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Article written by Jackie Porter
What is Coronavirus?
Many countries are currently battling the novel Coronavirus, also commonly referred to as the COVID-19 pandemic. Coronaviruses are a large family of viruses that can cause illnesses ranging from the common cold to more serious respiratory infections like bronchitis, pneumonia or severe acute respiratory syndrome (SARS).
What are the effects of the Coronavirus?
The virus has spread rapidly around the world and has affected the health and financial well-being of each country it touches. At this moment, there is no cure for this virus. In fact, carriers of the virus may not show symptoms for many days while continuing to infect individuals they come in close contact with. By the time carriers have tested positive for the virus, they would have already rapidly spread the virus in their community, leading to significant outbreaks in major centers around the world. The speed of COVID 19 infections has overwhelmed the medical systems of many countries. Leaders in these countries have had no choice but to shut down non-essential businesses and social activities in order to slow down the spread and flatten the spike of the virus. This had led to major corrections in the financial markets with an average drop in stock market prices to the tune of 30 percent.
What is Social Distancing?
Social Distancing is the practice of limiting close contact with other people in their daily routines in order to contain and slow the spread of the virus. They include:
- Avoiding crowded places and non-essential gatherings.
- Avoiding common greetings, such as handshakes.
- Limiting contact with people at higher risk (e.g. older adults and those in poor health).
- Keeping a distance of at least 2 arms lengths (approximately 2 metres) from others, as much as possible.
For the past couple of weeks, Ontario and the federal government have limited business operations only to businesses essential to the economy. These include finance, food, health and transportation. Many other businesses have had to set up remote communication with their staff and clients in order to continue to operate during the pandemic.
What are the financial implications of COVID-19?
The economy has had to adjust to COVID 19 at lighting speed. If you were involved in a business, either as an employee or as a business owner and you needed to be in close contact with your clients, your business and livelihood are likely now at a standstill.
For the business owner who has had to suspend business operations
How will you pay your bills, your staff, yourself? Chances are you will need to lay off your employees until your business is able to operate. How much cash do you have in the business to pay the company bills and yourself until you are able to open your doors again? What are the monthly operational costs of the business and what do you take out to pay yourself to cover your personal expenses? How long will these funds last? You need to get these questions answered NOW.
For employees who have been laid off due to COVID-19
If you’re an employee of a business, you may now be facing a layoff and are concerned about your ability to maintain your lifestyle on a reduced income. Are you carrying credit card debt? Do you have rent or a mortgage to pay? Do you have a sense of what your lifestyle costs are each month? Can some of your expenses be reduced? This is a good time to take a closer look at your financial health.
For business owners working remotely
How have your expenses changed during COVID-19 now that you and your team are working from home? For example, are you paying more for IT and remote services such as cloud computing, Zoom and other costs related to being able to communicate with your employees and clients remotely? Are you paying for office space and rental equipment you are not currently using? Do you own or rent the space you conduct your business in? It is probably a good time to speak to your suppliers associated with your office expenses to see if expenses related to the business can be suspended or reduced. This also applies to mortgages and leasing equipment. Talk to your banker or leasing company to see what they can do. At this point, it may be too early to tell if your clients will continue to be in a position to support your business based on how the COVID-19 pandemic will ultimately affect them.
For employees working remotely
If you are an employee working from home you are already finding the new reality a bit jarring. Based on the social distancing guidelines, you are likely quarantined with your family and trying to balance the pressures of family and the business demands of your employer. You may be concerned whether you will have your job in the future and are glued to the daily updates on how COVID-19 will continue to affect your health and financial well being in the future. It is a good idea to review your expenses to see what will increase and what will go down now that you are no longer travelling to work and the kids are now home during the day.
Resources and help for individuals financially affected by COVID-19
If you are at home and not able to work because of COVID-19, the government is introducing support for employees and employers who are affected. Check out the link and learn how you can obtain financial relief during this crucial time. Support ranges from mortgage and rent deferral, income tax payment deferral and additional childcare benefits. Refer to these resources here https://bit.ly/3axgfNY
Talk to your financial advisor to find out how you can make the most of the benefits available to you at this time.