New data: Small business reaction to federal wage subsidy mixed; removing barriers to access a priority

TORONTO, April 6, 2020 /CNW/ - Small businesses are divided on how helpful the Canada Emergency Wage Subsidy will be, with 29 per cent saying it will help them avoid further layoffs or recall staff, 37 per cent saying it will not help them, while 21 per cent are unsure, finds a new survey taken by the Canadian Federation of Independent Business (CFIB) over the weekend.

"The federal government took a big step by increasing the wage subsidy to 75 per cent and opening it up to businesses of all sizes and structures. It will help many, but there are still a lot of businesses in dire need of help that report they will not be able to access it," said CFIB president Dan Kelly. "In order to meet the program's objective of helping businesses retain staff and avoid layoffs, more work remains to be done to make this program successful."

For the 29 per cent of businesses reporting the CEWS would be helpful:

• 44 per cent said it will help them retain some staff still on payroll
• 35 per cent said it will help them retain all staff
• 29 per cent said it will help them recall some laid off staff
• 9 per cent said it will help them recall all laid off staff

For the 37 per cent of businesses reporting CEWS would not help them retain staff:

• 38 per cent said it is too late as layoffs have already happened and can't be easily reversed
• 30 per cent said they cannot wait up to six-weeks for the wage subsidy
• 21 per cent said they are worried they may not be able to prove the 30 per cent drop in revenue required to qualify
• 17 per cent said they would not qualify based on the current conditions
• 17 per cent said the wage support would not be enough to retain jobs

"Businesses are facing a lot of cost pressures right now. Only 19 per cent remain fully open, down from 21 per cent last week. We're hoping the government won't be too prescriptive when it interprets who qualifies for the subsidy," added Corinne Pohlmann, CFIB's senior vice-president of national affairs. "Some firms have very tight profit margins which makes it very difficult to continue to operate with a 30 per cent drop in revenues. New businesses, seasonal businesses, firms facing increasing costs and high-growth firms believe it will also be difficult to prove they meet the requirement."

To address these challenges, CFIB has brought several recommendations to government, urging officials to take quick action to ensure that business owners have confidence they can access the subsidy to protect jobs:

• Eliminate the 30 per cent test for small and medium-sized firms or the need for a test for firms ordered by governments to fully or partially close
• Create a different test to ensure that new or rapidly growing firms can access the support as well
• Ensure flexibility for firms with special circumstances, including those affected by major events in 2019, where accounting rules do not allow access, or facing giant increases in costs
• Reduce the 30 per cent test to 15 per cent for March to reflect that the major impacts on business began in mid-March

"The vast majority of small businesses have been deeply affected by COVID-19. They are worried for their employees and about their ability to ever reopen," concluded Kelly. "Right now, we need to quickly put in place the measures that will allow us to preserve our small businesses and keep them connected to their employees so we can recover once the crisis is over."

Read the full survey results for more details.

About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada's largest association of small and medium-sized businesses with 110,000 members 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.

SOURCE Canadian Federation of Independent Business

For media enquiries or interviews, please contact: Milena Stanoeva, CFIB, 647-464-2814, [email protected]

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