MONTREAL, Canada – We know that the COVID-19 pandemic is hitting entrepreneurs hard. More than one million Canadians have lost their jobs and 90 percent of small and medium-sized businesses are experiencing significant negative impacts, according to a BDC survey. In response, the federal government has announced unprecedented measures to help workers and businesses get through the crisis. When the crisis ends, there will be an economic recovery.
But for now, the most important things are the health of you and your employees and protecting your business. This letter provides analysis to help you navigate the crisis and describes resources to help your business.
It’s still too early to measure the full extent of the crisis on the Canadian economy. However, the initial shock has been extraordinary with several sectors of activity almost coming to a standstill. It’s just as difficult to determine how long the crisis will last and when the economy will recover. The current recession is unlike any we’ve ever experienced.
The slowdown, due to containment measures in Canada and other countries, is faster and more severe than in previous recessions. However, we expect the economic recovery to be faster than those following other major recessions, particularly the one caused by the financial crisis in 2008-09.
Recovery in China
The situation in China may shed some light on how the economic recovery in Canada will unfold. China was the first country to be hit by COVID-19, but also the first to emerge from the crisis. Containment measures had an immediate and severe impact on the Chinese economy. For example, retail sales fell by 20 percent and manufacturing output by 13 percent. The initial recovery from the end of containment was strong, especially in the manufacturing sector, which has almost reached its pre-crisis level of activity. However, this initial recovery has given way to a slower pick-up, reflecting continuing caution by Chinese consumers. It will likely take several months for the economy to return to normal.
The Chinese experience could serve as a guide to our recovery. At the end of this period of containment, several sectors should quickly resume their activities, but others will take months to return to normal.
For now, the most important thing is to follow public health directives and work to stabilize your business for the next few months. To help you weather the storm, check out this article on how to sustain your business.
Assistance programs
The Canadian government has put in place a series of measures to help Canadian businesses. These include:
- wage subsidies of up to 75%
- interest-free loans up to $40,000
- up to $12.5 million for your cash flow from operations
- BDC working capital loans of up to $2 million
