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Jon Shell is managing director of Social Capital Partners and has spent most of his 25-year career in local small business. He is co-founder of, a coalition of small businesses formed on March 22, 2020, to protect small business during the COVID-19 crisis.

Tomorrow is April 1. The rent is due and it’s not going to be paid.

According to a recent survey by the Canadian Federation of Independent Business (CFIB), 23 per cent of the organization’s members say they will not make their rent in April. At, our survey numbers are even worse: 38 per cent said they won’t be able to pay. By May, that number jumps to nearly 70 per cent in our survey.

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This shouldn’t come as a surprise. Local community businesses – storefront or retail operations that are often family-run – have been forced to close to protect people from COVID-19. According to a 2016 JPMorgan study, 25 per cent of small businesses have less than two weeks cash on hand, and an additional 50 per cent have less than a month. So, with no income coming in and every fixed expense remaining (rent, utilities, property tax), the money is running out exactly when you’d expect it to.

It’s important to stop and appreciate how big a loss this is going to be. In that same CFIB survey, 42 per cent said they are worried they will have to permanently close, and we’re less than three weeks into social distancing. That number is sure to grow. When restrictions are lifted and we return to our communities, the places we knew and loved are likely to be boarded up, and many jobs will be gone. Small businesses employ 70 per cent of Canadians, and with so many closed, our economic recovery would be much slower.

More important still are the real stories of personal tragedy. In our open database of the more than 22,000 responses to a petition we launched on March 22, thousands of owners describe how they are likely to lose everything they’ve built. It is a challenging read. Small community businesses are not a pathway to great wealth – more often than not, they are a job for the owner, providing income for their family. Their loss would affect these families long after the crisis is over; almost 70 per cent of the respondents to our survey have personally guaranteed their leases.

Other countries have acted decisively to ensure as many local businesses as possible can survive. Denmark’s government is paying some of the fixed expenses of small businesses whose revenues have collapsed because of social distancing. France paused rent, utilities and mortgage payments. South Korea has adopted policies to reduce rent costs. Australia has implemented a six-month moratorium on commercial evictions to give the government time to come up with a solution.

Canada is doing none of these things.

To date, the federal government’s attempt to address the impending wide-scale national rent default is a loan called the Canadian Emergency Business Account (CEBA). It is a generous loan. Up to $40,000 at zero per cent interest (for a while), and $10,000 is forgiven for those that meet certain criteria. It will probably be useful for a lot of small businesses, especially in the technology sector, where labour is a higher cost than rent. In fact, the idea for a loan-based response was proposed by the Canadian Council of Innovators, a technology advocacy group. But Finance Minister Bill Morneau said the program is for “the local restaurants, the corner coffee shops, the small travel agencies, the salons and barbershops and the many other small businesses that form the very backbone of Canada’s economy.”

Mr. Morneau, these are the right people to be worried about, but this is the wrong solution.

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First, it’s impractical. For most people, taking on debt is a really big deal. Owners will need advice from lawyers and accountants, which is a long process at the best of times. Banks that will be asked to deliver these loans are already failing to manage Canadians’ needs for mortgage relief. Canada has 1.2 million small businesses, so we’re likely talking about hundreds of thousands of loans. The chances banks can deliver these soon enough to prevent mass defaults are slim to none.

And second, it’s unfair. Businesses have closed to protect people in a public-health crisis. The burden should be shared as equitably as possible – banks, landlords, insurance companies and governments should all contribute. Loans, no matter how favourable, place the burden entirely on small-business owners.

It’s not too late to mitigate the impact, but we are certainly running out of time. Along with the Toronto Association of Business Improvement Areas, we have proposed a rent abatement plan that shares the burden among landlords, tenants, banks and the government. The CFIB has some thoughtful suggestions as well. Or, we could copy what other countries have done, as we have with wage subsidies and the deferral of sales tax.

No doubt the CEBA loan would look good on a whiteboard. And when it fails to save our Main Streets, government will be able to point to it and say: “We provided a great option, it’s just that not enough people took it.” But this is no time for pride to get in the way of the right answer. If we are serious about saving our “local restaurants and corner coffee shops,” good, non-debt options need to be acted on before it’s too late.

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