Federal aid programs not enough for all Alberta small businesses that were struggling pre-pandemic


This story is part of The Big Spend, a CBC News investigation examining the unprecedented $240 billion the federal government handed out during the first eight months of the pandemic. 

Many businesses in Alberta have been relying on federal aid programs to get through the pandemic — in some industries, more so than their counterparts in other provinces, data shows.

Still, some businesses in need of financial assistance in the province are still missing out on federal funds for a variety of reasons, such as not meeting program criteria and concerns about audit costs.

Alberta small businesses were already in a ‘dire situation’

For businesses across the country, federal aid programs have been both a sore point and a lifeline. 

In Alberta, where provincial deferral programs ended months ago, federal government supports have helped the business sector which had experienced years of recession even before COVID-19 struck.

“What that really points to is the fact that prior to the pandemic, Alberta small businesses were in a very dire situation, dealing with the impacts of a prolonged five-year economic recession, essentially,” said Annie Dormuth, Alberta provincial affairs director with Canadian Federation of Independent Business.  

“And now, of course, coupled with the pandemic, it has really pushed small businesses almost to a near-breaking point.” 

One of the most popular programs in Alberta has been Canadian Emergency Wage Subsidy (CEWS), which offers to pay up to 75 per cent of employees’ salaries.

Twenty-seven per cent of Alberta businesses (46,360) with employees have accessed CEWS at least once, according to Nov. 22 federal government numbers.

 

To qualify, a company must show its revenue for a specific month was 30 per cent less than that same month the previous year.

More Alberta companies in specific sectors — construction, oil and gas and professional services — have accessed CEWS compared to B.C. and Manitoba, said Michael Holden, chief economist for the Business Council of Alberta.

The Business Council of Alberta looked at the number of employees supported by CEWS by industry in Alberta and British Columbia. It found more Alberta employees in industries like accommodation and food services are being supported by CEWS than those in B.C. (Business Council of Alberta)

It’s hard to know any specifics because the federal government has not yet released a detailed list of CEWS recipients, as previously promised. 

An October Canadian Federation of Independent Business survey of almost 500 companies found more small business owners in Alberta relied on CEWS and the Canada emergency business account program than than the national average.

For Terrence Alty, owner of Canyon Creek Foods, the wage subsidy and $40,000 business loan has helped to keep the Edmonton-based fresh food manufacturer business.

“The wage subsidy really helped us a lot. We were able to maintain our 25 employees in the facility, including management,” he said.

“That really took us through the difficult time. And now we’re back running full tilt.”

Subsidy not worth the audit for some

But Daniela Felske, owner of in situ remediation company Esker Consulting, said the cost of the required audit would have been higher than the subsidy she would have received.

“I realize that some companies are going to get audited, but the compliance burden for a very small company like me would just be excessive,” said Felske. “It would have cost like thousands of dollars to respond to the audit.”

The audit has been a sore point for many smaller companies across the country

The subsidy could have been a critical support for Felske, who had to layoff her four employees.

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Business owners also struggled to get rent support through the first iteration of the rent-subsidy program, known as Canada emergency commercial rent assistance, as landlords had to apply on behalf of businesses.

The rent-subsidy program is now accepting applications under new criteria, yet some Alberta businesses cannot access additional funding under the revised program unless they are under lockdown restrictions. 

Early on in the pandemic, a store front in Toronto displays a sign about the Canada Emergency Business Account (CEBA) which was designed to help cover operating costs for organizations experiencing temporary revenue reductions. (Nathan Denette/The Canadian Press)

For many business owners, it remains a challenge to access the support programs.

Predrag Stojanovic, owner of Kittens’ Mittens Child Care in Edmonton, is not eligible for the federal wage subsidy. (CBC News)

Predrag Stojanovic, who started his Edmonton business Kittens’ Mittens Child Care in 2020, pointed out he isn’t eligible to receive the federal wage subsidy because he can’t demonstrate losses compared to 2019.

“That definitely does not mean that we are not affected,” he said.

“We need the Department of Finance to understand that they’re disqualifying us and discriminating us.”

No sign of sales returning soon

With most of the provincial deferral programs ended, many Alberta businesses are relying on the federal supports.

The province recently expanded its relaunch grant to provide a second payment of up to $5,000 for businesses that have seen a 40 per cent drop in profits.

What Alberta small businesses need most is to return to normal sales, said Dormuth of the Canadian Federation of Independent Business.

But there’s no sign of sales coming back anytime soon.

Provincial and federal governments could look at injecting cash, not loan deferrals, into small businesses to help them deal with lost revenue, she said.

And, with a lockdown looming, ample notice and a transparent lockdown plan will help businesses prepare.



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