Covid debt, rising costs challenge small business recovery, says CFIB
The Canadian Federation of Independent Business is calling on the federal government to help the hardest hit Small and Medium Enterprises across Canada deal with their COVID-related debt.
Small businesses are not only facing a long and challenging road to recovery – only 40 per cent are back to normal revenues for this time of the year, according to new data from the CFIB.
The survey results show only a quarter of business owners (27 per cent) say they are fully recovered. Among the many obstacles standing in the way of a full recovery, says the CFIB, is the staggering level of fresh Covid-related debt small firms have had to take on during the pandemic.
Businesses in deep debt
“Two-thirds of small businesses (65 per cent) have had to take on debt, at an average of $160,000, just to survive the past two-years,” says CFIB president Dan Kelly. “For almost 900,000 business owners, up to $60,000 of this debt is in the form of a government-backed Canada Emergency Business Account loan.”
Kelly says Ottawa’s 2022 budget “missed an opportunity to forgive a larger portion of these loans for the most deeply affected small businesses.” All major Covid support programs end on May 7, 2022.
Rising business costs
The CFIB says a huge number of small businesses are also facing major challenges with rising costs for energy, inputs and insurance (90 per cent), as well as increases to government-imposed costs for carbon and payroll taxes (82 per cent). The federation believes this may explain why almost three-quarters (72 per cent) of small business owners failed to find the measures in the 2022 federal budget particularly helpful to their situations.
‘Two-thirds of small businesses (65 per cent) have had to take on debt, at an average of $160,000, just to survive the past two-years,’ says the CFIB’s Dan Kelly
Seeking debt forgiveness
As such, the CFIB is calling on the Liberal government to provide help to the hardest hit SMEs with their COVID-related debt by raising the forgivable portion of their CEBA loan to at least 50 per cent, while extending the repayment deadline beyond December 2023.
The CFIB is also asking the government to help new businesses that were excluded from the CEBA program and to forgive a portion of other federal COVID-19 loan programs like HASCAP. Small business owners can add their voice to CFIB’s petition calling for more debt relief at cfib.ca/covidpetition.