Financial pressures from COVID-19 force many small Canadian businesses to close permanently

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TORONTO –
As non-essential businesses across the country close during the COVID-19 pandemic, some long-standing operations will not be able to reopen when things get better.

In Toronto, the Vesuvio Pizzeria and Spaghetti House has been in operation since 1957 and has been able to survive some of the most difficult times, but announced Tuesday that it would close permanently later this week.

“I think everyone feels a little what we feel: the broken heart. Well, it hurts, “owner Paola Pugliese told CTV News.

Since the announcement, however, the Junction neighborhood pizzeria has been inundated with orders, causing a queue of more than an hour outside the restaurant on Wednesday.

In Aldergrove, British Columbia, Emerald Phoenix Comics announced on April 4 that it can no longer afford to rent and will be forced to permanently close its doors.

Chris Bodnar, the owner of the comic book store, said his owner had offered to defer half the rent this month, but he still wouldn’t be able to keep the business afloat.

“If I can’t make rent this month, after losing a few weeks, I can’t say that I will be able to make more rent next week,” he said.

Nabib Faris, owner Mabata Fine Dining, in Halifax had planned to expand, but is now considering closing his restaurant.

“As a new business, we don’t have the cushion (or) of cash flow to support tough times like these, we’ve only been in business for 14 months,” he said.

Faris said the drop in sales forced him to donate thousands of dollars of food that would have been left rotten.

Pugliese, Bodnar and Faris aren’t the only small business owners struggling to make ends meet in these unprecedented times.

A survey of 10,969 Canadian small businesses by the Canadian Federation of Independent Business, released on Wednesday, found that about 22 percent of small businesses saw their income drop to $ 0 during the pandemic, while only half were confident that their business will survive until the end of May under current conditions.

“The risk of failing otherwise healthy businesses is getting worse by the day, as bills pile up with little or no income,” said Laura Jones, executive vice-president of CFIB, in a statement.

Jones hopes provincial governments will put in place subsidies of up to $ 5,000 for each month a business is closed due to COVID-19 and a 25% reduction in annual property taxes.

“Small businesses are not happy to seek government help, but we are in extraordinary circumstances,” said Jones. “Without more lifelines, too many otherwise healthy businesses will drown in debt. “

Saskatchewan and Nova Scotia already offer hardship grants to struggling businesses, as these are just one-time payments of up to $ 5,000 and are based on 15% of a business’s monthly revenues.

The federal government and Canadian banks also have several financial options to help small business owners.

The Canadian Emergency Wage Subsidy offers a 75% wage subsidy for up to 12 weeks to businesses of all sizes that have lost:

  • 15% of their income between March 15 and April 11;

  • 30 percent of their income between April 12 and May 9; or

  • 30 percent of their income between May 10 and June 6.

In addition, as part of the business credit program, eight of Canada’s best banks offer $ 40,000 interest-free loans for the first year, 25% of which will be canceled if they can be repaid by the end of 2022 .

However, Jim Cormier, director of the Atlantic section of the Retail Council of Canada, said that COVID-19 could continue to claim companies even after the restrictions were lifted.

“There are retailers who will not be able to recover,” he said. “You will then face a potential slowdown in sales as the company gets back on track and possibly months of payments that are due. “

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