The rise in business closures and insolvencies, however, is not only attributable to the pandemic. Small firms are being negatively impacted by rising operational expenses, a lack of demand, and higher borrowing costs.
“During the pandemic, government loans and subsidies helped many small businesses to stay open, but now those programs have closed, despite the fact that a majority of businesses are still not back to their pre-pandemic sales levels,” said Dan Kelly, CFIB president.
“With an average debt of $158,000 per business and mounting cost pressures on virtually every line of a small business budget, it’s no wonder many businesses are unable to pay off their debt and continue to struggle,” he added.
The CFIB is pleading with the governments to preserve the survival of small enterprises and assist in lowering their operational costs, proposing several measures including:
- Forgiving a minimum of 50% of the Canada Emergency Business Account (CEBA) loan;
- Extending until December 2024 the repayment date for CEBA loans to be eligible for partial loan forgiveness;
- Increasing the $500,000 small business deduction to $600,000;
- Freezing upcoming federal tax increases, including as those that are scheduled to take effect in 2022 for the CPP, EI, carbon, and alcohol industries, and lowering the burden of provincial payroll taxes; and
- Implementation of the promised reduction in credit card processing costs for small businesses
“Small firms are in for a rough recovery, but governments can step in and help by taking concrete measures,” Kelly added. “Governments need to decide whether they will make the problem worse by raising taxes or take immediate actions to keep many businesses from disappearing for good.”
