By Mary Spring
The View From a Small Town
Yesterday I drove down the main street of our small town on my way to pick up a few essential items. Really, I could have been driving down a main street of any small town in Canada.
At noon hour the main street was empty, with virtually no cars on either side of the road. I noticed all of the stores and eating establishments with signs on their windows and it made me feel very sad. The hardest part of this situation is the unknown. No one is able to tell us when this nightmare will end. What can be done to save our small towns, to keep our small businesses alive, and to look after the employees who have lost their jobs as a result of this crisis?
I am not an economist. Instead, I spent my career teaching elementary school children, mainly six-year olds. I am feeling the brunt of this COVID-19 in many ways. Isolation is difficult, but that can be managed. I am a landlord. I am a consumer. I have family members who operate a small business in this town. I have a family member living in a long-term care residence in this town. I am attempting to make sense of my situation so that other people can have a better understanding of the complexities of this virus.
Our government is working hard to keep us informed of the pandemic. The daily updates from our prime minister, our health officials and premiers have been most helpful. We are lucky to have such dedicated leaders helping to keep us informed. I am proud to be a Canadian these days.
Our government is working hard to help Canadians stay safe, to get help financially, and to stimulate the economy. We will be in debt for years and years to come, but looking after people is the number one priority.
The problem with government incentives and stimulus packages is that we are in a vicious circle. We are all part of a big puzzle, which needs each piece working together in place in order to be completed. I am attempting to relate this to saving small towns in Canada.
When a small business closes its doors, whether that is a retail business or a restaurant, there is no income coming in. That business has variable costs, which are cut because there is no longer an income. The employees have been laid off. There is no longer a need for a carpet cleaner, a delivery of food, garbage pick up, courier services, or costs of goods sold.
That being said, the small business has fixed costs, which never go away. Fixed costs are substantial and they would include rent, utilities (gas, heat, water, electricity), as well as loan payments that the business has incurred. With no revenue, the business owner is not able to pay those bills for long. In order to survive, the business must borrow more money and go further into debt. If and when the doors open again, they will be debt ridden. Will their profits allow them to pay off that debt?
Is the money that the government is proposing going to help the small businesses, retailers, and restaurants in our small towns? Will such funding get them through this crisis and allow them to open again?
The Canada Emergency Response Benefit (CERB) will help individuals and families in time of need. There has been an increase in the Canada Child Benefit and people have extra time to pay their taxes and mortgage payments. Consumers and families must be looked after so that they are not debt ridden at the end of this period of time. A small business will never recover without consumer spending.
The forty thousand dollar loan to small business owners, with ten thousand possibly being a gift, if they qualify, will help to pay off some of the fixed costs now. We do not know how long this will last. This is a loan and it will add to their debt when this is over.
The GST and income tax deferrals will help for now, but that money will still be owing in June. This means further debt for the business owner.
The stimulus for small business sounds appealing. The government, in an effort to keep people employed and to allow them to return to their original job, will pay seventy-five percent of wages. The problem is that when a business has shut their doors they no longer need employees because there is no business. The owners have no income, so they are unable to pay any wages. They are being asked to pay full wages and then be reimbursed by the government. Again, with no revenue available, this is an almost impossible task.
Some people are urging the government to provide rent relief. Most small business owners do not own the buildings that they are occupying. The problem with rent relief is that it forgets that landlords are also struggling. Landlords have as much debt as any small business. They need the rent in order to pay their fixed costs.
So, the question that we need to ask is, are the government initiatives really going to help our small town business owners? What else could the government do to help this important industry? It is essential that businesses in small towns survive, or there will be few jobs for people to return to.
In order for our businesses to survive they need people who are spending money. We must look after our families so that they will be able to consume in the future.
Picture our small town. What will it look like when we get through this crisis? We need more than a deferral of costs for small business owners. There must be some conversation about forgiveness if we want our small towns to survive. That would mean forgiveness from every piece of the puzzle.
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