As of March 2020, businesses across Canada were forced to shift their operations and business models overnight to ensure the safety of employees and their customers alike in the face of the COVID-19 crisis.
For businesses that are still open and operating, albeit, with a slightly altered routine, there are a few measures you can take to ensure your finances stay as stable as possible in this shifting economic climate. And for those businesses that have had to pause their operations, there are some crucial steps to take during closure that will help increase your business’ chances of bouncing back once conditions improve.
Here are a few proactive steps you can take during the crisis to help lessen the financial strain on your small business during COVID-19.
Tips for businesses still operating
Attend to cash flow
If your cash flow has ground to a halt, it’s vital to get your business outgoings under the tightest control. Reduce expenses by delaying any avoidable payments or investments until the picture is clearer. Lower your debt repayments to the minimum level possible, and explore any opportunities to refinance your most expensive debts to achieve lower repayments.
And to maybe compensate for lost income, check if your business insurance has interruption coverage, and whether it’s valid under COVID-19.
Speak to creditors and suppliers
In these difficult circumstances, many creditors and suppliers will be flexible over their payment terms. For example, a key supplier may be willing to extend their invoice period without penalty. Or, your utility company could agree to temporarily move your business onto a less-expensive tariff to reflect your reduced trading volume.
For every outgoing, your business has, contact the recipient to see if there is any potential for saving even a small amount of money.
Check for federal and provincial support
Federal and provincial governments have announced a range of support measures for small businesses hit by COVID-19. You may be eligible for an interest-free $40,000 loan to cover unavoidable expenses under the CEBA scheme, and there are also options available for wage subsidies and tax payment delays. Use whatever public assistance you’re entitled to keep your business running.
Consult with staff
No matter how hard you try to continue as normal, it may be inevitable you’ll need to let staff go or reduce their hours. It’s sensible to be upfront about this with your employees, as you’ll likely get greater cooperation when everyone is included in future planning.
Surviving a full shutdown
However, if the COVID-19 situation means your business effectively stops trading, you need to keep it alive during hibernation so that you can resume quickly once conditions improve.
Renegotiate Outgoings Again
If cash flow is halted, you again need to contact your suppliers, creditors, and utility companies. Tell them you’re not able to maintain current arrangements, and that the situation is urgent. Most major organizations now have plans in place for easing their customers’ coronavirus problems to some extent.
Defer Tax Payments
The CRA has announced that tax payments can be deferred, interest-free, until after August 31, 2020.
The Canada Emergency Business Account (CEBA)
If you haven’t already applied for a $40,000 loan under the CEBA, then doing so will allow you to continue covering essential operating expenses while trading is halted. You can learn more about how your small business can benefit from the Canada Emergency Business Account, and even apply, on our CEBA information page.
If at all possible, keep your staff on your books, using a federal or provincial wage subsidy if available. Staff are an essential asset for any business, and you need them close to hand for when restrictions are loosened and you can start trading again.
The most important thing anyone can do during this time is to stay informed. Things are changing sometimes daily, and the best weapon in anyone’s arsenal against uncertainty is to gather as much information as possible. Stay up to date with news and monitor the Government of Canada’s economic response plan page for new relief programs, and updates to existing ones. It’s also important to lean on experts at this time. Stay in close communication with your accountants and business partners, and be sure to lean on your relationship manager during this time of need. We’re committed to helping you and your small business get through these uncertainties with minimal financial impact.