1 in 6 businesses in N.L. could close due to COVID-19: CFIB

Thousands of small businesses in Newfoundland and Labrador could fail due to pandemic pressures, says the Canadian Federation of Business, which estimates one in six businesses are at risk of going under.

The CFIB estimates about 2,700 businesses are in trouble, although a possible recovery over the coming months could change that number to anywhere from 1,300 to 3,500.

"The recovery that we're going through right now currently, depending on how that goes, that will have an effect obviously in terms of how many businesses may decide to close," Vaughn Hammond, the CFIB's director of provincial affairs for Newfoundland and Labrador told CBC Radio's On The Go Wednesday.

The projections come from a CFIB survey sent out to business owners, asking if they were considering scaling back business or declaring bankruptcy. The survey also revealed that while 60 per cent of the province's small businesses are open, only 38 per cent are fully staffed and only 25 per cent are reaching normal sales numbers.

"It's not good news," said Brad Squires, owner of the outdoor goods store Alpine Country Lodge in St. John's.

Sales plummeted for Squires at the beginning of the pandemic, although he has been able to claw back to normal over the past few months.

"I know that there's other parts of business that are hurting a lot more than the outdoor trade, but that's concerning for anyone in business to hear that. No one wants to hear that," he said.

Hard-hit sectors

Of all the businesses surveyed, said Hammond, those in hospitality, tourism and arts and recreation are some of the most affected. As businesses face public health orders and restrictions around opening and operations, he said the costs to comply add up.

"Those [businesses] are the ones that we think are seriously considering what their futures will be … That's what many business owners are trying to grapple with right now," he said.

"They have additional costs related to making sure their businesses are safe, whether it's provision of personal protective equipment for their staff or physical distancing."

One gym in Harbour Grace closed its doors earlier this month, with its owner saying it was impossible to make ends meet under the provincial health regulations.

"There is an issue around revenue, but then at the same time there's some issues around cost," said Hammond. "So the question becomes now whether they can develop a viable business within this new COVID-19 environment."

With the major hit to industries like tourism along with the instability of the oil and gas industry in recent months, Hammond said the province will feel the impact of small business losses.

"There is an effect to this. Families who depend upon those jobs are going to be affected," he said.

"What we want is for the government as well as consumers to start thinking about how they can support small businesses, and making sure that hopefully they will be around in the future."

Government programs play a big role

Although Hammond said both the federal and provincial governments have done an adequate job at helping small businesses through programs like the province's wage subsidy program and the Canada Emergency Business Account, there is still work to be done.

He pointed to the Canada Emergency Commercial Rent Assistance, a program for commercial landlords to be able to provide rent breaks for their tenants, as one area that could use "significant improvement."

A photographer in the Goulds neighbourhood of St. John's spoke out in June about the cracks in that system, and how it forced her to rely on her landlord to apply for rent relief on her behalf.

"From our perspective, that's a very flawed program. It's been very much underutilized," Hammond said.

"With improvements there, we hope that business owners that need to pay to rent to the landlords would be able to avail of those programs in a more efficient manner."

In terms of how long government programs will be able to support small businesses in the province, Hammond said time will tell how the next three to six months play out. If restrictions continue, he said both government and public support will be needed in the future.

"In Newfoundland and Labrador we've gone in two-and-a-half months from Alert Level 5 to Alert Level 2, but that doesn't necessarily mean that we're all back to normal," he said, adding pandemic problems haven't gone away.

"Government support is still required, and certainly we need consumers to start considering small business owners or small businesses when it comes to them wanting or needing to avail of goods and services. The more that we can start to focus on that kind of stuff, hopefully the recovery will be a lot better."

Read more from CBC Newfoundland and Labrador