Canadian Businesses Struggle to Access Financing Amid Covid-19 Response

The COVID-19 response continues to strain small and medium-sized businesses in Canada. The uncertainty makes buying supplies, paying for new safety features, and even paying staff a struggle for many. While the Ontario government stepped in to offer financial support to businesses, many are still waiting.

Delays in Government Funding

According to the CBC, as of this April, Magdi Bazara, owner of the 3 Cents² Coffee Shop and Eats to Go, was promised funding that never arrived. Both businesses were granted $10,000, but the money didn’t come through. In March, Bazara then learned that his application for the Coffee Shop was deemed ineligible after the fact, without any explanation as to why. Being out $10,000 that you had counted on is a struggle for any business.

The CBC has several examples of businesses that are still waiting for the bureaucratic machine to fulfill its promises. For example, Steve Quay, owner of Quay Communications, has been waiting for a government grant he was approved for since January. As many business owners are no doubt doing, Jones is pouring his personal money into his business to try to keep it afloat in the meantime.

The government admits that while 108,000 businesses received their first payment, 35,000 have not yet received their second. An informal survey conducted by NDP MPP Jessica Bell found that 85% of the business owners she spoke to have not received their funding yet.

Gaps in Government Grants

Government funding isn’t just slow--it also has strict eligibility criteria that leaves many struggling businesses in the lurch. For example, Ontario’s Main Street Relief Grant for Personal Protective Equipment (PPE) is only for very small businesses with 2 to 19 employees. Sole proprietors with no employees and small businesses with 20 or more employees don’t qualify for this support.

Other grants have minimum revenue loss as their metric for eligibility. For example, the now-closed Small Business Support Grant required businesses to demonstrate a 20% revenue drop in April 2021 specifically. However, this was in response to a lock-down measure starting in December. The government did not really offer support to businesses that struggled over Christmas, unless the effect was so severe it lasted into April.

An Alternative: Invoice Factoring

If you find yourself ineligible or still waiting for government financing for your business, we have the financial solutions you need. Invoice factoring is a strong alternative to government loans. When you send out an invoice to J D Factors, we make sure that you have access to the cash from that invoice in 24 hours. That response time means that you can be more flexible, make better decisions, and be certain that as long as you can invoice, the cash will keep coming in.

Our services are particularly valuable as these economically uncertain conditions continue. J D Factors offers non-recourse factoring, which means we handle collection efforts from your clients and don’t ask you to return your money to cover bad debt due to a client's bankruptcy. Reach out today to discuss how invoice factoring can help you manage risk and keep your business open.