Business insolvencies have been on an upward trend since mid-2021, with small businesses being the most affected.
A new report by the Canadian Federation of Independent Business found 54 per cent of business owners are yet to return to normal, pre-pandemic revenue levels. Two out of three Canadian businesses are still carrying pandemic debt and only 10 per cent have been able to pay it back in full.
The report also said only 10 per cent of business owners would file for bankruptcy if they were to permanently close down, suggesting the numbers don’t adequately reflect the reality of small business woes.
“The rising number of small business bankruptcies is just the tip of the iceberg,” said Simon Gaudreault, the Chief Economist at the Canadian Federation of Independent Business.
Pandemic spillover is not the only stressor — rising operating costs, lack of demand and interest hikes all take their toll on small businesses.
“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, the Canadian Federation of Independent Business.
The federation makes several recommendations including increasing the forgivable portion of government loans, extending repayment deadlines, giving tax breaks and eliminating credit card fees for small businesses.
“Governments need to decide whether they will make the problem worse by raising taxes or take immediate actions to keep many businesses from disappearing for good,” Kelly said.