When Shane Johnson applied for the province’s emergency small business funding earlier this year, he thought he’d get two grants: one for each of his completely unrelated, yet equally struggling restaurants. But that was not the case.
Instead, Johnson, 46, got a single grant and a Sophie’s choice: He had to decide which of his Cora eateries to save and which to let fail. Was it going to be the breakfast nook in Milton, Ont., or the bigger, more family-oriented spot in Burlington?
“I was shocked,” he said.
While the province has billed its now-defunct Ontario Small Business Support Grant and its new Ontario Travel and Tourism Small Business Support grant as balm for businesses, this financial relief is not given to each company that meets the criteria. Rather, it’s meted out as one grant per business owner, regardless of how many of their businesses are eligible for the money.
Julie Kwiecinski, spokesperson for the Canadian Federation of Independent Business, told the Star that’s not only confusing, but “unfair.”
“If they qualify, they should get it,” she said. “It doesn’t make sense if they don’t.”
When asked why the program operates this way, the Ministry of Finance did not specifically address the question, but wrote in an email that “each small business can use the support in whatever way makes the most sense for their business, including distributing the grant funds within their affiliated businesses as they see fit.”
The guidelines do not explicitly explain that the grant could be transferred from one business entity to another. They do explain how to go about calculating revenue loss and employee count across all an owner’s businesses and asks them to list “affiliated” business on the application.
Kwiecinski said that term was a source of confusion.
To most entrepreneurs, an “affiliated” business implies that one business was established to help another. An example would be a meat-grinding company an entrepreneur set up to hasten burger preparation at his greasy spoon. But according to the province’s guidelines, businesses are “affiliated” if any one business is “controlled directly or indirectly by the same business, individual, or group of individuals or businesses.”
Kwiecinski said this terminology is part of the sweeping problems with the grants’ eligibility criteria that have excluded thousands of small, suffering businesses beyond those denied funding because they are owned by the same person.
To date, more than $ 2.9 billion in grants has been distributed to 111,000 small businesses across the province, the Ministry of Finance said. According to the guidelines for both grants, businesses must have fewer than 100 employees for all their small businesses combined; they must have suffered at least a 20 per cent revenue loss due to COVID; and they must have been forced to close or “significantly restrict services” due to the provincewide shutdown on Dec. 26, 2020.
Kwiecinski said there are thousands of small business that have suffered the same revenue losses even though they were allowed to remain open with capacity restrictions. Dry cleaners, for instance, took a hit because when people don’t go into work, they don’t dry clean their clothes, she said.
It’s the same with taxi drivers. “We cannot go to someone’s home, pick them up and take them from their kitchen to their bedroom,” said taxi driver Behrouz Khamseh.
Rocco Rossi, president of the Ontario Chamber of Commerce, said the government should take a closer look at its eligibility criteria to make sure it helps the businesses it intends to. Businesses in need may not be applying for the new grant, he told the Star in an email.
“Tourism operators are calling for amendments,” he wrote.
Johnson feels the eligibility criteria needed clarification. He skimmed the support grant guidelines and didn’t flinch when he saw the word “affiliated” in the eligibility portion of the document because it didn’t seem to apply to him. Each of his restaurants is its own corporation with a different CRA number. They are entirely separate entities. He’s owned the Cora in Milton for 12 years and the Burlington location for about eight years.
That is why he filled out a separate application for each restaurant. Additionally, the province awarded him the property tax and PPE rebate portions of the grant for both restaurants. It was just the grant itself that was missing for the Burlington location, the application he submitted second.
“Why did they allow that if it’s per business owner?” he told the Star. “It doesn’t make sense.”
The Ministry of Finance, in its email to the Star, said the “eligibility criteria for the property tax and energy cost rebates … are different than the main grant because these grants serve specific purposes,” such as “providing support for specific reported costs (i.e., rebates for actual property tax and energy bills or grants to cover actual PPE costs).”
In the end, Johnson put the grant money into the Milton location because that’s the location the grant was tied to, even though his Burlington restaurant is struggling more. Johnson is down from 20 employees to just 11 between both restaurants now, and he’s trying to make it work. But even though it appears the province has given business owners its blessing to use the grant money any way they choose, Johnson is skeptical.
“It’s difficult to start transferring money between businesses,” he said. “And when you do that, there is an argument they are connected. I’m not going to play that game with the government.”