CFIB urges federal government to relax restrictions on Canada Emergency Business Accounts

The Canadian Federation of Independent Business has called on the federal government to make it easier for small business owners to access Canada Emergency Business Accounts during the COVID-19 pandemic.

Federal finance minister Bill Morneau introduced the new measures on April 9. They allow business owners to apply for an interest-free loan of up to $40,000 until Dec. 31, 2022. Up to $10,000 will be refundable if the loan is repaid by the end of 2020.

However, the CFIB says the eligibility requirements are so strict many small business owners can’t meet them, and they’re asking Morneau to revisit the issue.

“We’re hearing from many hard-hit businesses that need the loan, but don’t qualify, whether it’s because they’re too small or too large or don’t have the payroll,” said Marilyn Braun-Pollon, the CFIB vice-president for Western Canada and Agri-Business. “The criteria that made sense three weeks ago doesn’t make much sense today, so we’re hoping that the federal government will change the program to cover more of those in need.”

Only businesses with a payroll of between $50,000 and $1-million for the 2019 calendar year are eligible for the loans, which are approved by banks and backed by the federal government. Businesses that were behind payments on an existing loan as of March 1, or sole proprietors who use personal chequing accounts to run their business are not eligible.

Braun-Pollon said roughly one in five small business owners won’t qualify for the funds, which is a problem when 80 per cent of small businesses are partially or completely closed. She added that the accounts are a welcome relief for small businesses who can access them, but they don’t do much for smaller businesses owned and operated by one or two people.

“Many are telling us that the eligibility requirements are really shutting them out at a time where they desperately need support,” she said. “As we enter the second month of a virtual shutdown of most small businesses, what we need is all solutions to be structured with flexibility in mind.”

Instead, the CFIB wants the federal government to either drop the minimum payroll requirement to $10,000, or eliminate it entirely. They’d also like to see the $1 million limit increased to $2.5 million to help businesses that have been completely shut down.

They also want the government to create a $10,000 grant that is immediately accessible, which can help cover costs like rent.

Small businesses in Saskatchewan have been hit harder than those in the rest of the country. CFIB surveys show the COVID-19 restrictions have cost them an average of $216,000. That’s slightly above the national average of $206,000.

“There are about three or four provinces that are higher than that, so we are above the average, and every day that the support isn’t there, it’s an added cost,” Braun-Pollon explained.

She added that they are grateful for the Saskatchewan Small Business Emergency Payment Program that the provincial government created on April 9. The program provides grants to cover 15 per cent of a business’ monthly sales revenue, to a maximum of $5,000. Businesses must have less than 500 employees, and committed to reopening once the COVID-19 public health orders are cancelled.

Braun-Pollon added that they’re optimistic the federal government will relax their requirements, since they did something similar with the Canada Emergency Wage Subsidy on April 8.

At the time, Mary Ng, the minister of small business, export promotion and international trade, said the government would do whatever it took to support the Canadian economy, even if it meant tinkering with current programs.

“We continue to listen, and we’ll be there for Canadian businesses every step of the way through this unprecedented challenge,” she said.

According to the CFIB, 29 per cent of businesses are fully open in Saskatchewan, while 53 are partially open and 16 are fully closed. Roughly 13 per cent have no sales or revenues, and 41 per cent are uncertain if they will survive past May if the COVID-19 restrictions remain in place.