Help is on the way for Alberta’s flood-ravaged small business owners.
Small firms struggling to recover from massive floods in southern Alberta last month will be eligible for government-backed loans of up to $1-million as well as two years of loan-interest rebates, the provincial government announced Tuesday.
The long-awaited plan for small business comes almost five weeks after high waters hit southern Alberta municipalities including High River, Canmore and Calgary, and is the first directive from the provincial government as to how 1,500 small businesses – “the lifeblood of the Alberta economy,” according to Alberta Finance Minister Doug Horner – will be helped with the massive cleanup and rebuilding ahead.
The “Hand-Up Plan” is a partnership between the province and financial institutions to get loans into the hands of small businesses or not-for-profit organizations 24-48 hours after they apply. The province will guarantee 75 per cent of each loan, and the Alberta government will also rebate the interest on these loans at 4 per cent for 24 months – essentially providing a zero-interest loan for many businesses in a period of low interest rates.
Firms with gross annual revenues up to $15-million in flood-affected areas, including in and around the oil sands hub of Fort McMurray, all qualify.
“The overarching policy goal is to ensure that businesses that have been impacted by the disaster that were viable businesses, and contributing to the community on employment and labour, are able to continue,” Mr. Horner said in an interview.
Southern Alberta business owners are in various stages of cleaning up and reopening, and are dealing with challenges that range from finding contractors to finding cash flow. One of the biggest concerns in Alberta’s low-unemployment rate environment is the loss of staff. Small businesses unable to pay staff while flood renovations are completed are seeing their best and brightest look for new work.
“We’re a small business and our staff is about to leave on us,” said Sharon Garlock, whose family owns a High River eye clinic where her husband Glenn is one of two optometrists, and there are five other staff. Almost everyone is also dealing with the fallout from flooding in their own homes. The building has been stripped to its studs, and it’s unclear how long it will take before the clinic is doing eye exams again.
“We can’t employ them but we need them if we’re going to re-open,” Ms. Garlock said. “They have to eat.”
Applications for the new program will be accepted from now until Dec. 31. The plan is expected to cost the province $120-million – in covering interest payments and loan defaults – and is separate from the disaster recovery program where the province hopes to recoup up to 90 per cent of its costs from the federal government.
While Canadian insurers do not offer overland flood insurance for homeowners, businesses can buy both flood insurance and business interruption insurance. However, the policies include high deductibles and can take weeks or months to be adjudicated and paid out.
The government program, said Mr. Horner, is intended to help whether businesses have insurance or not, and also provide an immediate infusion of cash – even for those with insurance policies. He expects a rush of business owners to apply for working capital loans, and believes over the course of the next year, the loan numbers will start to drop as business interruption insurance is paid out.
Dwayne Johnson and his wife Patti own three High River businesses hit by the flood, including the badly damaged Colossi’s Coffee House – where all of their stock was lost, and the flooring, furnace, hot water tank, bathrooms and equipment all to be replaced.
The Johnsons have flood insurance but there’s a “massive” $25,000 deductible.
“We’re basically starting from scratch,” Mr. Johnson said. “And not only that, we’re starting from scratch in the hole.”Report Typo/Error