Le Lézard
Classified in: Health, Business, Covid-19 virus
Subjects: SVY, CPN, SBS

Small businesses have not made a dent in their average debt, and face continuing uncertainty around a fourth wave


TORONTO, Aug. 31, 2021 /CNW/ - Small business debt has not abated since the beginning of the year, with businesses that have taken on COVID-related debt owing an average of nearly $170,000, according to a new report from the Canadian Federation of Independent Business (CFIB). That figure nearly doubles to $333,174 for businesses in the hospitality sector who continue to be among the hardest hit by restrictions.

"While the overall small business debt load due to COVID-19 has remained stable over the past six months, the actual repayment of this debt will be the next big obstacle that small businesses will face, especially as many are still seeing a slow pick-up in revenues, capacity restrictions and uncertainty heading into the fall and winter months" said Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB.

In total, CFIB estimates that small businesses in Canada now owe a collective $139 billion due to COVID-19, a slight increase from the estimated $135 billion in February of this year.

Three quarters (76 per cent) of small businesses that took on debt say that it will take more than a year to repay. That number jumps to 87 per cent for businesses in the hospitality sector, with a majority of them saying it will take longer than two years and nearly a quarter expressing concern about being able to pay off their debt at all.

"When we look more closely at the data, we can see two very different narratives emerge between businesses that faced lockdowns and those that remained open," added Taylor Matchett, a research analyst at CFIB and author of the report. "We have heard countless stories from members who have not been able to make a dent in repaying their debt. Higher operating costs and lower-than-normal sales make it seem like a distant reality."

With only 39 per cent of small businesses back to normal sales, CFIB is calling on governments to adopt the following measures to ensure that businesses can avoid accumulating more debt:

"With a federal election on the horizon, this is a pivotal moment for all parties to show their commitment to small business priorities. Without continued financial support and the opportunity to keep making sales, uncertainty around survival and worry about debt will continue to plague small business owners," concluded Pohlmann.

Small business owners can now sign CFIB's election petition to tell federal parties which small business recovery measures they want to see included in their platforms.

About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada's largest association of small and medium-sized businesses with 95,000 members across every industry and region. CFIB is dedicated to increasing business owners' chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.

Methodology
This news release presents findings from the following recent CFIB surveys:

SOURCE Canadian Federation of Independent Business


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