit by the COVID-19 crisis. Across Canada, CFIB continues to recommend provincial hardship grants of $5,000 a month to businesses provincial governments forced to fully or partially close and those most affected by revenue losses. Ontario’s NDP opposition suggested a similar measure providing for a 75 per cent subsidy up to $10,000/month in rent for small businesses, which CFIB supports.
  • The Ontario government should move immediately to reduce commercial property taxes by a minimum of 25 per cent with the requirement that the relief be passed on to commercial renters.  
  • The federal government should make the Canada Emergency Business Account (CEBA) loans available as soon as possible, eliminate the payroll test, and make the $10,000 forgivable portion a simple grant that is available quickly with a minimum of qualification criteria and administrative hassle. 
  • The federal government should allow business owners and the self-employed to have some limited earnings while remaining eligible for the Canada Emergency Response Benefit (CERB).

Other Ontario survey results relevant to cash flow and debt include: 

  • 30 per cent report they do not have cash flow to cover April bills;
  • 26 per cent report they are not having an easy time with banks;
  • 46 per cent do not think the Ontario government is doing enough to help business;
  • 63 per cent do not think they will be able to make up for lost revenues when the COVID-19 emergency is over; and
  • 90 per cent are worried customers will reduce or delay spending, even when COVID-19 is over.

“If we don’t do a good job helping Main Street businesses survive this today, the cascading effects will be felt for years to come. They are the job providers and creators for millions of Canadians. They are the connective tissue of our communities. Small business really is too big to fail,” said Mallough.

For media inquiries or interviews, please contact:
Milena Stanoeva, CFIB
647-464-2814
[email protected]

About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small- and medium-sized businesses with 110,000 members across every industry and region, including 42,000 in Ontario. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.