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MP urging federal government to fix 'shortcomings' in COVID-19 business loan program

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Conservative MP Alex Ruff says many local small businesses and farmers are falling through the cracks of federal COVID-19 emergency assistance programs and he will continue pressuring the Trudeau government to fix the problem.

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“My criticism is that there’s a lot of small businesses in rural Canada in particular and the ag sector that so far really don’t qualify for much of anything at the federal level that’s been offered,” he said Monday in an interview.

“On the individual level, the CERB (Canada Emergency Response Benefit) is not perfect, but it’s a pretty good system. They’ve got the money out quickly, there’s challenges with it and they have adjusted so people can go back to work and still collect it and at least do part-time work.

“But the biggest thing is on the business side, small business seems to be the ones that are taking the brunt of the pain here that’s facing Canadians.”

Ruff, along with Bruce-Grey-Owen Sound Progressive Conservative MPP Bill Walker and Owen Sound Mayor Ian Boddy participated in an online COVID-19 business recovery question-and-answer session, organized by the Owen Sound & District Chamber of Commerce.

The panel fielded a variety of submitted questions Monday – many from people concerned about how the pandemic will impact their business as well as those seeking more information on available government support programs and when the economy should begin returning to normal.

One of the questions, read by chamber CEO Diane Austin, noted that current federal government relief programs have “left out an entire sector” of small businesses: self-employed people and other sole proprietors who do not officially collect a paycheque or earn less than $20,000 a year.

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Ruff said his office has received many phone calls from those business owners.

He said he also has concerns about the eligibility criteria for the Canada Emergency Business Account (CEBA), which provides interest-free loans of up to $40,000 to small businesses and not-for-profits to help cover operating costs while their revenue has been reduced due to the economic impacts of the pandemic. Businesses that repay the balance by Dec. 31, 2022, will receive loan forgiveness of 25 per cent.

The federal government reduced from $50,000 to $20,000 the minimum employment income that businesses must have paid in 2019 in order to qualify for the program.

However, businesses that paid less than $20,000 in wages last year, including new firms that weren’t in operation in 2019 and those that pay with dividends only, are still excluded from the program.

Eligible businesses must also have an active business chequing/operating account that was opened before March 2 and is with one of the lenders for the program.

The Canadian Federation of Independent Business is calling on the federal government to: change the payroll test for CEBA to allow more businesses to participate, like the self-employed and micro-businesses; ensure the loan is available to all business structures, whether incorporated, partnership or sole proprietor; and ensure all businesses that qualify can access the loan regardless of which financial institution they use.

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Grey County says about 70 per cent of the 10,500 businesses within its jurisdiction are sole proprietors or home-based.

About half of the 269 respondents who completed a Bruce County economic impact of COVID-19 survey by April 21 said their business was a sole proprietorship.

Ruff referred to small businesses during the Q&A as “the lifeblood of our economic engines.”

He said the current suite of federal supports for businesses shut out a lot of small businesses, in particular sole-proprietors and farmers.

“The big issue is they just don’t meet the $20,000 minimum wage salary. If you’re a sole-proprietor and you didn’t take a wage, you don’t have employees, you can’t qualify,” he said in an interview after the Q&A session.

“The other thing is, I’ve got lots of businesses and farmers calling me and they can’t apply for it because they don’t have a business chequing account; they’ve always done their business by just their personal chequing account.”

Boddy said he understands the anxiety that home-based and sole-proprietor business owners are feeling right now and he hopes the eligibility criteria for CEBA can be expanded to assist them.

“If you own your own business, you put your own money into it and maybe you’ve dipped into a line of credit to buy an inventory and you can’t sell it and you’re paying rent. This is something that was overlooked by the federal government and we’ve probably got more small businesses that need the help if we can get it fixed,” he said.

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Walker said he has also heard from many small business owners that are not eligible for a CEBA loan.

“I believe both levels of government from a funding perspective tried to get out to as many people as possible in the first iteration and then they started to see gaps and started trying to address those,” he said.

“I think it will continue to get evolved and discussed and hopefully some supports will be forthcoming.”

Ruff said Conservative MPs are also “really pushing” the Trudeau government to return to businesses the GST paid over the last six months to a year to help them during the COVID-19 pandemic.

“That would put cash back into people’s pockets and it could be done very easily. And it’s not a loan; it’s just giving them money back that they paid to the government,” he said.

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