Hard-Hit Small Businesses Report Massive Debt

Two years into the pandemic, most small businesses are a long way from recovery, according to the latest report by the Canadian Federation of Independent Business (CFIB).

“It is good news that Covid restrictions are finally being lifted across Canada, (but) the economic damage to small business has been massive and has left many in a very precarious position,” says CFIB president, Dan Kelly. “As we enter the recovery phase of the pandemic, governments need to hold off on any cost increases, especially given that one in seven of small firms are actively considering bankruptcy or permanently winding down operations.”

On a national level, two-thirds of businesses report taking on debt at an average of $158,000 per business.

Since the start of 2022, the share of businesses reporting normal sales has risen very slowly, to 35 per cent from 31 per cent, while debt levels and the share of businesses considering bankruptcy remain high.

Until more businesses can get back to normal sales, their capacity to face new costs or repay debt remains significantly reduced. To give small businesses time to recover, CFIB is urging the federal government to freeze the carbon tax and work to immediately reduce energy costs; halt all current and future tax increases, including Canada Pension Plan and Employment Insurance premiums; extend the Canada Recovery Hiring Program for six months and expand eligibility to new businesses; and accelerate plans to reduce credit card processing fees.

“Small businesses have borne the brunt of two years of Covid restrictions and will be dealing with the fallout of the pandemic for months, if not years,” says Kelly. “Imposing new costs and higher taxes on them right now could be the final nail in the coffin for some.”

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