According to a Canadian Federation of Independent Business (CFIB) survey released Thursday, one in 10 SMBs considering closing would choose bankruptcy.
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The latest data from the CFIB shows that 54% of SMBs have not yet returned to their pre-pandemic sales levels. Almost two in three small business owners (62%) still have debt related to the pandemic, while only 10% have been able to pay it off in full so far.
“Official data on small business bankruptcies in the country does not account for zombie companies or those that would simply close their doors rather than file for bankruptcy. Our report aims to broaden the outlook for corporate bankruptcies in the country and clearly shows that the rise in small business bankruptcies is just the tip of the iceberg,” said Simon Gaudreault, CFIB vice president for research and chief economist.
“During the pandemic, government aid programs allowed many SMEs to stay open. But those programs are now over, while most of them have still not returned to normal levels of revenue,” said Jasmin Guénette, vice president of national affairs at the CFIB.
The organization is calling on governments to increase the grant ratio of Canada Emergency Business Account (CEBA) loans to at least 50% and extend the repayment period for CEBA loans that are partially convertible into grants to December 2024. A freeze is planned federal tax increases and a reduction in the wage tax burden of the states are also called for.
“The return to normal promises to be long and complicated for many SMEs. (…) We must not exacerbate the problem by raising taxes, but take immediate action to prevent too many companies from closing their doors permanently,” added Guénette.