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

FILE – Wet’suwet’en hereditary chiefs have agreed to sign a memorandum on rights and title with B.C. and Ottawa, but elected chiefs are demanding it be called off over lack of consultation. (Thom Barker photo)
Wet’suwet’en hereditary chiefs, Lake Babine Nation get provincial funding for land, title rights

Government says it’s a new, flexible model for future agreements between Canada, B.C. and First Nations.

The property on which a residential school (pictured) that was torn down years ago in Lower Post is to be the location of a cultural centre. (Indian Residential School History and Dialogue Centre photo)
Lower Post residential school building to be demolished, replaced with cultural centre

Project to be funded by federal and provincial governments, Daylu Dena Council

Photo collage of loved ones lost to substance use and overdose. (Photo courtesy Moms Stop The Harm)
B.C. overdose deaths still rising 5 years after public health emergency declared

Moms Stop the Harm calls on B.C. to provide safe supply in response to deadly illicit drug use

Burning will only occur if weather conditions are suitable and allow smoke to dissipate. (Priyanka Ketkar photo/Lakes District News)
Pile burning of 50 wood debris in Burns Lake community forest

Smoke might be visible for Burns Lake and neighboring areas

Rainbow trouts thrashing with life as they’re about to be transferred to the largest lake of their lives, even though it’s pretty small. These rainbows have a blue tinge because they matched the blue of their hatchery pen, but soon they’ll take on the green-browns of their new home at Lookout Lake. (Zoe Ducklow/News Staff)
VIDEO: B.C. lake stocked with hatchery trout to delight of a seniors fishing club

The Cherish Trout Scouts made plans to come back fishing soon

Royal Inland Hospital in Kamloops. (Dave Eagles/Kamloops This Week file photo)
RCMP intercept vehicle fleeing with infant taken from Kamloops hospital

The baby was at the hospital receiving life-saving care

Vancouver Police Const. Deepak Sood is under review by the Independent Investigations Office of B.C. after making comments to a harm reduction advocate Sunday, April 11. (Screen grab)
VIDEO: Vancouver officer convicted of uttering threats under watchdog review again

Const. Deepak Sood was recorded Sunday saying ‘I’ll smack you’ and ‘go back to selling drugs’ to a harm reduction advocate

Provincial health officer Dr. Bonnie Henry prepares a daily update on the coronavirus pandemic, April 21, 2020. (B.C. Government)
B.C.’s COVID-19 infection rate persists, 1,005 new cases Friday

Hospitalization up to 425, six more virus-related deaths

Premier John Horgan receives a dose of the AstraZeneca COVID-19 vaccine at the pharmacy in James Bay Thrifty’s Foods in Victoria, B.C., on Friday, April 16, 2021. THE CANADIAN PRESS/Chad Hipolito
B.C. Premier John Horgan gets AstraZeneca shot, encourages others

27% of residents in B.C. have now been vaccinated against COVID-19

The Nautical Dog Cafe at Skaha marina is getting its patio ready in hopes Mother Nature will provide where provincial restrictions have taken away indoor dining. (Facebook)
‘A lot of instability’: B.C. restaurants in layoff limbo

As COVID-19 cases stay high, restaurants in British Columbia are closed to indoor dining

Prime Minister Justin Trudeau looks on as Deputy Prime Minister and Finance Minister Chrystia Freeland responds to a question during a news conference on Parliament Hill in Ottawa, Tuesday, Aug. 18, 2020. THE CANADIAN PRESS/Adrian Wyld
Expectations high as Trudeau Liberals get ready to unveil first pandemic budget

The Liberals will look to thread an economic needle with Monday’s budget

Since April 4, 38 flights with COVID-19 cases have departed from Vancouver International Airport, while 23 arrived. (Phil McLachlan/Capital News)
Vancouver the largest source of domestic flights with COVID-19 cases: data

This month alone, 38 flights with COVID-19 cases have departed from Vancouver International Airport, while 23 arrived

John Furlong, Own The Podium board chairman and former CEO of the Vancouver Olympics, addresses a Vancouver Board of Trade luncheon in Vancouver, B.C., on Wednesday November 25, 2015.THE CANADIAN PRESS/Darryl Dyck
John Furlong presents 2030 Winter Games vision to Vancouver Board of Trade

Vancouver and Whistler would remain among host sites because of 2010 sport venues still operational

Most Read