The federal government’s emergency aid package is welcome and important, but won’t be enough to save many of the businesses hit hard by the coronavirus pandemic, experts say.
A wage subsidy, tax deferrals and $10 billion available in loans to keep companies afloat were all part of the federal government’s economic support package for small businesses announced Wednesday and late last week.
Experts say they’re all welcome and important measures, but won’t be enough to save many of the companies hit hard by the coronavirus pandemic.
“Even with this package, a lot of businesses are going to have to make painful decisions,” said Frances Donald, chief economist at Manulife Investment Management. “It’s just not enough.”
Overall, the government is putting up $82 billion to help fight the financial impact of COVID-19.
That figure includes a tax deferral program Ottawa estimates will leave $55 billion in the hands of Canadians, as well as $27 billion in direct support.
Of the direct support, up to $10 billion is allocated to cover employment insurance benefits for people who cannot work because of illness, self-isolation, caring for a sick person or child-care issues. Another $5 billion is set aside for contractors, freelancers and gig economy workers, who would not have been covered under existing EI rules.
Many workers and small-business operators have experienced an immediate cash flow crisis.
“It’s really amazing how quickly things happened,” said Allan Skok, who runs a chain of day spas. “Never in my wildest dreams would I have thought that things would have moved as quickly as they did.”
There are two key types of help for small businesses: a loan program and a wage subsidy.
Finance Minister Bill Morneau announced that it will see the government directly pay 10 per cent of salaries for some small businesses, non-profit organizations and charities that keep workers on the payroll.
“We need businesses to keep going so they can keep employees on staff,” said Morneau. “This is effective immediately and will help keep Canadians employed.”
The subsidy will last for three months, with maximums of $1,375 per e