Jenny Kwan, MP

Member of Parliament, Vancouver East

Open Letter on Accessibility of BDC Funding for Small Businesses

March 19, 2020

Sent to:
Hon. Chrystia Freeland, Chair
Cabinet Committee on the federal response to the coronavirus disease (COVID-19)

Open Letter re: Accessibility of Business of Development Bank of Canada Funding


Deputy Prime Minister Freeland,


This letter is regarding the accessibility of the recently announced Business Development Bank of Canada (BDC) funding to support business owners who have currently closed their businesses due to the COVID-19 virus, specifically those in the food and beverage sector. This is understandably an incredibly difficult time for many businesses, who are complying with government recommendations to close their doors to ensure that adequate social distancing is maintained to prevent further spread of this virus. This loss of business has created obvious financial and emotional stress for business owners and they are in desperate need of the Governments support.


The Government announced on Friday, March 13th that an additional $10 Billion of funding will be provided through BDC and Export Development Canada (EDC). This is commendable action from the government, and an important step in protecting the well-being and financial security of business owners. However, the accessibility of this funding is limited in scope. Particularly, businesses in the food and beverage section are having a difficult time in meeting the current requirements for this funding. As it stands, businesses are prohibited from applying if their historic liquor sales represent more than 50% of the business actual sales. For many restaurants, this is not surprisingly the case. In MP Kwan’s riding of Vancouver East there have been cases of 10 + restaurants that are currently facing this barrier when applying for the BDC funding, and there are likely many more across the country. This leaves these business owners in a state of insecurity, and unsure where they are supposed to turn for assistance. These businesses all expect and are eager to re-open when the spread of the COVID-19 virus is under control, but until then they need more concrete support from the Government.

The current restrictions punish these business owners in the food and beverage sector who surpass the alcohol sales threshold. However, these businesses pay full price to the B.C Liquor Distribution Branch (BCLDB) for the liquor and collect and pay to the Ministry of Finance 10% Liquor Sales Tax (LST) on the sale of the liquor. Earning more than 50% of ones revenue from the sale of liquor should not result in one being penalized. Businesses who do earn more than 50% of their revenue from the sale of liquor provide a significant amount of revenue for the BCLDB and the Ministry of Finance. Access to this funding should not be based on this specification.


MP Kwan’s office was in contact with BDC representatives on Wednesday March.18th and it was confirmed that this eligibility requirement remains the same and that they are proceeding with requirements in a “business as usual” manner. This current situation facing these business owners and all Canadians is anything but usual. We cannot continue with business as usual, and I am sure the Government can recognize this.


The increase of funding is a promising start; however without proper accessibility this will fall short to help these business owners. I am therefore requesting the Government changes this policy requirement so that all of those in the food and beverage section are able to apply for BDC funding, regardless of the percentage of their liquor sales. This policy needs to change to allow access to this essential funding. This is a very reasonable request considering the current circumstances, and we urge the Government to act accordingly.


We thank you in advance for your attention to these concerns and will look forward to your response.


Sincerely,


Jenny Kwan

MP, Vancouver East

and

Gord Johns

MP, Courtenay-Alberni

 


Cc: The Hon. Jean-Yves Duclos (Vice-Chair)
The Hon. Navdeep Singh Bains
The Hon. William Sterling Blair
The Hon. Patricia Hajdu
The Hon. Mélanie Joly
The Hon. William Francis Morneau
The Hon. Carla Qualtrough
The Hon. Kirsty Duncan
The Hon. Bill Morneau