CFIB believes a properly designed wage subsidy is the single best measure govt can take to (a) protect/stress on employees (b) ensure the viability of SMEs through the crisis & (c) ensure the economy can quickly recover by getting people back to work immediately after the crisis.
But we have heard concerns from small business on how the 30% revenue drop test may not work in practice.
1. New businesses without a track record; 2. low margin firms where even a small drop in sales can require major layoffs; 3. revenue recognition rules showing income that might never be received or which doesn't bring in cash;
4. seasonal businesses or those coming off a difficult period last month or last year at this time; 5. businesses who can't predict with certainty their level of future revenue at this time.
The goal of this unprecedented and positive move is to give employers the means and confidence to retain their staff during the #COVID19 pandemic. If employers are not able to know with certainty whether they will qualify for the subsidy, many will be forced to layoff workers.
Wages are so significant an expense that getting it wrong or having your documentation of the revenue drop rejected on audit would put small businesses in risk of bankruptcy.
And for this to work, the support needs to be delivered quickly as small business cash flow is quickly running out (for those that haven't had that happen already).
CFIB suggests that small and medium-sized firms be exempted from the requirement to demonstrate a 30% revenue decline. It is important to note that the majority of small firms across Canada have been ordered to shut down operations anyway.
Even those that are open or partially open report giant increases in costs to keep operations running (eg. delivery services, higher wage bills, extra sanitation). I've heard from pharmacies that are struggling due to a small drop in sales, but giant hike in costs.
CFIB urges govt to keep this simple. Small firms are very grateful for the support, but we need to get this right. Hundreds of thousands of jobs are on the line. The future of many small firms and a quick recovery are on the line too.
