Running a small business is an uphill battle, but when the hill becomes a mountain, many could lose hope.
Mike and his wife Jennifer Hearn are certainly finding it difficult to keep climbing that hill after their business shut down earlier this year due to COVID-19. The two own and run Action Play Centre Inc. in Midland.
"We've got a longer season than most of the tourism-based businesses around here," said Mike, explaining his business slows down during the months of June, July and August.
"We began feeling the effects of this in February when we booked half the birthday parties (compared to) last year. We are attributing that to this. We just lost March Break, which is four times the size of Christmas in terms of revenue for us. We rely on February, March and April, to carry us through June, July and August. And it's all gone."
One of the biggest problems, Hearn said, is that a business like his has no sustainable product to sell online.
And he said with average monthly expenses mounting up to $7,000 and their house as collateral for their business loan, things are looking a bit bleak. Even if they qualified for the government's $2,000-a-month funding plan, they would miss the mark, he added.
"We have about $140,000 loan we're paying off that's tied to our mortgage," said Hearn, who also does contract work as an illustrator. "If the corporation goes, we're still expected to pay off that loan. Either that or they come after our house. So even if the virus was gone tomorrow, we would still not have our revenue back."
Jason Malott understands exactly where his friend is coming from.
"Similar to Mike's situation, my wife still works at her full-time day job," said Malott, whose kids are 16 and 10. "But her wage can either pay the mortgage or our other bills."
The small business owner in Penetanguishene said he isn't sure if he qualifies for any of the funding options made available by the government.
"There's mortgage help for most people, but those people have mortgages with major banks," said Malott. "I'm not with one of the six major banks, so my lender doesn't have to comply with that."
He said this puts them between a rock and a hard place.
"I haven't seen anything so far that would help bail out the business side of our equation," Malott said. "Yeah, there are loans and whatnot, but that's the last thing small businesses want to do: take on more loans."
Hearn agreed and has sent a letter to officials in all levels of government outlining the difficulties he and many others like him will be facing in the next few months.
"The government cannot go and save every individual business, I understand that," Hearn said. "But there are millions of people in our position or worse. What is being proposed covers a very large number of people, but we're a country of 35 million people and if you only helping 10, that's a problem.
"I get not everything can be done. But you're going to see businesses close. There is no two ways around that. If we can't be protected to keep the business open, what we would be looking for is for a way to not lose our house as a result. When people set up a business, they expect the business to pay those bills."
Both men said they understand the gravity of the situation and the need to shut down businesses for everyone's safety.
"Knowing we have to pay the mortgage next month and not knowing where we're going to get the money is really stressful," Hearn said. "We're not looking for a handout. I just feel like as a small business owner I just want to get the same benefit everybody else is getting."
So far, Hearn has heard back from Midland Coun. Cher Cunningham and Simcoe North MP Bruce Stanton.
"There are so many of our small businesses that are in this position," said Cunningham. "Their mortgages are private and their business locations are privately mortgaged."
Unfortunately right now, she said, even if the municipality is able to find efficiencies and extra funds it can't take use taxpayer money and reallocate it.
"We might have some savings from our tourism and marketing budget," said Cunningham. "So we have our interim treasurer examining for efficiencies in the (next) budget when it comes to the table in October."
Creativity is possible in using the funds that are ear-marked for business attraction, retention and expansion to be used primarily for retention, she said, adding, it is early days in a constantly shifting landscape of new programs and funds that need to be fleshed out provincially and federally.
"Our Economic Development Corporation of North Simcoe (EDCNS) is committed to providing support to all of our local businesses in this time of crisis and beyond," Cunningham said. "We await details on provincial and federal funds as well as (Simcoe) county programs."
Beyond the work to support manufacturers in re-tooling and retaining employees, a subcommittee has also been established, she said.
"This is a collaboration between all four municipalities, our EDCNS, Midland BIA, Southern Georgian Bay Chamber of Commerce and North Simcoe Community Futures Development Corporation (NSCFDC)," Cunningham said. "We are pursuing resources for mental wellness support to help our business owner in this time of stress."
The county is also surveying local businesses and to gain a better understanding of their needs. Cunningham encourages local business owners to take the survey.
Stanton, in a conversation with MidlandToday, said he's heard Hearn's concerns, but noted there's little the government can do where private lenders are concerned.
"The government can't really direct lenders to make those kinds of arrangements with their customers," he said. "These are private-sector lending institutions, they're regulated by the bank, but they can't be forced to accept changes in lending terms on their own account. The government would be reluctant to use any tools to dictate how they would engage in their business."
What the government can do is provide more incentives to put more liquidity in the lending business to help smaller businesses get through this time, Stanton said.
"Smaller businesses that are self-employed can use the Canada Emergency Response Benefit (CERB)," he said. "We're recommending in those cases that people who have fixed costs try to seek some relief from their car companies or landlord to move these payments off. It's going to take a spirit of cooperation across all fronts to get through this."
In an attempt to explain the government's perspective, Stanton said even the government itself will be borrowing money.
"We are also buying credit in order to get people through this," he said. "Every taxpayer will be sharing the cost of that. When we're asking businesses to borrow, it's similar in many ways to keeping the overall cost of this to a limit. Businesses have more capacity to get that temporary cash to ride out a short period of time like this.
"By asking them to do some short-term borrowing is a way of spreading the risk. Make no mistake about it even if governments did give grants to businesses, they are also borrowing the money and then everyone would have to pay that back."
