Canadian businesses affected by pandemic call for eleventh hour aid extension
TORONTO, July 23 (Reuters) – Richard Vanderlubbe, owner of Canadian travel agency Tripcentral.ca, has had to reduce active staff to around 15% of the total workforce and close all physical locations since the start of the pandemic coronavirus, despite the wage subsidy and business loan.
As the Canadian economy is gradually reopening, the government is ending these programs. But Vanderlubbe and other companies hardest hit by the pandemic are calling for support to be extended until all restrictions are lifted, warning that breaking the rule could stifle many of them in the eleventh time.
“The subsidies have been a lifeline,” Vanderlubbe said, especially as travel agency revenues evaporated even as staff had to keep working. “The business has to go into more debt or I have to put personal assets in the business… or lose them,” he added.
Although the businesses most affected by the pandemic are mainly linked to tourism, events and leisure, they accounted for less than 5% of the economy in 2020. Yet they employed around 1.5 million of the 18 million people in the world. Canada.
Their struggles stand in stark contrast to much of the rest of the economy, which is rebounding strongly, with employment below 1.8% of pre-pandemic levels and another recovery expected. Read more
“It’s one thing to look at things macro and say it’s not a big impact, but it’s important for individual business owners,” said Ted Mallett, director of economic forecasting at the Conference. Board of Canada.
Nearly 60% of the most affected businesses will not survive if subsidies are not extended until 2021, surveys by the Coalition of Hardest Hit Business (CHHB) have shown.
“The schedule they came up with makes sense for 95% of the economy,” said Susie Grynol, Executive Director of the Hotel Association of Canada (HAC).
But “it does not make sense to invest in companies (the hardest hit) … and then drop them just before the finish line, which could lead to a collapse of the industry,” he said. -she adds.
Already, emergency wage and rent subsidies linked to the pandemic have fallen to 60% of eligible spending this month and are expected to drop to 20% by September. And the business loan program stopped accepting new applications on June 30.
Finance Minister Chrystia Freeland reiterated this week that the government is ready to extend support until the end of November if necessary.
Business lobby groups are calling for programs to remain for the businesses most affected.
“Politicians are understandably impatient to turn the page on this because these programs are very expensive and move on to other items on the agenda,” said CFIB CEO Dan Kelly. “So the momentum … to fix some of the programs seems to have slowed down.”
So far, the government has approved C $ 86 billion ($ 68.4 billion) in wage subsidies and C $ 48.4 billion in business loans, according to official data.
A few billion dollars in additional aid, introduced more recently for hard-hit industries and small businesses, is not enough, the business groups said.
“The number of bankruptcies has started to increase,” said Lori Sterling, senior counsel at the Bennett Jones law firm and former federal deputy minister of labor.
“It’s not huge at this point, but small businesses are predicting there will be a tsunami of bankruptcies,”
($ 1 = 1.2573 Canadian dollars)
Reporting by Nichola Saminather; Additional reporting by Julie Gordon and David Ljunggren; Editing by Denny Thomas and Marguerita Choy
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