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

Prince Rupert Fire Rescue attend an apartment fire on the morning of April 11 in a building at 521 Fulton Str. (Photo: K-J Millar/The Northern View)
Sunday morning fire rouses tenants

Prince Rupert Fire Rescue attended an apartment fire at 521 Fulton St.

Bears are waking up hungry and starting to forage, Conservation Officer Service said on April 9. Prince Residents are advised to keep garbage in sealed containers to lessen bear attraction. (Photo: K-J Millar/The Northern View)
Keep bears wild – they are not teddy bears

Conservation Officer Service warns bears are waking up hungry

Prince Rupert couple Alvin Tait and Loni Martin have postponed their wedding two times due to COVID-19 affecting the marriage rates in Prince Rupert. (Photo: supplied/L.Martin)
No marriages in Prince Rupert in 2021 so far

Weddings down 23.9% in P.R. since COVID-19 with B.C. wedding industry loss at $158 million

Three North Coast organizations are granted funding to promote multiculturalism and support anti-racism, Jennifer Rice MLA announced on April 8. Conrad Elementary School students recognized the first Black Shirt Day on January 15, 2021, to advocate for anti-racism. (Photo: K-J Millar/The Northern View)
North Coast organizations to benefit from anti-racism funding

$944,000 granted in provincial funding to aid multiculturalism

Restaurant patrons enjoy the weather on a patio in Vancouver, B.C., Monday, April 5, 2021. The province has suspended indoor dining at restaurants and pubs until at least April 19 in B.C. due to a spike in COVID-19 numbers. THE CANADIAN PRESS/Jonathan Hayward
B.C. sets new COVID-19 daily record with 1,293 cases Thursday

New order allows workplace closures when infections found

B.C. Health Minister Adrian Dix and Premier John Horgan describe vaccine rollout at the legislature, March 29, 2021. (B.C. government)
1,262 more COVID-19 infections in B.C. Friday, 9,574 active cases

Province’s mass vaccination reaches one million people

RCMP display some of the fish seized from three suspects who pleaded guilty to violating the Fisheries Act in 2019, in this undated handout photo. THE CANADIAN PRESS/HO - RCMP
3 banned from fishing, holding licences after overfishing violations near Vancouver Island

Mounties seized the group’s 30-foot fishing vessel and all equipment on board at the time

B.C. Premier John Horgan responds to questions during a postelection news conference in Vancouver, on Sunday, October 25, 2020. British Columbia’s opposition Liberals and Greens acknowledge the COVID-19 pandemic has presented huge challenges for Horgan’s government, but they say Monday’s throne speech must outline a coherent plan for the province’s economic, health, social and environmental future. THE CANADIAN PRESS/Darryl Dyck
Horgan’s NDP to bring in throne speech in B.C., Opposition wants coherent plan

Farnworth said the budget will include details of government investment in communities and infrastructure

FILE - An arena worker removes the net from the ice after the Vancouver Canucks and Calgary Flames NHL hockey game was postponed due to a positive COVID-19 test result, in Vancouver, British Columbia, in this Wednesday, March 31, 2021, file photo. As vaccinations ramp up past a pace of 3 million a day in the U.S, the NHL is in a tougher spot than the other three major North American professional sports leagues because seven of 31 teams are based on Canada. (Darryl Dyck/The Canadian Press via AP, File)
Vancouver Canucks scheduled to practice Sunday, resume games April 16 after COVID outbreak

Canucks outbreak delayed the team’s season by eight games

Two-year-old Ivy McLeod, seen here on April 9, 2021 with four-year-old sister Elena and mom Vanessa, was born with limb differences. The family, including husband/dad Sean McLeod, is looking for a family puppy that also has a limb difference. (Jenna Hauck/ Chilliwack Progress)
B.C. family looking for puppy with limb difference, just like 2-year-old Ivy

Ivy McLeod born as bilateral amputee, now her family wants to find ‘companion’ puppy for her

A vehicle that was driven through the wall of a parkade at Uptown Shopping Centre and into the nearby Walmart on April 9 was removed through another hole in the wall later that night. (Photo via Saanich Police Department and Ayush Kakkar)
Vehicle launched into B.C. Walmart removed following rescue of trapped workers

Crews cut new hole in parkade wall to remove vehicle safely

Four members with Divers for Cleaner Lakes and Oceans were out at Cultus Lake on March 28 and 29 hauling trash out of the waters. (Henry Wang)
PHOTOS: Out-of-town divers remove 100s of pounds of trash from Cultus Lake

Members of Divers for Cleaner Lakes and Oceans hauled out 470 pounds of trash over two days

Most Read