Fourteen per cent of Canadian SMEs considering bankruptcy or winding down operations; recreation and hospitality sectors could see the most significant impact
ACCORDING TO A new report from the Canadian Federation of Independent Business (CFIB), 14 per cent of Canadian small businesses are at risk of permanently closing, even as provinces move forward with phased reopening plans.
About one in seven small- and medium-sized companies surveyed at the end of June by the CFIB said they are at least somewhat considering bankruptcy or winding down operations as a result of Covid-19. That would represent about 158,000 businesses in addition to the ones that have already closed, the report stated.
Recent indicators suggest Canada is recovering, but economists warn the country is still headed for a long and painful climb out of the deepest downturn since the Great Depression. The CFIB said its results may be “conservative,” since its member businesses are usually more established, and therefore more resilient.
“Small businesses are big players in our economy, so minimizing business losses is critical to recovery,” Laura Jones, CFIB executive vice-president, wrote in the report. “Right now both government support and consumer behaviour are critical to transitioning back to conditions that allow businesses to survive and thrive.”
Business closures could range between 55,000 at the low end and 218,000 at the high end, depending on how the recovery goes, the industry group said.
Geographically, businesses in Alberta face the highest risk of going under at 19 per cent. The province has suffered a double whammy hit from the pandemic and a drop in oil prices.
The arts and recreation and hospitality sectors could see the most significant impact, with 30 per cent and 27 per cent at risk of closing, as those industries have been shut down for an extended period and have strict measures in place due to the nature of their work.