At the pandemic’s two-year mark, small business reports low sales, high debt and many considering permanent closure, says CFIB
TWO YEARS INTO the pandemic, small businesses are a long way from recovery, according to the latest Canadian Federation of Independent Business (CFIB) Small Business Recovery Dashboard.
According to the business group, only 35 per cent of businesses have returned to normal sales, while debt levels and the share of businesses considering bankruptcy remain high.
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“While it is good news that Covid restrictions are finally being lifted across Canada, 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 (67 per cent) report taking on debt, at an average of $158,000 per business. However, businesses in some sectors are faring considerably worse than the national average.
“Businesses in hospitality and arts and recreation have been the hardest hit by the pandemic, with the potential for a full quarter to permanently close as a result of the damage they’ve taken on due to COVID restrictions,” Kelly adds.
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Since the start of 2022, the share of businesses reporting normal sales has risen very slowly, from 31 per cent to 35 per cent. 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:
- Announce a freeze in the carbon tax and work to immediately reduce energy costs for small business owners;
- Halt all current and future tax increases, including the alcohol excise tax, Canada Pension Plan and Employment Insurance premiums;
- Extend the Canada Recovery Hiring Program for six months and expand eligibility to new businesses;
- Accelerate plans to reduce credit card processing fees for small businesses.
“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,” sums up Kelly. “Imposing new costs and higher taxes on them right now could be the final nail in the coffin for some.”