BDC (Business Development Bank of Canada) says the COVID-19 pandemic is hitting entrepreneurs hard with more than one million Canadians losing their jobs and 90 per cent of small and medium-sized businesses experiencing significant negative impacts. 

“It’s still too early to measure the full extent of the crisis on the Canadian economy. However, the initial shock has been extraordinary with several sectors of activity almost coming to a standstill. It’s just as difficult to determine how long the crisis will last and when the economy will recover,” said BDC which has conducted a survey on the impact of the crisis.

“The current recession is unlike any we’ve ever experienced. The slowdown, due to containment measures in Canada and other countries, is faster and more severe than in previous recessions. However, we expect the economic recovery to be faster than those following other major recessions, particularly the one caused by the financial crisis in 2008-09.

“The situation in China may shed some light on how the economic recovery in Canada will unfold. China was the first country to be hit by COVID-19, but also the first to emerge from the crisis. Containment measures had an immediate and severe impact on the Chinese economy. For example, retail sales fell by 20 per cent and manufacturing output by 13 per cent. The initial recovery from the end of containment was strong, especially in the manufacturing sector, which has almost reached its pre-crisis level of activity. However, this initial recovery has given way to a slower pick-up, reflecting continuing caution by Chinese consumers. It will likely take several months for the economy to return to normal.”

BDC said the Chinese experience could serve as a guide to Canada’s recovery. At the end of this period of containment, several sectors should quickly resume their activities, but others will take months to return to normal, it said.

Here are some key highlights from the survey:

  • 90 per cent of entrepreneurs continue to feel the negative impact of COVID-19. The level of negative impact remains high but the magnitude of that impact has stabilized. Only a slight minority of businesses have seen a positive impact;
  • After four weeks, the level of very worried entrepreneurs has decreased significantly. More entrepreneurs report being worried about the Canadian economy as a whole than they are about their own business; 
  • The top three concerns of businesses impacted remains the ability to keep employees on payroll, repay debts and keep the business open; 
  • Many entrepreneurs have already cited lessons learned and plans for the future: Create an emergency fund and save more money (19 per cent); Be present and offer products and services online (16 per cent); Broaden product offering (9 per cent); Put in place a remote work infrastructure (8 per cent); Cut expenses and streamline (8 per cent);
  • The Canadian economy will take a hard hit with potential real annual GDP to fall by 5.7 per cent; and
  • The economic impact of COVID-19 will be severe, but the Canadian economy should start to recover by the end of 2020.