The provision of emergency government financing in the face of the economic disruption caused by Covid-19 was critical to many small businesses, Statistics Canada reports.
Over half (53.7%) of businesses that qualified for zero-interest, partially forgivable loans offered under the federal government’s Canada Emergency Business Account (CEBA) program said the financing was enough to keep them afloat, according to a recent StatsCan survey. Another 20.6% of businesses required other government assistance alongside CEBA.
Only 12.7% said that they could have maintained operations without CEBA, StatsCan reported.
Just under half of the firms that relied on CEBA (47.8%) also received either the Canada Emergency Wage Subsidy (CEWS), the Temporary Wage Subsidy or both.
Indeed, paying employees was the primary use of CEBA loans, the survey found.
StatsCan reported that 29.4% of the funding received under CEBA was used to cover payroll expenses, 19% went to pay suppliers and 16% went to location costs such as rent.
The construction industry was the top recipient of CEBA loans, accounting for 14.1% of loan approvals, followed by the professional, scientific and technical services sector at 12.5% and retail trade at 11%.
The survey also found that 30.4% of businesses that received government funding also tapped additional private funding, such as drawing on an existing line of credit (13%), using personal savings or loans from friends or family (11.9%).
StatsCan noted that future research may be carried out to measure the impact of changes to the CEBA program, which was expanded in June and then in October. It remains open to new applicants until Dec. 31, 2020.