Small businesses take heart, you will lead the revival. For small business to fail en masse because of the COVID-19 crisis is not an option for government.
In Canada the one million+ small businesses (less than 100 employees) are a now an economic force majeure. They provide 7 in 10 jobs and account for almost half of the private-sector GDP (42%). Add in businesses with up to 299 employees and the GDP contribution is about equal to large companies combined.
Small businesses are the supply chain of big business. Choke off supply and large companies become at risk. And too many small business bankruptcies will spiral into permanent job losses. This would trigger massive collateral damage to landlords, creditors and banks. And in turn, impair the entire economy’s growth (read recovery) for years.
So it is imperative to help small businesses survive to fight another day. Though not without complaint governments were still quick to throw out fiscal lifelines, in an unprecedented situation and little lead time. And governments continue to take counsel on what small business needs. Organizations like Save Small Business and Canadian Council of Innovators are actively providing input.
Making cash available is the immediate primary aim. There are two sides to this coin. On the one side is easing creditor restrictions so cash can be doled out faster and easier. So far these include measures like:
- increasing bank lending capacity
- the Bank of Canada buying up financial instruments
- extending Export Development Canada and Business Development Bank credit facilities
The other side of the coin is putting programs in place to make the money available. Among the benefactor programs already in place are:
- wage subsidies up to 75%
- lower interest rates
- interest-free loans with forgivable portions
- deferment of tax and other levies
Post-crisis, it is equally important government intervention continue. This will likely come in the form of stimulus programs. Upcoming blogs will look at some of the recovery signposts, both in general and for the world of RFP bid proposals.