The Canadian Federation of Independent Business (CFIB) is raising the alarm on the massive amount of debt small business owners in Canada have had to take on during the COVID-19 pandemic.
The CFIB released a report revealing that small business owners have had to rack up $138 billion in debt to stay afloat.
The numbers were revealed in its latest study titled, Small Business Debt: The COVID-19 Impact. It questioned up to 4,950 small business owners across Canada.
“Actual repayment of this debt will be the next big obstacle small businesses will face. Many are still seeing a slow pickup in revenues, capacity restrictions and uncertainty heading into the fall and winter,” said CFIB Senior Vice-President Corinne Pohlmann.
On February 25, 2020, the CFIB reported that small businesses had a cumulative debt of $135 billion.
According to the study, the hospitality sector saw each owner take on an average of $333,174 in debt. Meanwhile, individual retailers took on $160,985, while contracts reported $141,754 in debt and wholesalers were taking on $93,265.
“This estimate may not capture the complete picture. As we are now well over a year into the pandemic, many other highly indebted survey respondents from February may have already gone out of business,” the report claimed.
“Half of entrepreneurs, 50%, say that repaying their debt is one of the biggest challenges their business is facing on the road to recovery.”
Early on in the pandemic, Prime Minister Justin Trudeau claimed that the Liberal government “took on debt, so Canadians wouldn’t have to” while justifying his government’s ballooning deficit and spending programs.
“It’s pretty bad. My little not-for-profit association took 78,000 calls from business owners last year to try to provide them with guidance and support: 78,000. And these calls are dark. These business owners are really at their breaking point,” said CFIB CEO Dan Kelly.
“They are not going to be forgiven in most circumstances. And there will be an anchor around the neck of the business owners as the economy begins to recover.”