Tips for Small Business Owners Impacted by COVID-19
Updated: Mar 30, 2020
We talk every day with our network members and small businesses in the community and we all know that the COVID-19 health crisis is creating huge economic challenges for small medium size businesses across our country. Recent surveys indicated that 43% of businesses reduced staff hours, while others are forced to lay off thousands of workers.
To survive this time of uncertainty we need to panic less and prepare more. If you do not have a business continuity plan and ideas to continue pushing your business through this crisis, it is time to have a plan. We have summarized some resources, here, which could be useful.
To quell the public’s anxiety and to support businesses, the government is stepping up to assist. Prime Minister Trudeau is pledging $82 billion dollars in support for businesses and individuals. $27 billion will go in direct support to Canadian workers and businesses.
The government will provide support to Canadian companies through loans, guarantees or insurance policies during these challenging times. In order to make an informed decision and a plan here is a look at a series of measures which you could benefit from:
There will be a temporary wage subsidy for three months to employers in order to prevent layoffs.
Waiving the one-week waiting period and the requirement for a medical certificate for employment insurance (EI) sickness benefits to provide immediate support for workers in quarantine. Introducing an Emergency Support Benefit to provide support to workers facing unemployment who are not eligible for EI.
Supporting businesses through the Canada Account, an Export Development Canada (EDC) program that supports Canadian exporters.
The government is recommending a payroll subsidy to any small, eligible business. Within a three-month time frame, employers should expect the subsidy to be the equivalent of 10% remuneration: with a maximum of $1,375 for each employee and $25,000 for each employer. People who will also benefit from this are corporations who qualify for a small business deduction, non-for-profit organizations and charities.
The Canada Revenue Agency will allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020.
Proceeding March 18, for the next four weeks CRA will not instigate any post assessment of GST/HST or income tax audits. Audits will be briefly postponed, and no contact with taxpayers and/or representatives.
$10 billion dollars in additional support will be provided by the Business Development Bank of Canada and the Export Development Canada through the Business Credit Availability Program for small businesses. Farm Credit Canada will increase its near term-credit for argi-food and farm sectors.
The Domestic Stability Buffer will be lowered by 1.25% by The Office of Superintendent of Finance Institution (OSFI). This will let the big banks to add an additional lending amount of $300 billion.
Banks have reduced interest rates: - Ex. Bank of Canada lowered their interest rate to 0.75%
Mayor Jim Watson will chair with councilor Eli El-Chantiry on an “economic task force,” to advise city staff on how to help the business community. “Staff will assess measures to support locally owned shops and restaurants and evaluate possible tax deferral measures to help some small businesses manage their cash flow and payroll obligations.”
An additional option to consider for entrepreneurs is BDC’s new capital support. Fundamentally it’s a loan that will be provided based on your financial situation over the next few months. For whatever reason your business needs money, whether it be to pay your employees, get essential tech. support for your home growing business or for the usual operating costs BDC is willing to loan you enough money to get through COVID-19.
More benefits include:
Floating rate only (base minus 1.75%) – currently the total rate is 3.3%.
12 months initial principle postponement.
24-month amortization after initial postponement, with 40% payable over these 24 months and 60% payable in a balloon payment in the final month.
Personal guarantees are applicable
General Security Agreement.
Application fee: 0.5% of requested loan amount to be deducted from the proceeds of the disbursement.
Legal documents will be prepared by BDC. A fee of $500 per multiple applies.
More information can be found in the links below.
Looking to the internet is a key survive instinct for all business owners. When we find ourselves struggling and we don’t know what to do, we pull out our phones and with just a few taps the answer is on our screens. That is why it is important to learn research techniques in order to find the best sources of information we are looking for. A reliable source of information is, the Ottawa Business Journal (OBJ). The OBJ is starting a series about coping with Covid-19, their first video Tips on Maintaining Cash Flow can be found in the link below.
The internet, whether we like it or not has become our best friend. If there is a way, businesses should start moving, it is virtually. There are many interesting and innovating stories from businesses overcoming this financial calamity; one restaurant turned their seating area into a grocery store while still making lunch deliveries. There are many solutions to our problems, it just involves a little creativity and a little help. So, check out the many links below for resources to help keep your business afloat.
CTV News Ottawa, Josh Pringle. (Monday, March 16, 2020 4:30PM EDT 6:30PM) City Assessing Support Measures for Small Businesses During Covid-19 https://ottawa.ctvnews.ca/city-assessing-support-measures-for-small-businesses-during-covid-19-mayor-1.4855231
CTV News, Basem Boshra. (Tuesday, March 17, 2020) Covid-19: Quarter of Canadian Small Businesses say They Could go Under in a Month https://montreal.ctvnews.ca/covid-19-quarter-of-canadian-small-businesses-say-they-could-go-under-in-a-month-1.4856181
BDC’s capital support information: https://www.bdc.ca/en/pages/special-support.aspx?special-initiative=covid19
OBJ, Michael Curran. (Tuesday, March 17, 2020) Coping with Covid-19: Tips on Maintaining low Cash Flow https://www.obj.ca/article/coping-covid-19-tips-maintaining-cash-flow
For more information form Government of Canada Click here
Extra Tips for Local Small Restaurants
Consider connecting with food delivery services (the new Love Local Delivery, DoorDash, Uber Eats, SkipTheDishes...)
Include a delivery fee in the total price
Reach out to insurance companies ASAP to get coverage for delivery drivers
Document everything happening with your business as a result of COVID-19, for future aid and relief program applications (e.g. detailed Excel sheet)
Make a list of your expenditures and see where you can save by negotiating costs with banks, suppliers, landlords, software providers and utility companies
Utilize social media to promote your products and services
Make sure that your point-of-sales system is capable of handling delivery payments without direct contact (e.g. online or phone payment or e-transfer, etc.)
Consider creating "Family sized" meals rather then individual portions
If possible, switch your production to frozen meals
Be creative, for example, pizzerias could deliver instead separate raw ingredients for children and parents to cook together
Why not create a donation program to support our health providers (e.g. clients donate and you prepare an deliver to the hospitals)