A new report released Friday by the Canadian Federation of Independent Business says small businesses on average have taken on more than $150,000 in debt during the COVID-19 crisis.
“Cash flow and debt continue to be among the top concerns of small business owners as restrictions and business closures remain in place in many provinces,” said Corinne Pohlmann, CFIB’s senior vice-president of national affairs, in a news release. “Many are also behind on their bills. This is going to be a major impediment to recovery if businesses can’t access more financing soon.
“Small business owners urgently need more access to financing. While the Canada Emergency Business Account was helpful early on, many businesses continue to struggle and that money will not stretch far enough.
“With more provinces and sectors reopening, businesses will need access to financing to purchase and install personal protective equipment, supply new inventory, rehire staff and keep their doors open. This is not just a necessity for small business survival, but an essential step in Canada’s economic recovery.”
According to CFIB’s latest survey results:
- A third of business owners are behind on major bill payments, like rent and credit cards—the hospitality, arts and recreation and personal services sectors are the hardest hit with four in 10 behind on bills;
- 37 per cent of business owners are using their personal savings to finance their business and 34 per cent are using credit cards – those numbers jump to 44 and 42 per cent respectively for businesses with fewer than four employees; and
- While the median debt load for small businesses stands at $40,000, the average debt is greater than $150,000, meaning that some businesses are taking an even bigger financial hit.
The CFIB said it has urged the government to increase the amount businesses can borrow as an interest-free loan under CEBA, and raise the forgivable portion of the loan from 25 per cent to 50 per cent.
