Recent data from the Canadian Federation of Independent Business (CFIB) shows 54 per cent of business owners have yet to return to normal, pre-pandemic revenue levels. Nearly two out of three Canadian businesses (62 per cent) are still carrying pandemic debt, and only 10 per cent have been able to pay it back in full.
But it's not just the pandemic that has led to the surge in business closures and insolvencies. Rising operating costs, coupled with a lack of demand and hikes in interest rates are significantly affecting small businesses.
"During the pandemic, government loans and subsidies helped many small businesses to stay open, but now those programs have closed, despite the fact that a majority of businesses are still not back to their pre-pandemic sales levels," said Dan Kelly, CFIB president. "With an average debt of $158,000 per business and mounting cost pressures on virtually every line of a small business budget, it's no wonder many businesses are unable to pay off their debt and continue to struggle."
CFIB is urging the governments to help ensure the viability of small businesses and help keep their operating cost down. The recommendations include:
- Increasing the forgivable portion of the Canada Emergency Business Account (CEBA) loan to at least half
- Extending the repayment deadline for CEBA loans to qualify for partial loan forgiveness to December 2024
- Increasing the small business deduction to $600,000 (currently $500,000)
- Freezing planned federal tax hikes, including the 2022 increase in CPP, EI, carbon and liquor taxation, and reducing the provincial payroll tax burden
- Immediately implementing the promised reduction in credit card fees for small merchants
