Problems Many Businesses are seeing with current proposal:

1)The $40k loan requires a payroll of $50k or more in 2019.

  •  Many small business owners take money out of their businesses in the form of Draw or Dividends.
  •  Draw is taken by many to recover personal money invested in the business
  • Dividends allow business to pay shareholders (owners) legally instead of paying them as employees

Solution

Allow the combination of draw, dividend and payroll to equal $50k.  This simple measure will include thousands of businesses that currently do not qualify.

2)Taking out loans to increase small business debt load is extremely discouraging for people who are barely making ends meet in good times.

  • Businesses with razor thin margins or those able to sustain modest lifestyles with their business cannot afford a further $40k debt even if it’s interest free for 2 years

Solution

If businesses are given assurances from either the Provincial or Federal Government (or both) that a majority of these loans will be forgiven, with proper steps, the confidence of business owners will dramatically increase.

3)Mass panic will cause detrimental effects on the Canadian economy for years.

  • Business owners across our region and across the country are beginning to panic, and thoughts of permanently closing are real for many small business owners.
  • As more businesses begin to panic, their ideas and the ideas of their accountants will begin to permeate causing others to do the same resulting in mass closures and a plummet into recession or even depression

Solution

A government solution specifically targeted to small businesses and not just its employees will dramatically reverse the panic.  By instilling confidence in the entrepreneurs you will see Nationwide enthusiasm and an eagerness to get back to work and increase the services being provided.

This will also positively impact other sectors that rely on small business such as agriculture, energy, and transportation.  If the majority of small businesses are back these sectors will come back stronger as well.  Closure of 50% of small businesses will result in huge losses to suppliers and supply chains throughout the country.

Proposed Solution for Small Businesses

1)         Use the Government allotted $40k loan offer (or whatever it turns out to be) to get through the closures caused by the virus.

2)         Reopen as many businesses as possible to provide normalcy to the community.

3)         During your next business or corporate GST/HST filing ALL fixed costs (rent/utilities) during the outbreak will be evaluated against the GST/HST you made instead of only GST of rent and utilities.

**An equivalent solution through Income Tax Returns would also work.**

Example.  A company that has revenues of $100,000 shows $11,500 in GST income (Ontario).

If fixed costs (rent, utilities) are $80,000 that business pays $9,200 in GST so no rebate and pays their tax share.

If the pandemic lasts 4 months and the business was closed with $0 revenue:

The same company makes $66,667 (8 months open) and shows $7669.00 in GST income.

Expenses remain the same at $80,000 so they pay $9200 in GST.

To compensate for the closure the government would allow fixed costs during closure,  $26,667 in this case, to be added to the GST paid ($26,667 + $9200)

Results in $35,867 in costs – $7669.00 GST income and a rebate of $28,198.

4)If the loans are interest free for 2 years this gives businesses a chance to pay the loan off in one chunk and returns the business to square one.

5)This solution takes the uniqueness of each business into account as some have totally closed while others operate at 50% and must show that revenue.  It also takes individual rents and other unique costs into account to promote fairness for all.  Landlords and banks would be unaffected, strong, and have no need to take action against tenants or clients.

6)There are approximately 1.14 million small businesses in Canada.  If every business took out the $40k loan, used it to its maximum, and was fully reimbursed the program would cost $45 billion.  Obviously not all business would qualify, and not all would use the program.  Also, many will not require the full $40k making the program run in the $20-$30 billion range.  This program would cost about 1/3 that of the CERB program to deal with 97% of the businesses in this country.

Please respond by Texting to 647-283-3953 for immediate response.

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We had a conversation with our MP Ryan Turnbull which went FANTASTIC. This is an outline of what we proposed to him. He is pitching it to all the Liberal MP’s and presenting to the Whitby Chamber of Commerce in 2 weeks. This proposal removes Landlords from the equation and puts it back in the hands of our Government.

Proposed Solution for Small Businesses

1) Use the Government allotted $40k loan offer (or whatever it turns out to be) to get through the closures caused by the virus
– there is a good chance dividends and drafts will be looked at the qualify

2) Reopen and re-energize business as usual

3) During your next business or corporate GST/HST filing your entire fixed costs (rent/utilities) will be evaluated against the GST/HST you made instead of only GST of rent and utilities.

Ex. A company that makes – brings in $100,000 shows $11,500 in GST (Ontario).
If fixed costs are $80,000 that business pays $9,200 in GST so no rebate and pays their tax share.

If the pandemic lasts 4 months and the business was closed with $0 revenue:
The same company makes $66,667 shows $7669.00 in GST.
Expenses are still $80,000 so we have the $9200 PLUS $26,667 in fixed costs incurred while the business was closed.

Results in $35,867 in costs – $7669.00 paid and a rebate of $28,198.

4) If the loans are interest free this gives businesses a chance to pay the loan off in one chunk and returns the business to square one.

5) This solution also takes the uniqueness of each business into account as some have totally closed while others operate at 50% and must show that revenue. It also takes individual rents and other unique costs into account to promote fairness for all.

Questions? Please contact Kim Keller – 647-283-3953 or email info@killerfitpa.com

PLEASE TAG EVERY SMALL BUSINESS OWNER YOU KNOW. WE NEED TO MAKE NOISE.