Small businesses in Atlantic Canada are shutting their doors, laying off staff and bracing for an unprecedented shutdown, with some fearing they may not survive as COVID-19 continues its rampage across the globe.
New research released Wednesday shows business confidence across the country has dropped precipitously, with small business sentiment falling below record lows reported during the 2008 and 1990 recessions.
“It’s carnage,” said Jordi Morgan, vice-president of the Atlantic Canada region for the Canadian Federation of Independent Business.
"Business confidence has tanked. It's bad."
More than half of small businesses are partially or completely closed, the organization’s latest survey shows, with 52 per cent laying off some or all staff.
With a higher proportion of jobs stemming from smaller businesses in Atlantic Canada, the economic impact of COVID-19 on the four eastern-most provinces could be dire.
The federal government unveiled a sweeping $82-billion economic aid package last week that includes assistance for employers to reduce payroll costs and retain workers. Provincial governments have also taken steps to shore up the local economy.
But some business owners say more should be done for both businesses and workers.
Hoping to offer hope
In a bid to offer small businesses a glimmer of hope in an increasingly grim situation, CFIB has cobbled together a set of additional measures governments could take to help mitigate the impact on businesses.
“The situation requires much more robust and direct financial assistance to small business to avoid widespread catastrophe in this sector,” Morgan said.
He added that the organization is “gathering critical information and putting recommendations in front of decision makers to help small business as quickly as possible.”
While bigger companies may be better equipped to withstand a temporary halt of business, small businesses are scrambling to get by with help from customers and government.
Jim Cormier of the Retail Council of Canada said with the exception of grocery stores and pharmacies, the retail sector is being hit hard across the board.
“From small independent stores right up through to the largest retailers in the world, it’s really tough,” he said.
Sheri Somerville, chief executive officer of Atlantic Chamber of Commerce, said a number of campaigns have popped up across the region to get customers supporting local businesses.
“The critical thing we need to do is keep cash in the hands of companies,” she said. “Cash flow and liquidity is critical.”
Somerville applauded the federal government for quickly introducing new measures to support businesses, but she said more is needed.
Right-sizing wage subsidies
For example, she said while a 10 per cent wage subsidy might be helpful for bigger businesses, she said smaller businesses with thin margins might be better off just laying off staff.
European countries have ushered in larger wage subsidies, with Denmark offering up to a 75 per cent wage subsidy in some instances.
Marie Mullally, president and CEO of CUA, said loss of income and unemployment are key indicators that the economy could be headed into a recession.
She called it a “vicious cycle” for small businesses.
“If consumers aren’t spending because they don’t have a job or income, then small businesses won’t have revenue or growth to be sustainable,” Mullally said.
“If there’s one sector that’s feeling this today, it’s small businesses because they don’t have the backstop or the business model to support the current economic challenges.”
But she said if the situation drags on for several months, “even the most stable company is going to feel quite significantly the impact of what is happening.”
CUA has ushered in a number of measures to help customers, including deferring mortgage payments, adding overdraft to accounts and increasing loans.
