Nova Scotia

As COVID-19 drags on, businesses look to government for more support

The federal and provincial governments continue to announce support programs for business as their need for help during the COVID-19 pandemic shows no sign of slowing.

'We are still in for many tough months and people who will be requiring a lot of help,' says business group

Small businesses along Main Street in Yarmouth, N.S., and across the country are suffering from major drops in revenue due to the pandemic. (Richard Cuthbertson/CBC)

There was never a public health order telling Donnie Hamilton he had to close his two stores in Yarmouth, N.S., but the businessman decided to do it anyway when a state of emergency was first declared in the province in March.

"I closed because the government was telling us to stay in and I wanted to comply with them," he said in an interview.

With the rallying cry of stay the blazes home ringing throughout the province, Hamilton didn't see the sense in making his five employees come into work at his two Main Street shops, which sell clothes and athletics wear.

But that's meant no revenue from the businesses for close to two months and Hamilton said he's frustrated that as government assistance programs have been announced, there hasn't seemed to be much in the way of help for small retail.

"Retail is supposed to be one of the largest employers that there is and if they want the economy to get back on track, you would think they would make sure that retail has to be there," he said.

Yarmouth, N.S., businessman Donnie Hamilton owns Runner's Attic and Hamilton's Fine Clothing. He closed both in March when a state of emergency was declared. (Runner's Attic/Facebook)

A new $110-million regional relief recovery fund announced by the federal government on Wednesday, partially targeted at "main street businesses" in small Atlantic Canada communities, could help Hamilton's situation. But he's far from alone in these uncertain times.

Jordi Morgan, Atlantic vice-president of the Canadian Federation of Independent Business, said many businesses are reporting dramatic drops in revenue and need more help to survive the economic toll COVID-19 is taking on them.

In some cases, public health orders have prevented businesses from being allowed to open or drastically curtailed their ability to operate. Then there are cases such as Hamilton's, where it simply hasn't made sense to be open because customers are staying home.

Morgan said the federal and provincial governments have been receptive to feedback about their support programs so far and in some cases have made changes based on that feedback. He's hoping a recent survey of member businesses that was delivered to government drives home just how much help is still required as provinces begin contemplating how to reopen their respective economies.

"We are still in for many tough months and people who will be requiring a lot of help," he said.

Jordi Morgan, Atlantic vice-president of the Canadian Federation of Independent Business, says governments have been responsive to feedback about support programs. (CBC)

The executive director of the North End Business Association in Halifax, Patty Cuttell-Busby, said the help many of her members require is in relation to rent.

Although there are government programs to help, they only work if landlords are willing to participate and Cuttell-Busby said that has been a tough sell in many cases. She's hoping governments make stronger arguments for why the programs should be used.

"We all need to have a good understanding that we're in this for a long haul and we need to start rethinking what that means for everybody, including landlords," said Cuttell-Busby.

"The message is these programs are a good offer, and if you haven't looked at them you probably should look again."

Another challenge is that many of the support programs are coming in the form of loans. That was fine when it seemed like businesses would only be dealing with a few months of reduced operations, but Cuttell-Busby and Morgan both said it's clear that's no longer the case and the government response needs to adapt with that fact.

'Crunch time'

Business Minister Geoff MacLellan said the province is evaluating its suite of programs daily because things are changing just as quickly.

"It goes without saying, and the premier is aware and I'm aware and our team is aware, that loans are going to be carried for as long as a business can and then it becomes crunch time," he said.

"If [businesses aren't] pulling in revenue a few months down the road, they're going to have no ability to pay."

Business Minister Geoff MacLellan says the province is evaluating its suite of programs on a daily basis. (Robert Short/CBC)

The minister said he has no doubt shifts from loans to grants will be necessary soon for some sectors and that's before the full economic toll of the pandemic is calculated for universities, the tourism sector and other industries.

MacLellan is part of a Liberal government that has, at times, seemed more like Progressive Conservatives in the way they've been religiously wedded to balanced budgets. But that's given them room to operate at a time when they desperately need it, he said.

The Nova Scotia government has seen varying degrees of uptake in the programs announced so far.

Some programs more popular than others

The small business impact grant, for example, a $20-million fund administered by Dalhousie University, had 3,235 applicants as of May 6 and had paid out $9.5 million. The worker emergency bridge fund, another $20-million program administered by Dalhousie, had 5,219 applicants as of May 6 and paid out $5.2 million.

Both programs were announced April 2.

Contrast that with the recently-announced small business credit program, a loan of up to $25,000 administered through provincial credit unions. Applications were put on hold after just a week as officials work through 700 applications for the $20-million fund before deciding what to do with it next.

MacLellan said that kind of response tells him the government has hit the right mark with the program, but he said supports are evaluated almost as soon as they're announced and it doesn't take long for the business community to offer feedback.

"Every day, we're going to figure out what the next best move is and hope we can help as many people as we can and prop up the economy until it's time it can experience a rebirth in earnest," he said.

Prepare for the worst, says professor

Mohammad Rahaman, an associate professor at Saint Mary's University and the Canada Research Chair in international finance and competitiveness, said his advice for governments is to prepare for the worst-case scenario and hope for the best, something he isn't sure is happening right now.

Governments must be ready for a second and even third wave of COVID-19, he said, because successive shutdowns would create an economic depression.

"That is the nightmare scenario," said Rahaman.

"We need to be very careful how we sort of reopen our economy. We need to have a solid strategy in place."

Rahaman said one of the biggest challenges will be for small retail, a sector that was already struggling because of the growth of e-commerce. That's only expanded as people have been told to stay home, he said.

"I think, frankly speaking, the small traditional retailer, they will be the biggest casualties of this COVID-19."

'Some people will fall through the cracks'

Rahaman said he believes the Nova Scotia government still has room to provide more assistance, and that high-interest loans aren't what small businesses need "in this difficult situation," but he said the lion's share of the help must fall to the federal government because it has far more fiscal capacity and borrowing ability than provinces, which also have the responsibility of delivering services such as education and health care.

"[The provinces'] finances are already strapped, and I'm not sure how far they can go to help those community-based, small- and medium-sized retail businesses," he said.

"It's a tough balancing act to do, but, at the end of the day I think no matter how much fiscal power the government has, they cannot protect everybody. Some people will fall through the cracks."



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