Cash crisis and debt nightmares top Sask small business concerns; more help needed immediately

Only 30 per cent fully open, 26 per cent do not have cash flow to pay April bills and 44 per cent worried about permanent closure

Regina, April 7, 2020 – Monthly bills and mounting debt top a long list of small business worries, finds a new survey taken by the Canadian Federation of Independent Business (CFIB) over the weekend.

“Saskatchewan entrepreneurs are scared that the economics of the ongoing shutdown are unsustainable,” said Laura Jones, CFIB executive vice-president. “Broadly speaking there are three big challenges—relief is slow coming for bills due now, people are falling through government eligibility cracks, and too much of the relief is in the form of deferrals and loans, which just adds to the fear of coming out of this crisis with a mountain of debt that will be difficult or impossible to repay.” 

Survey results show that 38 per cent of Saskatchewan small businesses plan to use the Canada Emergency Business Account (44% nationally) with many others wanting to use it, but not being eligible (17 per cent). Only 8 per cent say they don’t need it with the rest unsure. Once running, the program will provide up to $40,000 in interest-free loans with up to $10,000 forgivable. However, it is restricted to businesses with payroll between $50,000 and $1 million.

“These loans can’t be available fast enough and we strongly recommend eliminating the payroll test and making the $10,000 forgivable portion a simple grant that is available quickly,” added Jones.

Rent is one of the biggest month-to-month costs a small business needs to shoulder. For those that pay rent (close to 65 per cent of those surveyed across Canada) 61 per cent paid or plan to pay in full for April. About one in four have deferral agreements in place with landlords. Most of the rest could not pay their rent in full and don’t have an agreement in place (7%).

“April rent was really tough, and many businesses will find May a total nightmare if things don’t change,” said Marilyn Braun-Pollon, CFIB vice-president, Western Canada and Agri-business. “While we are pleased with the relief measures announced so far by the province and some municipalities, it is clear that more help is needed immediately.”

Other survey results relevant to cash flow and debt include:

• 26 per cent of Saskatchewan small businesses report they do not have cash flow to cover April bills (30% nationally);
• 48 per cent report having an easy time with banks (42% nationally) and 23 per cent report they are not (26% nationally);
• 55 per cent do not think the provincial government is doing enough to help business (50% nationally), 29 per cent think they are doing enough (32% nationally), 14 per cent don’t know (16% nationally);
• 63 per cent do not think they will be able to make up for lost revenues when the COVID-19 emergency is over (63% nationally); and
• 91 per cent are worried customers will reduce or delay spending, even when COVID-19 is over (90% nationally).

Based of feedback from small business members CFIB is making the following recommendations:

• 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;
• Provinces should provide rent subsidies to cover fixed costs of businesses hard hit by the COVID crisis. CFIB continues to recommend provincial hardship grants to those forced to fully or partially close by provincial governments 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 in rent for small business that CFIB supports;
• Business owners and the self-employed should be able to have some limited earnings while remaining eligible for the Canada Emergency Response Benefit (CERB);
• The provincial government should create temporary protections to ensure commercial tenants are not evicted during the COVID-19 crisis. For example, the New Brunswick government recently introduced eviction protection for commercial leases.

“If we don’t do a good job helping Saskatchewan 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,” Braun-Pollon concluded.

To arrange an interview with Marilyn Braun-Pollon, CFIB’s vice-president, Western Canada & Agri-business, please call (306) 539-6302 or email mssask@cfib.ca. You may follow CFIB Saskatchewan on Twitter at @cfibsk.

About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 110,000 members (5,250 in Saskatchewan) across every industry and region. 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.