Lockdown #2 could be a death knell for small businesses. They need more government help

OPINION: Businesses are heading into their highest-earning weeks of the year — and Toronto and Peel are in lockdown
By Melissa Alice - Published on Dec 01, 2020
A man talks on his cellphone at CF Toronto Eaton Centre on October 25. (Rachel Verbin/CP)

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It’s been one week since Toronto and Peel region entered their second lockdown, set to last 28 days. That means those of us in the grey zones are to shelter in place until December 21, just in time for the holidays. Family dinners and countdown toasts aside, we have entered the busiest consumer season of the year, a time when all businesses, but especially small businesses, see their highest revenue-earning weeks.

There’s been an overwhelming amount of pushback on the government’s lack of support for small and local businesses, now forced to close during their peak season. Adam Skelly, owner of Adamson BBQ, an Etobicoke-based restaurant, became the infamous and unofficial spokesperson for anti-lockdown sentiments. When Toronto entered the grey zone, Skelly defied shutdown orders and kept his restaurant open; hundreds of people showed up in support and to protest these restrictions. Skelly was later arrested and fined, but not before a GoFundMe account had been set up to pay for his legal fees. The account has now raised well over $280,000 from almost 6,000 donors in a little more than five days.

The popular restaurant Buca, with three locations serving downtown Toronto, was evicted from its Yonge and Eglinton location due to unpaid rent. It was later reported that Buca’s parent company, King Street Food Group — which owns five other GTA restaurants, including La Banane, Jacob’s & Co. Steakhouse, and Jamie’s Italian — was filing for bankruptcy, with almost $46 million in debt. Between April and September, KSF Group says, revenues were down 98 per cent compared to the same time last year, which has been the case for much of the hospitality industry.

While a group of restaurants that have enough scale to acquire tens of millions of dollars of debt might not be considered particularly “small,” its downfall echoes those of dozens of independently owned and operated restaurants that were just getting by pre-COVID-19. As one downtown restauranteur and 25-year industry veteran told me earlier this fall, before the province had announced the second lockdown for Toronto and Peel, “We can likely hold for another three months, but when the cold weather hits, I’m pretty sure we’re closing for good.”

While hospitality seems to have come to terms, to some extent, with its gloomy outlook, small businesses in general — particularly those in the retail sector — appeared to be holding out for the holiday season, when they could expert to make up a significant portion of the losses suffered over the previous eight months.

No such luck.

According to a report by PwC, total year-over-year holiday spending will decrease by 30.7 per cent; 57 per cent of Canadians say that the pandemic has had a negative impact on their spending capabilities. While big-box businesses, such as Costco and Walmart, are allowed to remain open, small and independent retailers must close or face the consequences.

As Toronto columnist and writer Sabrina Maddeaux notes, “Costco and Walmart can still sell non-essentials alongside groceries, and department stores can continue to sell vitally important items like hosiery. This, despite the fact big-box profits have soared throughout 2020 as small retailers flounder. Walmart alone reports a 5.6 per cent increase in revenue from last year with free cash flow of $15.4 billion, up 9.4 per cent from last year.”

While large corporations continue to profit from pandemic closures, turning billionaires into mega-billionaires, where is the solidarity for the small and medium businesses that are the core of our economy?

Currently, the Government of Canada has in place the Canadian Employment Wage Subsidy and the Canadian Emergency Rent Subsidy. The CEWS, which launched at the beginning of COVID-19 lockdowns this past spring and re-launched a modified version on November 19, provides business owners seeing a significant decline in revenue with some much-needed wage and salary relief. On September 27, the Canadian government launched CERS so that eligible businesses can receive rent relief. Both programs are slated to end in June 2021.

While these two programs helped keep many small businesses afloat and staffed toward the beginning of the pandemic, this new lockdown, and a lack of resources to withstand these closures, could be the fatal blow for many.

Small businesses make up 40.8 per cent of the total Canadian GDP. With a 28-day lockdown in effect across Toronto and Peel — two major economic hubs in Canada — and uncertainty over future lockdowns and the financial viability of COVID-19 restrictions, we could very well lose a critical part of our financial health and prosperity as a nation.

Canada needs small businesses. Our communities need small businesses. And our government needs to better acknowledge this and provide support to our small businesses — through tax incentives, for example, or programs that at least rival those available to large corporations. Otherwise, the devastating impacts of this pandemic will take decades to repair.

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