Small business owners denied COVID-19 grant funding criticize Ontario for lack of appeal process

Some business owners in Waterloo region and Guelph who applied for provincial funding to help them through the COVID-19 pandemic lockdowns, but were either denied the cash or only got a portion of what they thought they should, say they have no way to appeal the decision.

Santiago Almada of Kitchener said he applied for the Ontario Small Business Support Grant for his three businesses. Almada owns a gym, a soccer club called FC Berlin and an events company. 

He was initially rejected for all three.

"They said that they got rejected because we already had another application," Almada said in an interview.

He tried to reach someone at the province for four months to figure out what he could do before he reached out to his MPP, Laura Mae Lindo, a member of the NDP.

"You try to get an update with nothing. And then eventually we did get the money. But [Lindo's office] called me and said I had to basically pick one of my businesses," he said.

"So I had to choose whether the gym goes under or we don't get the funds for a soccer club for the next summer, and it was just a really awful process."

'Neverending series of automated messages'

Rebecca Lofsnes owned Hallowed Hearts Tattoo in Kitchener with her partner, Cam Davis. She was forced to shut the business three times under lockdown measures.

She applied for provincial funding and received the first round, of $10,000. But when it came time for the second round of funding, nothing showed up in her bank account.

"I tried to contact the Ontario telephone number that was provided. It was sort of just a loop, like a neverending series of automated messages with no real help," she said.

Eventually, she was able to get a case worker assigned to her file, updated her contact information and waited again. When she did hear back, it wasn't good news.

She was told, "I will not be receiving any more money. That they reviewed my case and that I should have never got it in the first place, and that if it wasn't for a pandemic I would have had to pay it back."

She said that response was shocking.

"That's almost adding insult to injury now, telling me that I don't get any more money and that I shouldn't have got the first round of money, which I know I should have because I was forced to lock down my business."

Lofsnes also reached out to Lindo's office and they advocated on her behalf, but weren't successful.

"They were sort of met with the same thing: There would be no more money coming to my business, and they said it didn't qualify, but they wouldn't give any reasons why it didn't qualify."

In Guelph, it was a similar story for Ray Mitchell, who owned the well-known downtown store Dis-a-Ray Antiques and Collectibles.

He missed the first round, applied for the second round of provincial funding, but never heard back. He has since closed his store.

"All I got was dead silence," he said.

"That's my biggest concern about the whole thing, isn't exactly the money. I'm not eligible. That's just the way it is. But nobody gets back to you. If you can't find out if you've been accepted or denied, if you've been denied, you can't find out. So you send them emails and nobody responds."

MPPs tried to help

Lindo, Guelph MPP and Green Party of Ontario Leader Mike Schreiner and Waterloo MPP Catherine Fife have heard similar stories from other local businesses.

Lindo said her staff tried to advocate for as many businesses as they could, but it became clear the system wasn't working.

"We have been able to help some small businesses, individual cases where we just kept calling them and emailing sometimes daily, because everything that we had in front of us said they were eligible. And there was no recourse," she said.

"That's not the kind of program that small business owners asked for. They didn't ask for a program that would require them to find a member of provincial parliament and get their member of provincial parliament to hound the ministry.

"They asked for swift work that would help them to stay afloat. They asked for a clear understanding of the needs across different sectors and the kinds of business needs that they had. And they couldn't afford the delay that happens even for those businesses that become eligible."

Schreiner said his office heard from a number of business owners who were "extremely frustrated and barely hanging on" because they couldn't get answers about the grant funding.

"So many businesses are being denied funding and there is no appeal process," he said.

"There are so many businesses we are directly trying to help them navigate through the system. We're advocating for them. But you know, there should just be a process they can go through that is just less bureaucratic, easier."

In April, Fife wrote to Minister of Economic Development Vic Fedeli "to amplify" the voices of business owners in her riding.

She said in her open letter there was one bookkeeping training business that was told it didn't qualify for a grant because it was in the financial sector. The business asked to amend errors in its application, but waited two months to get a code to re-access their application.

Fife described a family owned jewlery-making business that was denied grant funding despite other similar businesses getting money.

"They have not been provided with an explanation of why they were denied, but believe that they misclassified themselves on the application. They have not been offered an opportunity to correct," Fife said.

Audits took place before 2nd round

CBC Kitchener-Waterloo reached out to the Economic Development Ministry, but were told questions should be directed to the finance ministry.

In an emailed response, Emily Hogeveen, director of issues management and media relations for Finance Minister Peter Bethlenfalvy, did not say if the province would be considering creating an appeal process for businesses.

She did note the grant program saw nearly $3 billion in funding go to more than 110,000 small businesses across the province.

"As we audited the program prior to the second round of payments, we identified businesses suspected to be ineligible," Hogeveen wrote.

"After multiple follow ups with these businesses to clarify and determine eligibility, we have determined 15,000 businesses should not have received the first payment and will therefore not receive the second."

She wrote that the vast majority of business owners applied "in good faith."

"Although we could pursue repayment, we are choosing not to given that no employer needs yet another financial hardship just as the recovery gets underway. Instead, we want all businesses focused on recovery," she wrote.

'This whole process was a joke'

Mitchell says he would like to bring the store back, even if it was online, but he needs money to set up a web store, too.

"I've been in business for 30 years and I end up not getting a penny," he said.

"I just seem to fall through all the cracks of all the eligibility. No employees, not enough expenses right now anyways. Yes, Dis-A-Ray is on hiatus," he said. "What is next is hard to say."

Almada hasn't paid himself for months.

"It's just not been a really good thing. And like, I don't want to put myself on payroll until we're financially there. But when the government shuts you down for seven, eight months at a time for no reason and then provides no support during that time, like what are you really supposed to do?" he said.

"This whole process was a joke," he added. 

Lofsnes, meanwhile, has closed her tattoo shop in Kitchener, sold her home and is in the process of driving across Canada to move to B.C., where she says lockdowns were handled in a better way, particularly for personal services like her own that followed strict health and safety rules long before COVID-19.

"It's just been a very, very trying time for small businesses, and I know many, many people in the same situation as me," she said on the phone during a stop in Banff.

"If the government is going to take the state of emergency into their hands and take people's livelihoods and control over their own livelihoods out of their hands, then you have to provide for people and they need to get their act together because there's too many people slipping through the cracks," she said.

"I just have had enough with Ontario and just thought there's absolutely no help for us."