The Problem of Reported Salary
One of the problems is that the loans require businesses to have paid out at least $50,000 in salaries last year. That could exclude some self-employed people and other sole proprietors.
Sole proprietors earn and declare business income as opposed to salary, and many do not have any employees on the payroll or have a very small payroll. Even if they could get the government's wage subsidy, that does not help with other operating expenses.
Operators of many small businesses often work in the business themselves with few staff or just a single assistant. For many, that means their salary expenses are too low to qualify for a CEBA loan.
Yet, in the midst of the pandemic, many of these same businesses have been forced to close and are left with little or no income to cover operational expenses that are still accumulating, even though some costs are being deferred.
The Canadian Federation of Independent Business is calling on the government to eliminate the payroll test and make it accessible to more businesses, for that exact reason.