Small Firms in Canada Are Seeing Business Dry Up on Coronavirus
(Bloomberg) -- Canada’s smaller companies are bearing the brunt of the coronavirus outbreak, with disruption to operations, loss of business and quarantined workers adding to woes of business owners already struggling from a rail blockade last month.
The Canadian Federation of Independent Business, an association representing 110,000 small and medium-sized companies, has fielded “a few hundred calls” from members concerning the coronavirus outbreak, said Chief Executive Officer Dan Kelly. Most calls are coming from British Columbia and Ontario.
Many businesses in travel, tourism and hospitality -- particularly those companies geared toward Asian-Canadian populations -- are seeing a third to two-thirds of their business dry up, Kelly said in a phone interview.
“That’s not every firm of course, but it’s pretty significant,” he said. “And of course a lot of this is on the heels for many of the same businesses that were affected by the rail blockades.”
Kelly said companies across the service industry are already feeling the pinch, with restaurants, nail salons and spas drawing fewer customers. And companies with business tied to supply chains are facing new challenges, just weeks after protests blocked rail lines, interrupting the flow of goods across Canada.
“The economic effects are there, today, and they’re growing,” he said. “That should be a concern, whether or not there is any kind of significant domestic transmission of the illness.”
Small and medium-sized businesses are at particular risk if they’re not given enough access to loans in an economy with a cash crunch, according to AGF Management Ltd. Chief Executive Officer Kevin McCreadie, who’s monitoring how the turmoil is affecting markets.
“As these small businesses don’t have people coming into restaurants, they’re going to be strapped pretty quick,” McCreadie said Thursday in an interview at Bloomberg’s Toronto office. Larger companies are already drawing on credit lines and liquidity is likely going to get a bit worse, he said.
McCreadie said the policy response needs to bolster liquidity in the system, rather than cut interest rates.
Prime Minister Justin Trudeau’s government announced C$1.1 billion ($797 million) in new measures on Wednesday to help mitigate the effects of the coronavirus outbreak. Trudeau said he’s prepared to use federal financing agencies to stimulate the economy further if needed. The measures included providing faster unemployment insurance benefits to people who self-isolate.
“That’s quite big, because a lot of smaller and medium-sized companies don’t have paid sick time to begin with,” Kelly said. “Even those that do have paid sick time in the private sector for the most part, they wouldn’t have enough to cover off a two-week isolation.”
Most of the calls to the business group are tied to employment-related issues, such as how to deal with workers who have come back from virus-infected areas or what happens if an employee is advised by health authorities to self-isolate for 14 days.
“We’ve certainly had pockets of scares related to SARS and other flu outbreaks,” he said of his 26 years with CFIB. “But I’ve not seen anything quite like this where there are just so many unknowns and employers are legitimately asking ‘What am I supposed to do?’.”
Lost time and productivity will weigh on the Canadian economy this year, according to Kelly.
“That’s the larger economic concern that we’ll be facing: you’ve got a lot of entrepreneurs that right now are focusing their time on preparing for Covid as opposed to how do they grow their business, which is taking the wind out of the sails of 2020,” he said.
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