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A key government-controlled bank is set to offer billions in financial assistance to almost any small businesses affected by coronavirus — except bars.
The Business Development Bank of Canada (BDC) is set to offer some $10 billion in assistance to businesses across the country, and applications are already open (it’s unclear how assistance will be delivered, although it appears it will be in the form of loans).
But the bank has apparently decided to act as a vice squad of sorts — the application includes a short list of businesses that would be automatically ineligible for assistance, regardless of their status as legitimate businesses. Bars, lounges, pawnshops, and sex shops will not be able to claim a single penny from the BDC, regardless of the fact that they are operating legally and are affected by mass shutdowns of businesses due to COVID-19.
(The list of excluded businesses also includes some that are generally in more morally questionable territory, such as payday loan companies, widely regarded as predatory, and “businesses that promote violence, incite hatred or [discrimination]”, although it’s unclear what kind of establishment falls into that category.)
In Montreal, where bars have been forced shut for almost two weeks (and won’t be able to reopen until at least May), bar owners are confused by the BDC.
“I think that’s ridiculous...the only difference is [we’re] serving a drink instead of serving a hamburger,” says Paul Desbaillets, owner of three pubs, including Little Burgundy favourite Burgundy Lion.
“If it’s somebody saying ‘I run underground card games and I need assistance’, I understand [the exclusion]— but a wine bar with 30-odd employees?”
The BDC does not operate the same way as private banks — it has a specific mandate to promote and support small- and medium-sized businesses. It’s a crown corporation: Effectively a publicly-owned entity, along the lines of something like Canada Post (although obviously with a vastly different function), and answers not to shareholders, but to the government.
The BDC is not the only source of financial assistance for small businesses in Canada, however, the federal government is framing it as one of the key types of assistance directly available to small businesses. Other funds are aimed more at helping employees and business owners with their own personal costs (such as residential rent), or allowing private banks to expand their loaning capabilities. It’s also likely that provincial governments and possibly municipal governments may step in with additional assistance, although it’s the federal government that has the greatest ability to make cash flow.
That means bar owners aren’t going to be denied any and all assistance. However, some say it’s still disconcerting to be so bluntly excluded from any category of financing. David Schmidt co-owns bars like Pamplemousse and Club Pelicano, and says he doesn’t know if he’d need to apply for BDC financing at this point
“We’re talking about small businesses in general, I don’t know why we’re excluding any. It’s in everyone’s interests that we keep everyone’s industries alive and well and not single them out.”
He also notes that there’s issues with the BDC’s broad exclusion of bars — while the province of Quebec does clearly define bars and restaurants when issuing alcohol permits, much of the country has different standards, making it hard for a federal-level bank to just exclude “bars”.
“What constitutes a bar? If we have a bar permit but we’re selling 50% food, does that make us a bar? Are we not eligible?”
There’s also the fact that in places like Montreal, bars are a significant part of the culture, and also a key draw for tourism.
“I think that we’re useful for the city...my biggest fear is that the city’s not going to feel the same after.”
Eater has reached out to the BDC for comment, but has not yet heard back.