A new report says Canada’s small businesses now collectively owe more than $135 billion as they struggle to survive the pandemic, a staggering amount experts say could hurt the country’s economic recovery. THE CANADIAN PRESS/Adrian Wyld

A new report says Canada’s small businesses now collectively owe more than $135 billion as they struggle to survive the pandemic, a staggering amount experts say could hurt the country’s economic recovery. THE CANADIAN PRESS/Adrian Wyld

Canadian small businesses rack up $135 billion in debt to survive pandemic: report

Federation of Independent Business said the average small business owner has accrued $170K in debt

Canada’s small businesses have collectively taken on $135 billion in debt in an attempt to survive the pandemic, a dizzying amount that could hurt the country’s economic recovery, according to a report released Thursday.

The Canadian Federation of Independent Business said the average small business owner has accrued $170,000 in debt, with businesses in the hospitality, recreation and service sectors most indebted.

The debt load has left many small businesses in a precarious financial situation that could lead to a wave of closures, the CFIB warned.

The longer the COVID-19 pandemic goes on, the more bleak the outlook becomes for some small businesses, said Laura Jones, CFIB’s executive vice-president.

“Over the last six months, the average debt taken on by small businesses to deal with COVID-19 has grown significantly,” she said in a statement.

“While many businesses had previously reopened and were attempting to regain lost sales, the second wave and the restrictions that came with it are putting a massive wrench in an already slow recovery for small businesses.”

The report said more than 70 per cent of business owners across Canada report that they have taken on debt to cope with the impacts of COVID-19.

When drilling down by sector, it becomes apparent that public-facing businesses with a limited ability to conduct work remotely as well as those considered non-essential have taken out loans in greater numbers.

For example, 91 per cent of businesses in the hospitality sector including bars, restaurants and accommodation took on debt, the report said.

In the arts, recreation and information sector, which includes gyms, music venues, performing arts companies and golf courses, 87 per cent of businesses took on debt, the CFIB said.

Among business owners who have taken on debt, three-quarters said it will take them more than a year to repay loans, the report said, while 11 per cent expressed concern that they may not be able to repay their COVID-19 related debt at all.

Meanwhile, 17 per cent of businesses are already actively considering bankruptcy or winding down their business, the CFIB said.

In fact, a staggering one in six small- and medium-sized businesses in Canada – a total of 181,000 businesses – are at risk of closing permanently due to COVID-19, the CFIB said. That’s on top of businesses that have already closed, it added.

“Small businesses need our support through this challenging time,” said Taylor Matchett, a research analyst at CFIB and the lead author of the report.

“We must also keep in mind that businesses are much more fragile now than at the beginning of the pandemic, and every effort should be made to keep businesses open while managing the health implications of the virus.”

The CFIB’s findings are based on an online survey of 3,554 small business owners in February.

Coronavirus

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Kelly Ng (left) tries to get the attention of Podzol and Aquila as twin sister, Pauline Ng, snaps a photo of the two dogs by a field of hyacinths at the Chilliwack Tulips attraction on April 13. (Jenna Hauck/ Chilliwack Progress)
PHOTOS: Strolling through tulips, hyacinths and daffodils at Chilliwack Tulips attraction

Colourful spring flower attraction opened on the weekend in Chilliwack, continues into May

Cannabis plants visible under bright lights inside a large facility at Shxwha:y Village on July 6, 2018. The reserve was home to the licensed producer for Indigenous Bloom, which opened up a dispensary on the Kwaw-Kwaw-Apilt reserve. On April 12, 2021, Shxwha:y announced Health Canada approval for a licensed production facility at the village. (Paul Henderson/ Chilliwack Progress file)
Chilliwack’s Shxwha:y First Nation approved for cannabis cultivation and processing facility

It will be the first majority-owned Indigenous on-reserve licensed facility in Western Canada

Commercial trucks head south towards the Pacific Highway border crossing Wednesday (April 14, 2021). The union representing Canadian border officers wants its members to be included on the frontline priority list for the COVID-19 vaccine. (Aaron Hinks photo)
CBSA officers’ union calls for vaccine priority in B.C.

Border officers at ports including South Surrey’s Pacific Highway should ‘not be left behind’

Bat Packs are the newest addition to the FVRL Playground, and have everything you need to learn more about bats, and track them in your neighbourhood. (FVRL image)
Bat Packs at Fraser Valley libraries come with echometer to track bats

Packs are the newest part of the FVRL Playground inventory

Demonstrators at the legislature on April 14 called on the province to decriminalize drug possession and provide widespread access to regulated safe supply across B.C. (Jake Romphf/News Staff)
Rally calls for decriminalization, safe supply on 5th anniversary of overdose emergency declaration

From 2016 to the end of February, 7,072 British Columbians died due to overdose

Surrey RCMP are seeking the public's help to locate three puppies stolen from a South Surrey home on April 10. (Surrey RCMP photos)
UPDATE: 1 of 3 puppies stolen from South Surrey returned to owner

American Bulldog puppy recovered after being sold at Mission car show

Two women walk past ‘The Meeting’ sculptures in White Rock’s Miramar Plaza Wednesday afternoon. (Aaron Hinks photo)
New public art in White Rock faces criticism as the ‘two Michaels’ remain in China’s custody

‘I would encourage people to go out and enjoy it’ said Vancouver Biennale founder

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

(Government of Canada)
Liberal MP caught stark naked during House of Commons video conference

William Amos, in Quebec, appeared on the screens of his fellow members of Parliament completely naked

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature, Feb. 1, 2020. (B.C. government)
B.C.’s COVID-19 case count jumps to 1,168 Wednesday, nearly 400 in hospital

Now 120 coronavirus patients in intensive care, six more deaths

Moss covered branches are seen in the Avatar Old Growth Forest near Port Renfrew on Vancouver Island, B.C. Thursday, Sept. 29, 2011. THE CANADIAN PRESS/Jonathan Hayward
B.C. blockades aimed at protecting old-growth forests reveal First Nation split

Two Pacheedaht chiefs say they’re ‘concerned about the increasing polarization over forestry activities’ in the territory

Everett Cummings in a tribute video posted to dignitymemorial.com.
Mechanic’s death at Fraser Surrey Docks leads to $200K fine for company, union says

Photos of rally outside Surrey court posted on ILWU’s ‘Kill A Worker Go To Jail’ Facebook page

Most Read