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To date, the federal government’s support for small business – such as this restaurant seen here in Toronto on April 6, 2020 – largely revolves around two programs. The Canada emergency wage subsidy, passed on Saturday, and the Canada emergency business account or CEBA, opened last Thursday.Chris Helgren/Reuters

Business groups are urging Canadian governments to match other countries by offering cash grants to companies that are facing pressing financial concerns because of COVID-19.

Australia, Britain and some U.S. states have unveiled schemes that offer hardship grants to small businesses that are struggling during the pandemic, with some payouts as high as the equivalent of $90,000. Meantime, eligible companies in Denmark can get their fixed costs, such as rent and utilities, partially or fully paid by the government, depending on the severity of revenue declines.

In Canada, however, businesses are largely being directed to take on more debt to cover the bills – a daunting prospect when mandated industry closings and physical distancing guidelines show no sign of easing.

“There is a huge number of businesses that do not want to take on additional debt at this time,” said Dan Kelly, president and chief executive officer of the Canadian Federation of Independent Business, adding many companies “are unsure whether they’re ever going to reopen.”

“The big missing gap [in government policy] is covering some of the fixed costs,” he added.

To date, the federal government’s support for small business largely revolves around two programs. The Canada emergency wage subsidy will cover up to 75 per cent of eligible companies’ wages – to a maximum of $847 a week for each employee – to help with staff expenses and minimize layoffs. The wage subsidy bill was passed on Saturday.

The other program, known as the Canada emergency business account or CEBA, was opened last Thursday and provides eligible companies with up to $40,000 in no-interest loans, of which 25 per cent (up to $10,000) is forgiven if the loan is repaid by the end of 2022.

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Mr. Kelly said CEBA is a “good program” that will help out thousands of businesses. However, many companies are shut out of CEBA assistance because of one criteria: that a business needs to have paid between $50,000 and $1-million in employee wages in 2019.

Natalie Borch, owner of the Pink Studio, a fitness and dance studio in Toronto’s east end, got halfway through filling out her CEBA application before discovering she wouldn’t qualify. Ms. Borch paid out more than $100,000 to workers last year. However, her instructors are independent contractors, rather than staff, and thus not recorded as payroll expenses.

“We thought that this loan would be the answer to be able to pay May and June [rent],” Ms. Borch said. “This isn’t even a grant. Why are we begging to get a loan that we’re paying back?”

Many organizations will struggle to meet the CEBA’s payroll minimum, such as new businesses, small companies with one or two employees, and family businesses that pay themselves through dividends, which is recorded differently in accounting than payroll wages.

Melissa Bourdon-King and her mother are the sole proprietors of Once Upon a Bookstore, a children’s book shop in Kelowna, B.C. Their business is new and they haven’t drawn a salary yet. “I wish I had a payroll of $50,000,” Ms. Bourdon-King said. “As of this moment, from the research that I’ve done, I don’t qualify for any of the relief programs that the government has offered.”

Mr. Kelly suggested knocking down CEBA’s payroll floor to $0 and raising its ceiling to perhaps $2.5-million, while offering the forgivable loan as an up-front grant to help with immediate expenses.

Beyond that, he said CFIB’s “number one recommendation” is getting provincial governments to cover some rent costs.

Thus far, provincial help is limited. Saskatchewan last Thursday announced a program that will offer one-time grants of up to $5,000 to businesses that ceased or curtailed operations due to public health orders, similar to a scheme in Nova Scotia. Mr. Kelly said Saskatchewan’s move is “really good” and will help with near-term rent payments, but that it’s “probably too small” as the pandemic drags on.

Save Small Business, a grassroots coalition of more than 30,000 small companies and individuals, would like to see Canadian governments place a moratorium on commercial evictions, matching bans that have been put in place in Britain, Australia and other countries. (In some form, all Canadian provinces have eviction bans in place for residential tenants.)

“Rent is what everyone in small business is talking about,” said Jon Shell, one of the organizers behind Save Small Business, which is pushing for non-debt solutions to bridge companies across the pandemic.

“If businesses are faced with several months’ backlog of debt, then many of them will not even bother to reopen,” he said.

With unemployment skyrocketing during the coronavirus pandemic, personal finance columnist Rob Carrick offers some tips on how to deal with creditors and make a bare-bones budget.

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